Striving for a Green Supply Chain

By staff reporter MA YAN

IN September 2017, the German auto-part manufacturer Schaeffler sent a letter to the environmental protection department of Pudong New Area, Shanghai, claiming that its exclusive roller pin supplier was ordered to suspend operation due to an environmental problem. This will affect the company’s supply to customers and may result in a decrease of over three million cars and a loss of RMB 300 billion in the Chinese market. Therefore, Schaeffler pleaded the authority to grant a three months’ buffer period for changing the supplier but was told that suppliers for foreign enterprises must abide by the laws and regulations and the government is resolute in punishing illegal businesses. The “Schaeffler supply chain crisis” sparked nationwide attention. Shi Feng, an official with China-ASEAN Environmental Cooperation Center, said: “I felt sorry for the huge economic losses incurred, but it is a shame that such a major multinational company has not planned to implement green supply chain management (GSCM) procedure yet.”

Not long ago, on the 2017 Green Supply Chain Forum held by the Institute of Public and Environmental Affairs (IPE), Shi Feng, a promoter of the green supply chain, highlighted the importance of GSCM based on the “Schaeffler incident.” He advocated green procurement to realize green transformation and sustainable development of the whole industry and improve economic and environmental performance.

Huawei’s Environmental Management Practices 

As the world’s leading supplier of information and communications technology (ICT) solutions and the flagship of China’s electronics industry, Huawei attaches great importance to environmental management and strives to provide customers with products and solutions featuring energy conservation and environmental protection. According to the 2017 Corporate Information Transparency Index (CITI) green supply chain rankings, Huawei is on the Top 30 List together with many famous global brands.

The Huawei Exhibition Center in Beijing shows the integration of hi-tech and green ideas.
Although dealing with heavily polluting industries, Huawei has always adhered to the green strategy by promoting green concepts in every link of its Product Life Cycle (PLC), reducing the impact on environment through constant technological innovation.

From the very onset of product design, Huawei evaluates the whole PLC, including raw material acquisition, manufacturing of spare parts, product processing, transportation, usage, abandonment, and recycle to find out how products impact the environment at each stage of the PLC. Key factors that impact the environment will be identified and consequently, targeted measures will be taken to reduce the negative effects. Huawei also explores new eco-friendly materials to minimize negative impact. For example, bioplastic made from plants has been used for mobile phone production since 2013, which reduced the consumption of non-renewable petroleum products. Soy ink was also put to use when printing. All these practices help combat environmental pollution and degradation substantially.

Huawei is very prudent about selecting suppliers. The conference on sustainable development of suppliers is held every year. All the suppliers are evaluated and rated at three different levels and a list of key suppliers is made. Huawei also conducts on-site inspections on its suppliers regularly to improve their environmental management and performance.

In the same way, Huawei always takes “impact on the environment” as the most important indicator when evaluating product quality in PLC, including the packaging materials, production, usage, abandonment, and logistics.

The IPE Director Ma Jun spoke highly of Huawei’s efforts in building the green supply chain. According to him, “Huawei is on par with many leading international brands in terms of GSCM.”

Market-driven Green Supply Chain

“By adopting green procurement, Huawei has promoted energy conservation and emission reduction of several hundred upstream suppliers in electronics manufacturing,” said Shi Feng, citing that Huawei has become a pilot in promoting green supply chain in Shenzhen.

As the torch bearer of China’s reform and opening-up drive, Shenzhen, with a relatively small area and large population, has scarce natural resources. To maintain a favorable ecological environment and sustainable development, the Shenzhen municipal government has long been exploring the green supply chain. Huawei is well cognizant of these conditions and has become a successful model for developing the green supply chain for other enterprises in Shenzhen as well as for promoting the GSCM around China.

Markem-Imaje releases its new industrial platform in Shanghai in late December 2013.
As early as in 2006, Shenzhen launched a waste reduction campaign which was guided by the government and joined by enterprises. This initiative received support from large enterprises such as Huawei, Foxconn, and BYD. The joining of this campaign became one of the standards by which some procurers select suppliers. Soon afterwards, the Bureau of Environmental Protection released a Green Procurement Declaration together with large enterprises such as Huawei, Foxconn, and Fuji Xerox. Procurement agreements were signed, enterprises were encouraged to strengthen environmental protection and curb wastes at the root.

To further explore a feasible and effective GSCM pattern, Shenzhen carried out a green supply chain pilot program in 2014 with the support of the Ministry of Environmental Protection and China-ASEAN Environmental Cooperation Center. The Human Settlements and Environment Commission of Shenzhen was responsible for implementation of this program. Guided by the government, this program encouraged major enterprises to take the lead and encouraged small and medium-sized enterprises to jointly improve the environment.

By employing such program, the government provides assistance to enterprises in terms of policy, capital, information, and technology, so to help them select and evaluate suppliers, regulate their behavior and build their respective GSCM systems. During the process, instead of interfering in the decision-making of enterprises, the government promotes the green supply chain by letting the market play a decisive role. As the core of supply chain, large enterprises exert significant influence on the supply chain and force small and medium-sized suppliers to enhance their sense of responsibility for environmental protection.

Building a Cooperation Platform for the Green Supply Chain

“I think it is beyond doubt that China is the center of the world’s supply chain, since China ranks the first in the import of raw materials and export of products, its promotion of green supply chains will exert great influence on the world economy,” said Shi Feng.

On the 22nd APEC Economic Leaders’ Meeting in 2014, China proposed building an APEC Green Supply Chain Cooperation Network. This proposal was unanimously agreed upon by attendees and finally documented in the Beijing Agenda for an Integrated, Innovative, and Interconnected Asia-Pacific – the 22nd APEC Economic Leaders’ Declaration, which is the only outcome related to environmental protection of this conference.

The 2017 Green Supply Chain Forum is held in Beijing on October 13, 2017.
The APEC Green Supply Chain Cooperation Network is a bridge for economic entities in the Asia-Pacific region to conduct cooperation and provides a platform for the exchange of information and experience about building the green supply chain. Embraced by each country, the network operation pushes for green development in the Asia-Pacific region.

To promote the “Belt and Road” construction, China has also built a Belt and Road Green Supply Chain Cooperation Platform in 2017. Taking GSCM as a bond of economic and trade cooperation among the Belt and Road countries, China strives to bring about a greener international industrial chain and promote interconnection among countries and green development in areas along the Belt and Road. Shi Feng remarked: “Under the leadership of the Ministry of Environmental Protection, we initiated this platform for international cooperation with nine other institutions in a bid to share China’s experience in green supply chain construction with countries along the Belt and Road and push for a greener Belt and Road.”