HP Global Citizenship: Linking small businesses to a sustainable supply chain

That is why HP has developed guidelines to help multinational companies implement social and environmental standards throughout their global supply chains, right down to the smallest suppliers. The guidelines have been published by the Danish Commerce and Companies Agency (DCCA) in a report titled – Small Suppliers in Global Supply Chains. It is based on an exhaustive study of 15 of HP’s suppliers based in the Czech Republic, Hungary and Poland.

HP, together with industry experts, provided training and advice to first and second-tier suppliers in these countries. The companies, including suppliers of packaging components, plastic and sheet metal parts, gained access to training and advice on management systems, occupational health and safety topics, and sound environmental practices.

With the right ‘tools,’ in place, they were able to link general business objectives to corporate social responsibility in new ways. Specifically designed to help small and medium-sized suppliers, the project - called CESR (Central European Supplier Responsibility) - was funded by the European Commission. On-site assessments, management and worker interviews all played an important role. Another valuable element was a forum, in which the supplier community could share best practices and help each other with problem solving.

One of the report’s conclusions is that small and medium-sized suppliers (SMEs) require a different approach to management systems than larger companies. Often, it is not necessary for SMEs to have all the procedures of a regular management system in place, due to the size of their company. What the company does need is a management system that clearly communicates to employees in every department the role and importance of standards.

Perhaps the single most important lesson is that supply chain initiatives can improve the bottom line of small businesses as well as large ones. “There is a clear link between companies with strong ethics and good performance.” said Carsten Ingerslev, Head of the Danish Centre for Corporate and Social Responsibility (part of the Danish Commerce and Companies Agency). “Through this project we have firmly demonstrated what needs to be done in order to promote strong social and environmental standards through the supply chain.”

Regular audits are a critical component of any green supply chain strategy. More than 90 per cent of HP’s products are manufactured by other companies. Since 2004, HP has conducted audits at sites employing more than 400,000 workers. The company is providing training and support to help them meet the same stringent social and environmental standards to which HP holds itself, and the suppliers are responding with great progress and a commitment to ongoing improvement.
But there is a potential ‘missing link’ in the supply chain: second-tier suppliers. Many of them are small and medium businesses (250 employees or less) lacking the knowledge and resources to meet HP standards. Unlike direct – or first-tier – suppliers, these second-tier suppliers don’t have contractual relationships with HP. Instead, they provide goods and services to HP contract manufacturers. They are much more difficult to monitor.

The goal of CESR is to extend social and environmental requirements all the way down the supply chain. As part of the project, HP’s direct suppliers are learning to audit their own suppliers, i.e., HP’s second tier suppliers. All participants (both first and second-tier suppliers) take part in training workshops held in their local language. Ultimately, CESR gives smaller companies the same tools for success that our direct suppliers have.

“We want to encourage other multinational companies to take advantage of what we have learned and apply the strategies we have found to be effective to make improvements throughout their own supply chain,” said Karl Daumueller, programme manager for global procurement at HP. “Imagine the impact we could jointly make if our industry peers and other large Fortune 100 companies started to apply these findings. Globally, this would represent a drastic improvement in social and environmental standards.”