Greening the Supply Chain

The environmental impacts related to Baxter’s business extend beyond its direct operations and into its supply chain. Although the company has limited control over these impacts, it is improving its systems to track supplier environmental information and collaborating with its suppliers to improve their performance. One of Baxter's 2015 goals is to incorporate green principles into its purchasing program with its top 100 suppliers (by spend). Baxter and its suppliers both benefit from these efforts.

To better understand Baxter's suppliers' performance, in 2008 the company surveyed approximately 100 of its suppliers on their sustainability activities, particularly regarding environment, health and safety, and supplier diversity. These suppliers accounted for $2.2 billion, or 50 percent, of Baxter’s total supplier spend during the year. See detail.

Managing Information about Supplier Environmental Performance

Effectively tracking the materials and chemical substances used in products and manufacturing is complex since a product may contain thousands of components from hundreds of suppliers worldwide. To better meet this challenge, Baxter has purchased a product stewardship software application to manage environmental and other information related to all new and existing products. This will include information about product materials content, which will help Baxter evaluate supplier compliance to the European Union Restriction of Hazardous Substances (RoHS) Directive and Registration, Evaluation and Authorisation of Chemicals (REACH) legislation and similar emerging regulations related to product materials in other parts of the world.

The product stewardship software application will interface with other company information systems related to products and also supplier information systems, allowing Baxter to better understand, manage and optimize product environmental performance and meet customer needs. The company began phasing in this system in 2009, and is exploring how to use standards such as IPC 1752, related to materials declaration sheets and developed originally for the electronics industry, to streamline the data collection process. Baxter also will use this information to help shape its product stewardship strategies.

In 2008, Baxter incorporated sustainability language into its requests for proposal and standard supplier agreement to take into account suppliers’ environmental performance and other sustainability measures in determining what suppliers to do business with (see Managing Supplier Performance). In 2009, Baxter will add criteria related to supplier sustainability programs to its global supplier scorecards, used to monitor supplier performance.

Green Procurement

In early 2009, Baxter implemented its Environmentally Preferable Purchasing (EPP) policy in its Deerfield, Illinois, headquarters. The policy covers consumables, which are mainly office supplies, and also contributes to LEED (Leadership in Environmental and Engineering Design) certification for existing buildings. While the initial scope is Baxter’s corporate headquarters, the company will track compliance with this policy during the year and plans to broaden its scope to all Northern Illinois Baxter facilities.

One area of focus is the company’s car fleet. In the 2008-2009 lease cycle, the advertised fuel efficiency of the cars Baxter selected increased compared to the cars replaced. However, the measured fuel efficiency actually decreased. Baxter is determining how to improve this performance in coming years to meet its 2015 goal. Baxter has efforts outside the United States as well. For example, in Maurepas, France, Baxter’s facility identified a preferred “green” car within each vehicle category with low greenhouse gas (GHG) emissions, and provides this information to employees when they change their company car.

Building Supplier Capabilities

Baxter is committed to building partnerships with its suppliers to share knowledge and help improve supplier environmental performance. Since 2005 Baxter has been an active member of the Green Suppliers Network (GSN), a collaboration of industry, the U.S. Environmental Protection Agency and the U.S. Department of Commerce's Manufacturing Extension Partnership (MEP). The GSN works with large manufacturers such as Baxter to engage their suppliers in low-cost technical reviews to identify strategies for improving process lines and using materials more efficiently. Several tools related to lean manufacturing, energy efficiency, chemical management and other aspects of improving environmental performance are available to participants. More targeted technical support is also available as needed.

Participating suppliers have realized significant benefits through the program. For example, LeHigh Press Puerto Rico, which manufactures package inserts and labels for healthcare, food and general consumer products, identified opportunities ranging from improving on-time delivery to increasing energy efficiency, and developed process maps and plans to implement those changes.¹ The effort produced substantial savings for LeHigh Press, including improved material handling practices (saving $27,000 annually), enhanced material utilization (saving $53,000 a year), reduced waste generation (saving $47,000 annually) and other opportunities adding up to more than $200,000 a year.

In 2008, Baxter continued to recruit key suppliers to participate in the GSN. The company engaged four additional suppliers, bringing the total number of Baxter suppliers in the program to 12. One project involves a value-stream mapping process that traces the manufacture of a Baxter part back through several tiers of suppliers. Each supplier will undergo a “lean and clean” review, to identify opportunities to reduce waste, energy use and other environmental impacts.

Other Supplier Initiatives

Since 2004, Baxter has partnered with Xerox Corporation to improve the efficiency of Baxter’s U.S. copying and printing activities. After analyzing Baxter’s document processing environment, this initiative replaced a larger number of single-function devices such as printers, copiers and fax machines with a smaller number of high-efficiency ENERGY STAR ® rated multifunction devices. This reduced printing-related energy usage by an estimated 22 percent, GHG emissions by 19 percent and solid waste by 33 percent between 2004 and 2008.

Finally, Baxter has reported its GHG emissions from operations to the Carbon Disclosure Project (CDP) since the CDP’s inception in 2002. In 2008, CDP initiated a supply chain reporting initiative. Baxter’s goal is for at least 10 of its suppliers to commit to this program in 2009, with most if not all of its top 100 suppliers participating by 2015.

See Environment, Health and Safety for more information about Baxter's programs in related areas. Also, read about the company's progress toward its green supply chain priority.

¹ This example is based on content from Target Magazine with permission from the Association for Manufacturing Excellence (AME), www.ame.org, 2008.