By Brian Kilcourse, Managing Partner
4/8/2008
Preliminary responses from RSR’s current survey, What Can Green Do For You?, indicate that retailers and their partners believe that “packaging and materials costs” are most in need of an environmentally friendly overhaul. As a matter of fact, more than 60% of our early respondents indicate that this is a top priority, compared to less than 50% for such things are energy costs in the stores or the supply chain. Packaging is indeed something that needs addressing; one has only to attempt to open a box of Lightning McQueen action toys to wonder where all that plastic will go, and perhaps think a little about the Texas-sized mass of photo-degraded plastic material now floating around in the Pacific Ocean.
One company, Hewlett Packard, is doing something about it, and the initiative isn’t new. As a matter of fact, HP has taken a “green” position well before it became politically correct to do so. Millions of consumers use HP inkjet and laser printers, and so we’re all familiar with the post-paid envelope that comes in every HP ink cartridge refill box. But the company’s commitment goes much deeper than that, as we learned in a conversation with Richard Walker, Senior Vice President and GM of HP’s Consumer PC division. Richard, a 25-year HP veteran, manages a global operation that delivers products including the Compaq Presario and TouchSmart computers as well products like the HP Media Center PC and HP Digital Entertainment Center. We caught up with the HP executive this week to discuss the technology company’s perspective on “green” product design, manufacturing, and packaging.
It is part of the GM’s charter that the carbon footprint of products coming out of the division should be reduced with each design revolution. “In fact, the company has been actively involved in this issue for probably twenty years or so,” according to Walker. “The very first product recycling effort was in 1987, so as a company, this is a big part of what we believe in.” In the early 90’s, HP established a program it called “Design for the Environment” that has evolved into a set of corporate initiatives that flow through every business group, ensuring that environmental goals are established and met, for example, to drive hazardous materials out of the manufacturing process or to minimize the amount plastic and metals in products. According to Richard, “This commitment includes a supply chain code of conduct that we introduced in 2002 when we made it clear to our partners (and, our business model is based on partners!) the kinds of expectations we had, and the kinds of expectations that they should have with their component suppliers. Ultimately, when a thing is built we have to be confident that consideration has been given to what happens when that thing ends up in a landfill - if that’s where it ultimately ends up.”
HP changes its PC platform every two years. All PC’s that are being sold now are based on a platform design that was introduced in 2007; the 2009 platform is now in the works. According to Walker, the 2007 design had very specific goals around greenhouse gas emissions, thermal performance, and energy efficiency. “When you look at the power management technology that we implemented, it may represent as much as 350 million kilograms of CO2 - equivalent to removing 76,000 cars from the roads for a year.”
When it comes to packaging, consideration is given to reducing or even eliminating non-biodegradable materials. HP designs the packaging that its products are delivered in. “That’s a big part of our ‘Experience 09’ plan. Experience 09 is a big umbrella initiative that covers everything from how we present our products on the web to and how easy it will be to understand the value proposition, to what we need to do to make our products more easily understandable to our retailer partners. There are also a series of initiatives around the product itself, and one of those is specific to packaging. I have a packaging team that is looking at everything, for example, at using corrugated cardboard paper instead of foam to protect the computer during shipping. I’ve asked the team to get as close to 100% paper-based packaging as possible – it may not be 100% but it will certainly be in the 95% range. We’ve done the research on this, and we know how important this has become for consumers.”
Packaging designs are sent out to bid to vendors, often to long time business partners. These partners understand that the packaging, just like all HP-designed products, must adhere to design specifications. HP’s supply chain division has processes in place to ensure that specifications are adhered to, even if HP doesn’t directly manage the vendor (i.e. if the partner uses a supplier). Says the GM, “Part of our responsibility is in making sure that our partners demand their suppliers adhere to our specs as well. Ultimately it all comes together in the factory and goes through a qualification and test process before it is released.” How is adherence to environmentally-conscious design specs monitored? “When we enter into agreements with our partners, it’s built into the contract. It’s part of the education and training that we provide, and it’s part of our operating model – we do audits on a very periodic basis, quarterly, or certainly every six months. And when we bring up a new partner, we’ll get directly involved - we want to make sure that the new provider understands what our quality expectations are and adheres to our standards. However, this is not an easy thing to manage. Our supply chain teams are basically the ‘enforcers’, and they have a constant challenge. But the more you focus upstream, ultimately the higher quality your product will be and the better chance you have of ensuring 100% compliance to everything that you’re trying to achieve. ”
So, how much benefit have these kinds of initiatives delivered to the environment? Here are some interesting factoids from Walker’s team: “The 2007 platform used 22% less metal than the prior (2005) platform, and 44% less plastic. The metal savings equates to about 8500 metric tons - which is more than the Eiffel Tower (which is approximately 7000 metric tons). The plastic savings equates to 740 metric tons.” And HP’s recycle program? Last year the company recycled 164 million pounds of product: “That’s equivalent to 600 jumbo jets,” says the executive.
“It’s an ongoing journey,” says Richard,“but that’s what we’re doing - we may not be perfect, but this is truly a company-wide focus. Consciousness on the part of the consumers is so much higher now that there’s even further importance to do as much as we can to figure out what happens at the end of a product’s use – you can’t just stick it in the trash can and hope it just goes away somewhere.”
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