2Sustain

By Chris Hazen
Director for Asia of WSP Environment & Energy 

Everybody is looking to cut costs these days as economic uncertainty continues to loom.  At the same time, many conversations about Asia-Pacific supply chains will often link cost reductions to risk reductions, which can be a tough pair of objectives to marry.  Tainted milk and lead-paint toys are still fresh in people’s minds.  Yet to stay competitive at the cash register, brands and retailers can’t afford to ignore the need to lower prices.

How can these risks be better managed to the benefit of all parties without impacting the cost of getting the products to market?  If products aren’t competitive in the market, that can kill their profitability even more quickly than non-compliance.

Last fall, WSP conducted a survey of Asia-Pacific electronics manufacturers and found that, in at least one area, compliance risk management practices have not kept up with the demands of global markets (see “Asia-Pacific electronics manufacturers lag in green practices” at http://www.greensupplyline.com).  Our objective in this survey was to get an accurate picture of the extent of the gap, and to then suggest to the manufacturers that this is likely to be a competitiveness issue going forward.  What we learned was that there is a lot of data being moved around the supply chain, but not a lot of thought about the validity of the data—or the risk that the data is intended to manage.

Corporate approaches to managing supplier compliance with part-level compliance requirements vary widely.  For many, it can be a case of “don’t ask, don’t tell”—at least until there’s a problem.  For a growing number of leading brands, however, the logic of risk management in your own manufacturing operations increasingly applies: If you don’t audit it, it’s not worth the paper it was written on.  Auditing can be expensive, but without auditing, part-level compliance management can be no more than a paper exercise that is not doing anything to reduce risk.

Over the next few weeks, we’ll post some of the key results from our survey of environmental compliance management practices, followed in a future blog by some of the best business practices in the industry in this area—driving down costs while ensuring risks are managed.

Christopher Hazen is the Director for Asia of WSP Environment & Energy.  His 18 years of professional experience have been split between Silicon Valley and Greater China.  Along the way, Chris has completed consulting projects around the world in the practices of sustainability strategies, supply chain management, product strategy and market entry, climate change, performance metrics and reporting, merger and acquisition due diligence, compliance assurance, and regulatory analysis.  Clients have included Cisco, Apple, Microsoft, Seagate, Avery Dennison, PG&E, Intel, Disney, Solectron, Mattel, Abbott Laboratories, Johnson & Johnson, and Monsanto.