Shanghai campus - "How to Manage a Sustainable Global Supply Chain" was the topic explored by IBM's Vice President of Supply and Chief Procurement Officer Mr. John M. Paterson during today's Executive Forum hosted by CEIBS. Students from the MBA and Executive EMBA programmes gathered to hear Mr. Patterson's views on the topic within the context of current environmental initiatives.

After opening remarks by CEIBS Professor of Operations Management Dr Thomas E. Callarman, Mr. Paterson began his speech with an overview of IBM's Integrated Supply Chain -- the hub of sourcing and working with suppliers.

IBM has focused on environmental initiatives since 1971 when it established a first-of-its-kind environmental policy. During this evening's talk Mr. Patterson painted a detailed picture of what sustainability means, why sustainability is important to everyone, and how leading organizations and corporations -- including IBM -- are taking the lead to address this issue. He also provided details of the IBM Integrated Supply Chain (ISC), its history, and how it fits into the wider IBM Corporation.

Mr. Patterson told the audience of the changes that have occurred in the company and its supply chain since the early '90s, tracing its path from geographically fragmented operations, numerous business units and operating structures, to an era where functional skills became more focused on higher value versus administrative tasks. For example, in 1995, 70% of procurement resources were spent on administrative and transaction processing work. Today, 85% of procurement resources are doing high-value tasks, such as: procurement engineering, strategic cost management, international trade and risk analysis, advanced intellectual property law, competitiveness and collaboration, as well as strategic supplier relationship management. IBM also began to extend electronic links for collaboration between the company, its suppliers, partners and clients. Thanks to on-going automation over the last 10 years, 99% of purchase orders are now done electronically -- processing time was cut from a month to less than a day, contract length was shortened from approximately 40 pages to an average of 7 pages. The result was obvious in the form of better prices, paperless processes, higher value rebates in price masking operations, speed and accuracy. The ISC has become a profit driver, primarily by saving money.

Mr. Paterson then moved on to discuss the day's topic, telling the audience that sustainability is a 'must have' for the IBM global supply team, suppliers and their supply chain. He then delved into the topic of sustainability as a business imperative -- both for the present and the long-term. He explained that at IBM, the pursuit of sustainability is consistent with corporate core values: client focus, innovation and personal responsibility. Mr. Paterson stressed the universal importance of sustainability in a world of limited resources. It is vital, he said, to identify new and improved methods that will facilitate development without the depletion of resources.

The IBM executive maintained that economic, social and technological progress would be difficult unless all stakeholders -- individuals, corporations and nations -- make sustainability a top priority. It appears that the message is being heard: Mr. Patterson quoted recent findings that indicate that 5 out of 6 CEOs no longer agree that the sole purpose of business is to increase profits, and there is increased focus on achieving sustainable growth. IBM is among the firms that is doing its part. It has a company-wide Environmental Procurement Policy that pinpoints suppliers' minimum compliance levels for all applicable national and local environmental laws and regulations, and that they demonstrate an interest in meeting the ISO 14001 environmental standard. While ISO 14001 certification is not mandatory, IBM strongly encourages it.

In concluding, Mr. Paterson reinforced the lead role IBM has taken in the areas of environmental compliance and social responsibility. The company's focus will be on the business metrics one would commonly expect to remain competitive (operational excellence, cost/cash optimization, exceptional end-to-end client service, expansion of global talent base in growth areas). But equally important it will aggressively and innovatively drive Green Supply Chain best practices: the application of sustainability principles to produce greater efficiencies and lower costs, driving environmental initiatives in partnership with its suppliers, and increase efficiency and value to clients.