On Monday, Newsweek released their inaugural Green Rankings, and interestingly, HP finished at the top. In an article, titled "The Greenest Big Companies in America" they explain they decided to publicize this list to recognize the efforts of companies, and how they ranked companies in industries as diverse as high-tech and mining.
Some are critical about the way this was done, Rose Gordon in PRWeek for example, points out that "ranks are fraught with subjectivity, or incomplete and self-reported data", but recognizes this is "a best first effort".
HP's position is due to its long term commitment to reducing the environmental footprint of all its operations, and not based on carbon offset or any other substitution program. The environmental subject is an emotional one, but reading through some of the blog comments, I realize many HP programs are not known and not visible to most. Indeed, our objective has not been to market green, but rather to become greener. HP is mainly working in three spaces:
- Reducing the environmental impact of a product throughout its whole lifecycle, from design to recycling
- Reducing the environmental impact of HP's own operations and facilities
- Helping HP employees reduce their own environmental impact
Each of those subjects is worth a whole dissertation, and it is not my plan in this entry to review all measures taken and describe every internal policy, this would take us way too far. However, I would like to highlight some very practical examples that may help you understand what we are trying to do.
Let me first highlight a program, called Design for Environment, we embarked on several years ago. The objective of this program is to include the environmental aspects right from the early design stages of the product. It addresses the impact of the product during manufacturing, during usage and at recycling, so, all the way through the lifecycle of the product. Aspects such as packaging, materials, energy consumption, supply chain impacts, ease of reuse/recycling are all taken into account. Obviously tradeoffs have to be made to ensure quality and ease of use of the product, as our customers do not expect HP to lower their standards.
Let me give you some examples. About one year ago, HP designed a notebook for Walmart, shipped in a stylish bag made out of 100% recycled material, reducing packaging with 97%, and winning Walmart's Design Challenge along the way. Another example is the increased use of recycled material in the production of Inkjet Cartridges. These are just two examples in a series. I will come back to the DfE program in a future entry.
And let me take a minute to urge you to recycle your cartridges and HP products. You can find information on the program in your country here.
To reduce its environmental impact, HP is addressing multiple aspects at the same time. And here is where, a partial view does not allow a real understanding of what is happening. For example, when HP announced the doubling of Green Energy Use in late 2008, we received negative comments from some of our competitors, and that's fine. In the mean time, we are well on the way to reduce our total Greenhouse Gas (GHG) emissions from our facilities to 16 percent below 2005 levels, by the end of 2010. Our current performance can be found here. We are consolidating buildings; increase the use of renewable energy, decrease emissions per unit of floor space etc. But we are also ensuring our company car fleet uses more efficient cars (reduction of 8% of GHG emissions from 205 level, and 24% from 2006 level in Europe alone) , we are reducing travel and have implemented Halo telepresence studio's in all major facilities. We have also consolidated our IT datacenters resulting in drastic reductions in energy consumption, and are working at consolidating our printing environments.
In many countries programs exist to help employees reduce their environmental impact. In my own country for example, a program for acquiring rooftop solar panels has been implemented. Environmental tricks and tips are available on the intranet to give another example. And HP goes even further, trying to incent its customers to reduce their carbon footprint. The "Power to Change" program, launched last June, is one of the examples. To address the widest possible audience, the program is on facebook and twitter.
Becoming "greener", and I use this term rather than the term "green", as I strongly believe companies can always reduce their environmental impact, is not a big bang announcement, but an orchestration of many small steps that each add to a common goal. Caring for the environment has been in HP's DNA for a long time. Our first recycling program was started in 1966, to recycle punched cards. Most of you probably do not even remember how they look.
We are committed to continue our efforts to reduce our environmental impact. If you are interested in reviewing how we progress, check our environment pages.
On April 27th, HP was presented with the Prestigious Franz Edelman Award for contributions in breakthrough analytics, transforming a complex product portfolio. Since 38 years, the Franz Edelman competition, run by the Institute for Operations Research and Management Science (INFORMS), attests to the contributions of operational research in the profit and nonprofit sectors. The award is another demonstration of HP's Innovation in the area of Supply Chain.
HP did win the award for its development of innovative analytics applied to the management of product variety, the number of different products and configurations HP offers its clients. More than $500 million were saved over the last three years, while delivery times were shortened and customer satisfaction improved.
The work being honored includes both the Revenue Coverage Optimization (RCO) software algorithm developed by HPLabs, and the company's complexity Return on Investment calculators, developed by HP's Strategic Planning and Modeling Team (SPaM), according to the press release.
As HP's reach has grown, also have the number of SKU's and product configurations, making the Supply Chain extremely complex to manage. Marketing is looking at increasing the number of platforms and features to grow market share and customer satisfaction, while the Supply Chain team looks at better forecasts and less inventory to reduce costs and lower cycle times. The issue is to provide both parties with reliable information to allow them to optimize the equation between configurations and inventory/responsiveness. Two series of tools have been developed for this purpose:
- The Complexity ROI Calculator, used prior to launching the product, calculating the profitability impact of the fixed and variable costs associated with the complexity of the product offering. The tool, based on statistical analysis, inventory theory and other cost modeling techniques, screens proposed products for a minimum complexity ROI, before the product is included in HP's offering.
- The Revenue Coverage Optimization manages product variety by analyzing product order history to identify the relative importance of the product in the mix. It ranks the products according to the revenue generated and enabled. The efficient frontier of revenue coverage and portfolio size is established. Once ranked, the product in the portfolio are included in the core portfolio, the extended portfolio or become candidates for discontinuance.
The combination of the two series of tools allows the identification of core and extended offerings, and the adjustment of service levels to each class of products.
Core offerings products are now stocked in higher inventory levels and are made available with shorter lead times, while extended offering products have longer lead times and are either stocked at lower levels or not at all.
Both tools have been used by many business units within HP to streamline their portfolios. One division of PSG established that roughly 20% of their products, if optimally selected, could completely fulfill 80-85% of all customer orders. As HPLabs states it Innovation + Smart Planning = Happy Customers.