BT’s greening of the supply chain
British Telecom is taking its internal sustainability practices and applying the principles to its supply chain here in Asia.
Peter Beaudoin, who is responsible for BT’s sustainability efforts in Asia, says the operator is now putting more emphasis on corporate social responsibility practices of its suppliers when tendering contracts, to the point of actually visiting the suppliers and requesting actual changes.
“Last year, we looked at additional environmental principles that we’d like to bring into our overall contracting method, from there, we came up with an additional number of contract questions that we wanted to ask in all our bids. It is a new process – so we had to test it out – so last year, on a couple of our big contracts in Europe, we started to ask those questions to understand from our service providers – not our products – but our service providers, what their views are on CSR and climate change,” Beaudoin said. “Once we got those, we said, ‘well we could better understand the level of those service providers and how much we can influence them.’ So what we then said was, ‘ok, we up the bar for all our service suppliers around the world.’ So when we ask them to bid now, we tell them that these are must have answers, but also that their weighting that we use for those questions are now increasing.”
As with many aspect of being green, the most important element of the process is actually being aware that there is a problem in the first place. In BT’s case, simply bringing the topic to the forefront with its suppliers is yielding positive results.
“We quickly realize that on the service supply side of our business, there’s big savings that we can drive into those suppliers if we ask those questions,” he said, adding that at the moment, the key focus at the moment is primarily on BT’s service providers such as recruitment companies, consultants and so on. “We found that by asking the right questions, we can readily drive the proper behaviour.”
SITE SURVEYS
In addition to asking their suppliers to adapt more responsible behaviour, BT is also now visiting its suppliers in site surveys. This year, the company has already conducted 27 site surveys, compared to 20 such visits in the last year. The majority of the site surveys took place in Asia, as well as one in Romania, according to Beaudoin.
“That was for our tier 1, tier 2 and tier 3 suppliers. So we went into some tier 1s, and then we went into their suppliers and some tier 3 suppliers, just to understand the value chain. From there, what we’ve been able to do is assess the quality of those suppliers. And when we go from a tier 1 to a tier 2 supplier and tier 3 supplier, we bring along the tier 1 supplier,” he said. “Out of that, we did have to eliminate some of the tier 3 suppliers that we found that were not meeting our requirements. For the tier 1 and 2 suppliers, we obviously began to work with them to improve their performance.”
REDUCING SHADOWLOAD
According to Beaudoin, the company has set up a procurement team in Shanghai to implement the new supply chain initiative in Asia. The location is strategic in that BT also relies on major electronics manufacturers to supply its infrastructure for its retail business in the UK.
“Globally, all manufacturing is moving to Asia and China in particular. We are increasingly sourcing from China. I think you need to look at different components of our business. On the retail side, we are buying millions of units that we are then selling on, like phones and handsets – a lot of that manufacturing is done in China, a lot of OEMs, etc,” he said. “In an average UK household, 15% of the energy is used, or wasted rather, is a result of the shadow load, so in essence, it’s your television sitting there on idle waiting for you to turn it on, those types of things. What we identified was that a lot of the technologies that we are producing and providing in the home are creating some of the shadow load.”
As part of the strategy, BT looked at the products that its services are relying on, such as broadband modems, set top boxes and fixed line phones, and are now working with the suppliers of those items to reduce their impact in the household.
“That is where we are really working to influence them now. So we are saying to them, ‘every new product that you are producing based on where we start to look at your product management, has to be produced using less and less energy and physically, they must use and consume less energy in the home,” he said. “That is where we are focusing at the moment and that is what, eventually, we will bring over to other geographies where they will see operational cost decreasing.”
CHANGING BEHAVIOUR
While BT is setting forth more stringent demands on its suppliers, the process is not only about gauging the ‘greenest’ of each supplier and either passing or failing them. Beaudoin explained that such pass and fail methods often do not work because they lack a real working relationship between both buyer and supplier.
“In a way, what we are trying to do is set an agenda. We have to convince our suppliers that it is an opportunity. In all things, it is about working with them property,” he said. “There are two ways of discussing with your suppliers. One way, you say, ‘yes you are using too much overtime, so you have to cut down on your overtime,’ but as an operator, we might also turn around and say, ‘we need you to deliver it in 48 hours.’ So we have to work with the supplier and sit down and say, ‘ok, it might not be the overtime that is an issue, it might be the way we forecast.’ We need to work through processes to understand – it is not just us telling them you’ve got to improve and it has to be. This is an issue we see. It is not just that they have to hire more people, but it could be that we need to give them better forecast, so we have to sit down with them and have that dialogue.”
Having a working relationship is also more effective, according Beaudoin, because it discourages ad hoc measures simply to ‘pass’ the test.
“The reason is that we call them audits and ‘you pass’, ‘you fail’ – that is really not the language that we want to use. If you just say that ‘you pass’ or ‘you fail’, in the end, any type of behaviour you are looking to change will suddenly disappear because they will try to hide it to ‘pass’, and that is not the behaviour we want to encourage, we are trying to make sure that our supply chain and our suppliers are working within the bounds we are setting,” he said.
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Category: Climate change, Featured articles, Green corporations
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