Category Archives: Going Green

Green Your Packaging

Supply Chain Brain recently ran a decent article on 10 Steps to Green Packaging in the CPG Industry that had a few insights that are worth a closer look.

  1. Replenish
    Purchase raw materials from suppliers who employ sustainable resource management policies.
  2. Re-explore
    Use recyclable material.
  3. Reduce
    Use ergonomic design and optimization to minimize the use, and size, of packaging material.
  4. Replace
    Replace hazardous and harmful substances with eco-friendly materials.
  5. Reconsider
    Use renewable materials whenever possible.
  6. Review
    Inspect, monitor, and control waste in the packaging process.
  7. Recall
    Immediately recall harmful packaging and put processes in place to insure that harmful packaging does not get used again.
  8. Redeem
    Collaborate with retailers and collect reusable and recyclable packaging materials in exchange for discounts.
  9. Reinforce
    Set up a Centre of Excellence (COE) to disseminate environmental best practices throughout the organization.
  10. Register
    Sign up for carbon reduction commitment initiative and follow-through.

For more information on the 10Rs, as well as examples on how to achieve them, check out 10 Steps to Green Packaging in the CPG Industry.

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“Surprise” Tariff Increase on Solar Panels

Editor’s Note: Today’s post is from Dick Locke, Sourcing Innovation’s resident expert on International Sourcing and Procurement. (His previous guest posts are still archived.)

The October 1 New York Times has an interesting article on a tariff increase on solar panels. While the panels came from China, that’s not the interesting part of the story. The interesting part is that CBP (The US Customs and Border Protection department — successor to the US Customs Service) announced the tariff increase eight months ago and nearly the entire solar panel industry missed it.

To summarize, one US company asked CBP for a classification ruling that would set duty rates for the solar panels they were importing. The company proposed using a semiconductor classification, as the rest of the industry was doing. CBP replied that solar panels were more complex and should be classified as DC generators. CBP published this ruling through normal channels and almost nobody noticed. Here are a few key paragraphs in the article:

 

“It is somewhat unusual for an industry to take as long as eight months to become aware of a customs ruling that affects it,” said Mel Schwechter, a partner at Dewey & Leboeuf in Washington and a former president of the Customs and International Trade Bar Association.

Customs decisions, even for a single importer, are made public on the agency’s Web site and on commercial Web sites, said Mr. Schwechter, who is not advising any of the participants in the dispute.

Mr. Resch said the growing industry lacked the resources to constantly track tax and regulatory decisions.

Duties will be doubled if customs officials determine that companies have been negligent in not paying them earlier.

 

Importers might also be liable for duties on all solar panels brought into the United States in the five years before the ruling if customs officials decide that the companies were guilty of “material misstatement or omission” for failing to notice sooner that solar panels had evolved to the point that they no longer met duty-free rules.

The duty on semiconductor devices is zero. The Times said the duties on DC generators is 3.5%. I think it’s 2.5% but my opinion is should not be relied upon for reasons I’ll explain below.

So what went wrong here? Mr. Resch is right, the industry “lacked the resources to constantly track tax and regulatory decisions.” What does that take? In the US, it takes a relationship with a very professional customs brokerage firm who would be under retainer to keep a client informed of regulatory decisions impacting the products a company imports. This is getting more difficult due to structural shifts in the customs brokerage industry. There used to be large, stand alone customs brokerage companies. Many importing companies had different companies doing their freight forwarding and customs brokerage. However, about five years ago two major customs brokers were purchased by UPS and Fed Ex respectively. The remaining customs brokers are much smaller companies. Importers can and should change freight forwarders if there are performance issues, but customs brokers are harder to change. They need detailed knowledge of their clients’ business and the learning curve can be steep.

Why shouldn’t you rely on my opinion on duties on generators? CBP can increase penalties for non-compliance if they determine an importer didn’t use “reasonable care” in their customs decisions. They look for an audit trail back to either a licensed customs broker or a customs attorney. I’m neither, so taking my advice wouldn’t meet the “reasonable care” test. I still think I’m right though.

Dick Locke, Global Procurement Group and Global Supply Training.

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Have You Extended Your REACH?

If you haven’t, you might find that you’re shut out of European markets in 2010. You see, when January, only two short months away, comes around, another 15 substances must be reported under REACH. Furthermore, the EU is planning to add substances to the list every six months, possibly until the entire SIN List of 356 chemicals that have been identified as Substances of Very High Concern is on the table. If you can’t complete the necessary reporting, you can’t import into, manufacture in, or export from the EU. Right now, you just have 15 restricted substances that require mandatory reporting but the following 15 substances identified on the ECHA website will soon be restricted and require mandatory reporting as well.

Are you ready?

And are you ready for the Global RoHS initiatives? China, Japan, California, etc. … it’s not just the EU anymore.

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SaaS Is Green … But It’s Greener If You Go Thin Client

This summer, MessageLabs (now part of Symantec) released a white-paper on “The Greening of SaaS” which I found very disappointing because one key point that many vendors overlook when selling SaaS is how it can considerably green your operations if implemented and utilized properly.

The paper indicates that with no hardware to purchase or software to run, the energy required to power that hardware and execute that software is eliminated or significantly reduced, depending on client-side consumption. While it is true that the client does not need to buy, maintain, and then dispose of (as much) energy consuming software if they go SaaS, as they won’t need a server farm in a data centre, this does not make SaaS green. If the “SaaS” vendor is actually an ASP-in-disguise vendor maintaining a separate instance of the application on separate hardware for each client, the same amount of energy will be utilized and the same amount of carbon produced. The only difference is that it shows up on the provider’s carbon footprint and not the client’s. That’s not green at all. It’s only green, on the server side, if the vendor is using a shared multi-tenant model and dynamically managing the modern high-density low-power virtualized server farm so that only the processors and storage devices currently being utilized are powered up and the utilization of active processors is at least 70% (to meet the EU PEU guidelines for green).

Furthermore, it then says that the three key local ingredients for best customer results are:

    • desktop and notebook PCs configured to spin down, suspend, or turn off when not in use,
    • utilization of usage-based power consumption devices (with idle ports suspended and inactive ports disabled) on the LAN, and
    • utilization of WAN optimization devices to minimize equipment needs, data transfer, and power consumption

.

And while all of this is a good start, it makes absolutely no mention of thin client. If all your applications are over the web, why can’t you use a SunRay II or a CP20 instead of an energy hogging desktop? Even a modern desktop will still consume an average of 100 watts of power to the 4 watts for a SunRay II or the 25 watts for the CP20 if you need to replace high-end developer workstations. Furthermore, there’s no mention that you should be replacing your old energy hog CRTs with low-energy LCD monitors if you really want to be power efficient. (Now, it is true that you’ll need one or more servers and SANS with your virtual machine instances to support your thin clients, but when you can easily run 128 virtual machine instances off of a modern, high-density, low-power 32-core diskless server, which can all be stored with terabytes of room to spare on your standard 4U 48 TB SAN, you’re still saving oodles of energy and fistfuls of dollars because the cost of 128 SunRays, 1 server, and 1 SAN is significantly less than 128 desktops which need to be replaced at least twice as often as the thin clients, which have twice the lifespan.)

So yes, SaaS is a very green solution … if it’s done right. It’s not just about aggregating traffic to minimize data transfer needs and, thus, equipment needs to support the data transfer, it’s about being smart with resource and energy utilization every step of the way, from the end user all the way back to the provider’s data centre.

For more on greening your data center and greening your desktops, see the linked posts.

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Is China Starting to Clean Up its Act?

Editor’s Note: Today’s post is from Dick Locke, Sourcing Innovation’s resident expert on International Sourcing and Procurement. (His previous guest posts are still archived.)

There’s an interesting discussion going on over on Spend Matters about whether or not China is manipulating its currency. Well, I think it’s interesting because I’m participating. I don’t believe pegging a currency to the US dollar meets a normal definition of “currency manipulation.” Your mileage may vary, of course. The discussion can be found in last Friday’s Rant on Spend Matters (Should We Rethink Free Trade).

One of the other participants brought up the issue of China’s poor environmental standards. That’s true, as has been true of all developing countries. Back in the late 60s, Tokyo was one of the more polluted cities on earth. Traffic police wore oxygen masks. Electronic signs in Ueno and other places posted the CO and CO2 levels in the air. By the mid 80s the place was pristine. No outside pressure was brought to bear. The Japanese just got fed up and fixed the problem. It usually takes some degree of economic development before this starts to happen.

I’ve always hoped the same thing would happen in China. It looks like it’s starting to happen. I’m glad, because China is too big for the environment to continue to accept their volume of pollution. Most importantly, it’s happening because of internal Chinese policies, not foreign pressure. Thomas Friedman has a column in today’s New York Times titled “The New Sputnik“. It’s about Red China becoming Green China. (You can read the opinion for yourself.) Friedman is less than totally optimistic, saying pollution is going to continue in parallel with development with solar and wind industries. He also points out that the US seems to be missing this market and most solar cells are coming from China already.

Dick Locke, Global Procurement Group and Global Supply Training.