Pirelli is leading the way in promoting sustainable behaviour by using its manufacturing muscle – and it is bringing its suppliers along with it. The company audits suppliers on their sustainability practices and in 2012 it also asked them to join Pirelli in the new Green Sourcing policy, based on the concepts of Reduction, Reuse and Recovery. “We're trying to get everyone in our Premium Quality supply chain to think in a new sustainable way,” says Guido Riva, Suppliers and Materials Quality Manager at Pirelli.
Intricate supply chain
The tyres themselves are made from a wide range of materials – synthetic and natural rubber, carbon black, steel cord, synthetic and renewable cellulosic fibres, steel bead wire, silica as well as wax, oils and other chemicals. The materials come from around the world – Europe, Russia, the Middle-East and Africa, Asia Pacific, and North and South America. And Pirelli's supply chain involves hundreds of companies from raw material providers to logistics, services and utilities. Pirelli is busy talking to all of them about its Green Sourcing Policy which was launched in 2012.
Pirelli believes it is important for its supply chain to share its principles. It thinks this will not only help to decrease the environmental impact of the tyre life cycle, but also create opportunities for innovation, help improve efficiency and cut costs.
Pioneering work
Pirelli relied on a small team of five to formulate the Green Sourcing policy – one from each of the key functions of Health, Safety and Environment (HSE), Purchasing, Quality, R&D and Sustainability, while co-opting others as required. After one year in the planning, it was published in 2012.
Pirelli is breaking new ground on this – it is the first tyre manufacturer to insist that its suppliers minimise emissions by means of an integrated strategy – and communicating its plans in a clear and open way was key to getting suppliers on board. The aim was to make suppliers engaged, willing and enthusiastic participants.
After the official online publication of the Green Purchasing Guidelines in September 2014 – derived from the Green Sourcing policy –, Pirelli started to actively deploy them. It held a series of meetings with around 120 key suppliers around the world in order to present its vision and get direct feedback. “It's about best practice but it's also about innovation, doing things differently, better, creating opportunities,” says Riva. “The suppliers we have already talked to have been really receptive. We are also helping them understand how to get their suppliers to do the same. It's a ripple effect.”
Suppliers have embraced the policy and responded with practical steps such as improving the energy efficiency of their plants, introducing LED lighting, improving logistics by adopting other low emissions strategies such as intermodal train and truck, and introducing innovative production processes. They are now expected to encourage their own suppliers to embrace the policy too and Pirelli is helping them develop their communication strategies by sharing its own.
Large potential
The number of suppliers involved in the whole matrix is huge which makes this a major project. Pirelli believes that although the Green Sourcing policy will demand some difficult changes from its suppliers, including new investment, these changes will ultimately be positive and deliver their own rewards.
Pirelli already saw in the past the achievement of the principles of the policy, in particular in the Western car industry. In this case, it was very difficult to use recycled metal in engines. But when suppliers were forced to do it, they came up with a solution and new global standards were set for recycling. The needs of the market drove the R&D and the R&D drove the innovation.
Coming back to Pirelli, in its meetings with suppliers, it has been particularly impressed with the reaction of Chinese companies, where the culture of recover, reclaim and recycle is long embedded. Chinese suppliers understood the goals immediately, saw the opportunities and are now forging ahead.
Positive impact
The company's Green Sourcing Policy is more than just encouragement. Pirelli is monitoring Scope 3 carbon emissions from its supply chain and, where they have an opportunity, will expect suppliers to find ways to cut them. Although the project is still in its infancy, the initial results are encouraging. In its first year, the CDP supply chain programme, enabled by the policy, already registered a cut in Pirelli suppliers' global CO2 emissions of 65m tonnes, generating economic savings of more than €681m.
“This is such good news,” says Riva. “We have only just started and already we are making a substantial difference – environmentally and economically.”
