Mary D. Lewis
March/April 2011, eSide Supply Management Vol. 4, No. 2
Implementing a paper-reduction strategy promotes sustainability and saves money. Here's how to get the ball rolling.
Corporate sustainability programs often revolve around a mantra of "reduce, reuse, recycle." As an opportunity to reduce waste, paper offers organizations a chance to cut costs while contributing to green initiatives.
The paper industry's impact on the environment is significant; it's the biggest user of water and forestry products on the planet and the third biggest user of energy. In the United States, paper comprises almost 40 percent of all municipal solid waste. Plus, industrialized nations — which represent only 20 percent of the world's population — consume 87 percent of printing and writing papers.
Although paper reduction sounds simplistic, it can be challenging for an organization to achieve. It requires a thorough understanding of its supply chain, the drivers for its use and the ability to implement the right changes. The key is to design — and execute — an effective paper-reduction strategy.
Sprint Nextel Corporation has recognized the significance of including paper reduction in its green initiatives. In addition to eliminating 14.3 million pounds of printed paper between 2007 and 2009, our company cut costs in excess of $11 million.
This article outlines the process Sprint used to establish and implement its paper-reduction strategy — tips other organizations hoping to accomplish the same thing can use in the process.
The first step in our paper-reduction process was to form a cross-stakeholder team of users and influencers. As part of a company's supply chain and category of spend, "paper" can be defined (and purchased) in many ways.
In some purchasing environments, those who procure or manage paper have no control over the decisions regarding type, timing and volume of purchase. In these cases, it's a good idea to start with a rudimentary spend analysis, and then identify stakeholder groups that influence the volume of paper used or bought.
At Sprint, for example, we determined that a significant amount of certain advertising spend involved the ad agency's purchase of paper (in other words, for marketing). Because Sprint issues recurring invoices and statements, three organizations control paper volumes: IT, which formats the data onto the page; Marketing, which designs solicitation inserts; and Mailing Services, which chooses envelopes and paper. Sprint's Real Estate Department controls copy paper purchases, and our Retail Operations Department controls printed materials in stores. In supply management environments and companies structured like ours, procurement is accountable for selecting suppliers and reducing costs.
At Sprint, we called our cross-stakeholder team the Paper Leadership Council (PLC) and included, as members, the biggest users and influencers of paper. If your company has a corporate social responsibility department — as ours does — include that representative, too.
Sprint's PLC collaborated on data analysis, created strategies for reduction and sought support from each stakeholder executive.
Once we identified our team at Sprint, we defined what we wanted to control. As a medium, paper can be overwhelming. We wondered if, in addition to copy paper, we should include marketing materials, statements and boxes. Also, what about lavatory supplies, napkins and paper cups?
In the end, Sprint's PLC decided to limit its focus to printed paper, which was comprised of marketing and retail collateral, direct mail, customer billing statements and envelopes, and copy paper. This was done for two reasons: (1) printed paper was a large enough category that we could make a significant impact, and (2) it had a more focused supply chain.
To start, we mapped the printed paper supply chain, which also showed the chain-of-custody and purchase portals:
As we discovered, it is helpful to first determine who needs to implement change — the buyer or the supplier. For printed paper, changes could be made, managed and measured by the buyer.
Second, we determined whether or not the category could be benchmarked with other companies so it can be compared with other methods and metrics.
The overall objective is to be successful with the initial "small" win, and then build on that success by adding other departments and wood pulp products at a later date.
To reduce anything, you need a common measure — which presented our very first challenge.
Printed paper was purchased in sheets, rolls, boxes, cartons, finished pieces and SKUs. Determining a metric that could be applied across suppliers and goods was crucial to establishing a starting baseline and target.
Regardless of all other attributes, paper has a common metric: weight. In our analysis, we also discovered two other key metrics that impact the company's environmental footprint: recycled content and chain-of-custody (CoC) certification. Third-party CoC certifications — such as FSC (Forest Stewardship Council) or SFI (Sustainable Forestry Initiative) — provide assurance that materials originate from forests managed to meet the social, economic and ecological needs of present and future generations. Armed with this information, and to leverage copy paper initiatives underway since 2007, we requested our suppliers restate Sprint's paper purchases over a two-year timeframe into meaningful data — by calendar quarter and by purchasing organization; number of pounds bought; pounds of recycled content; and pounds FSC/SFI-certified.
We consolidated the data and established the printed paper baseline. We validated the biggest purchasers and influencers (Marketing, IT, Mailing Services and Real Estate) and discovered interesting buying patterns. It was a Eureka! moment.
Based on the PLC's guidance, Sprint CEO Dan Hesse announced in an August 6, 2009 press release a corporate-level target of reducing annual printed paper consumption 30 percent (by weight) over five years . Individual stakeholder department objectives were established internally based on the relative contribution each organization could make to the overall paper reduction goal. And, limited sustainability efforts that were initiated in 2007 and 2008 were ramped up to meet the aggressive corporate target by 2012.
As a power user, Marketing consumed more than 65 percent of the paper volume and accounted for the most spend. But, e-billing and a statement redesign project presented early opportunities that would allow IT-Billing Services to make a significant dent more quickly. As a team, we collaborated and collectively explored many ways to reduce printed paper weight across each organization.
If a strategy had multiple alternatives to achieve a reduction commitment, we studied the financial, operational and environmental impacts of each one to ensure an implementation in one area didn't result in an inadvertent cost increase in another. For example, mailing machines can jam if paper is too light or has recycled content (rework). We consulted our treasury department and discovered we could actually increase costs if e-billing customers paid by credit card instead of the more desirable ACH bank account method. We studied the impact of volume reductions on supplier prices and evaluated the positive marketing impact of using FSC/SFI-certified paper.
Through our experience, we found it very useful to identify positive and negative impacts from proposed changes and ensured each significant negative implication has a corresponding mitigation strategy.
The PLC's recommendations were then presented to each organization's executive for approval and implementation, after which we tracked progress quarterly. It was especially helpful for us to set unit-specific objectives based on each group's opportunity to meet the overall target, and then measure and report on a regular basis each organization's printed paper consumption.
Although reduction of a resource can result in positive benefits to the company's bottom line, sustainability requires a holistic understanding of the commodity, as well as its supply chain. Buying less paper — but purchasing it from a broker or mill that doesn't use responsible sourcing or forestry techniques — is not a sustainable practice.
While each company's paper-reduction strategies will be unique, examine the broader aspects of what constitutes sustainability. Then, align your firm's strategies with line-of-sight accountability to areas within your organizations that influence and control the commodity. In this way, you'll have a greater chance of achieving your initial goal, as well as any further targets you set.
Sprint's journey toward a more sustainable paper supply chain continues to evolve. Recently, we implemented a procurement policy for paper and print which not only expands our initial paper-reduction goal from 30 percent by 2012 to 40 percent by 2017, but also establishes new goals for recycled content, sustainable forest certification and supplier compliance with environmental and social responsibility.
Our collective focus on sustainability — including our approach to sustainable paper procurement — has contributed to Sprint's being named No. 6 on Newsweek's 2010 "Green Rankings" list.
For more information on Sprint's sustainable paper procurement practices, visit the company's paper micro site.
Mary D. Lewis is a sourcing manager and former chair of the Paper Leadership Council (PLC) for Sprint Nextel Corporation in Overland Park, Kansas. The paper-reduction strategy detailed in this article was part of her executive MBA project at Rockhurst University's Helzberg School of Management in Kansas City, Missouri. To reach this author, please send an e-mail to email@example.com.
For articles and resources on sustainable sourcing, visit the ISM articles database.
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