By definition, a global supply chain consists of many independent partners. So it makes sense that any efforts to boost environmental sustainability would require the cooperation of multiple entities, both inside and outside the organization.
GlaxoSmithKline plc is one of the world’s largest pharmaceutical companies. It has long focused on enrolling suppliers in efforts to reduce carbon emissions. Three years ago, with that specific goal in mind, it formed the GSK Supplier Exchange. The online peer-to-peer platform was set up to share best practices, with the aim of reducing GSK’s carbon footprint by 25 percent by the year 2020, and creating a carbon-neutral supply chain by 2050.
The supplier base was a good place to start. More than half of GSK’s carbon emissions are related to the purchase of materials and services. So at the outset, GSK asked more than 500 suppliers to participate in the members-only exchange. The top 200 suppliers represent approximately half of the company’s raw materials spend, estimated at $1.29bn at today’s rate of exchange. Today, the exchange is host to more than 700 members, representing 360 of GSK’s largest suppliers.
Nevertheless, reaching GSK’s ambitious carbon-reduction goals would prove to be a difficult task. At the time, 65 percent of its suppliers lacked an active program to slash energy costs. And no single supplier accounted for more than 1 percent of the company’s carbon footprint.
“We were going to have to engage an enormous number of suppliers if we were to make a material impact in helping to reduce their carbon footprint — to help us reduce ours,” Matt Wilson, head of GSK’s Environmental Sustainability Centre of Excellence, said at the time. “Our challenge was how best to tackle this.”
Seeking Outside Help
GSK was pleased with the initial progress it made upon formation of the Supplier Exchange, but saw the need for a more coherent approach to carbon reduction. So it turned to Schneider Electric to take over as community manager of the initiative. Schneider was chosen to supply expertise in the form of webinars, case studies, newsletters, and Q&A sessions, as well as provide networking opportunities for GSK’s army of suppliers.
The two companies were far from strangers. Over the course of a 14-year relationship, Schneider Electric has done “a whole host of things” for GSK, according to Andy Dewis, vice president of Schneider’s Energy and Sustainability Services Group for the EMEA region. Its role has included supporting GSK’s purchasing activities, buying its energy, managing the relevant data, and aiding in programs to boost energy efficiency. More recently, it has helped GSK to tackle the broader issue of climate change.
Schneider was a natural to take on yet another role on behalf of GSK. “We found that many of our suppliers may not be entirely sure where to start when it comes to identifying resource-conservation opportunities,” said Wilson. “We have partnered with Schneider Electric to develop sustainability expertise that will help our suppliers expand their knowledge on sustainability topics and practical solutions.”
Dewis says Schneider Electric has spent a significant amount of time delving into GSK’s internal operations, with an eye toward solving energy and sustainability challenges. “We operate in over 100 countries where they are,” he notes. “We support them at the corporate and local levels.”
An Evolving Mission
He calls Schneider Electric’s appointment as community manager of the Supplier Exchange a natural evolution of what it had been doing for GSK. The company was able to draw on market intelligence gleaned through its work with thousands of organizations worldwide on the topic of sustainability.
The exchange acts as a platform for generating ideas on achieving supplier sustainability in multiple areas. Key areas of focus include waste production and the reduction of harmful chemicals, says Dewis. But the whole issue of climate change is on the table as well.
Schneider Electric maintains a team of experts who are embedded with GSK and interact directly with its suppliers, Dewis says. In addition to community management, they can draw on sustainability expertise from around the world. An initiative that’s working well in one part of the globe can be “copied and pasted” elsewhere within the GSK supplier base.
Membership in the exchange is voluntary, although it’s difficult to see why any major supplier of GSK would refuse to participate. In fact, the company has been successful in bringing on board its biggest vendors. Dewis says the exchange continues to solicit members, with the ultimate vision of creating an open platform for the sharing of ideas and innovative carbon-reduction programs.
Schneider Electric has taken on similar responsibilities in other industries, particularly retail and apparel, where efforts to improve sustainability are driven by social risk. The pharmaceutical sector is also under growing public pressure to exhibit responsible corporate behavior, touching on environmental policies as well as human rights, although “a lot of what happens in this space is more behind closed doors,” Dewis says.
He believes GSK is on track to achieve its goals for carbon-emission reduction. At the same time, Dewis says, both Schneider Electric and GSK see the need to become even more ingrained with suppliers.
“There’s a value-add in building closer connections,” says Dewis, “in the form of more integrated relationships within the supply chain, as well as just driving the environmental footprint.”
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