The company
Smiths was founded in 1851 by Samuel Smith, as a family clock and watch-making business. Smiths Group is now a global operation and is the UK´s leading specialist engineering company providing advanced technology solutions in aerospace, detection, medical and speciality sectors. It employs 30,000 employees in over 40 countries.
This case study focuses on Smiths Aerospace Electronic Systems Cheltenham, which is part of Smiths Group’s aerospace division, and currently has a turnover of £141 million and employs over 900 staff. The Cheltenham site deals with electronic engineering design, manufacture of aircraft power management, cockpit display and information systems, aircraft monitoring systems and fuel management.
Smiths Group’s overall approach to CSR has been focussed on environment, health and safety (EHS) issues within the day-to-day running of the business. The company considers improved performance in EHS as part of good business in reducing risk and identifying opportunities for cost savings, and also in delivering products with improved performance to meet customers’ needs. In addition to improving EHS issues it is dealing with broader sustainability issues through its Code of Corporate Responsibility and Business Ethics which has been implemented across the group.
This case study focuses on the establishment of an environmental management programme for suppliers to Smiths Aerospace Electronic Systems Cheltenham as a means of encouraging and supporting environmental responsibility amongst its suppliers.
The drivers
Smiths Aerospace Electronic Systems Cheltenham (Smiths) has always aspired to minimise waste and utilise best environmental practice in its operations. In 2001, Smiths successfully implemented an environmental management system with certification to the ISO14001 standard. The standard provides the process for managing environmental performance. Immediate results were achieved, for example a 35% reduction of waste for landfill during the period 2001-02.
Smiths recognised that achieving the level of commitment necessary for ISO 14001 can be a bewildering process for smaller businesses to contemplate. Furthermore, a clause in the ISO 14001 standard requires the certified organisation to communicate its environmental requirements to its suppliers. However, with over 2,000 suppliers Smiths doubted what impact a generic ‘communication letter’ would have. The company thought it could achieve much more by sharing its experiences of environmental management, providing a catalyst for the suppliers to consider similar programmes. The drive behind this was threefold; a moral responsibility to improve the environmental impact of companies supplying them products, reduction of costs through savings in material and energy use (these savings could then be passed on to Smiths in the product offering) and improvement of the relationship Smiths had with the companies.
A fourth driver was the implementation of its Fit for the Future Programme within which is its Enterprise Improvement Programme (EIP). The EIP is a supplier development initiative that assesses all of its suppliers, identifying strengths and opportunities. Monitoring suppliers’ environmental performance would inform the EIP as one way in which suppliers can be assessed.
Taking action
Within Smiths there are 12 members of the environmental team who work in different parts of the company. These managers meet every month. At one meeting the team prioritised its UK suppliers on the basis of those they felt had the greatest potential to reduce their environmental impacts, for example metal plating and polishing companies. Fifteen companies were selected and invited to a day- long conference in July 2004. The whole process, from recognising the ISO 14001 requirement to hosting the conference for its suppliers, took two months.
The purpose of the conference was to announce the environmental management programme for suppliers, to provide the suppliers with information on Smiths’ own environmental management best practice programme and to provide information about where suppliers could obtain free advice and help.
Smiths was faced with two significant challenges in developing the programme. First, they had to overcome supplier scepticism about ‘another initiative’ and Smiths’ motives for it. Second was how to raise awareness at CEO and operational director level about the environmental impacts of their business.
These challenges were overcome at the conference by asking the suppliers what they wanted from the programme. They responded by requesting expertise in identification and implementation of opportunities to improve environmental performance and in particular compliance to environmental legislation. This feedback helped Smiths and its partners design the Environmental Management Programme (EMP). Twelve companies signed up to the year-long programme.
The EMP had four objectives:
- To provide support to ensure the products manufactured by the suppliers had minimal impact upon the environment;
- To provide specifically tailored support so the suppliers could embrace environmental best practice;
- To ensure the suppliers had an environmental policy;
- To ensure the suppliers complied with current environmental legislation.
The programme was developed in partnership with Envirowise – a government funded advisor to business – and the University of Gloucestershire. “Our partners became involved in the programme after approaching me at one of the presentations I had given to local businesses on Smiths’ environmental actions,” said Phil Capener, Smiths Aerospace UK environmental manager.
At the conference, the University outlined the wider environmental issues such as the impacts of climate change, resource use and pollution whilst Envirowise talked about the business services they provide to help companies. Staff from both the University and Envirowise provided their time for free, whilst Smiths also provided free resources – the venue, catering, staffing and convening the event – as well as presenting its environmental management programme.
The proposed EMP was explained to the suppliers. It comprised three distinct phases:
Awareness raising – where the University of Gloucester provides environmental awareness training. The programme provides resources, seminars and events, presenting networking opportunities for the suppliers.
Site visits – Envirowise provides a fast-track one day visit to the suppliers and conducts an environmental audit to benchmark current performance and identify where improvements can be made. Smiths provides follow-up assistance and advice on implementation of actions.
In-company training and support – expert training and consultancy is provided at the suppliers’ premises on a range of issues including waste management, water conservation, air emissions, development and implementation of an environmental policy.
Through these three phases the participating companies had access to specialist help and advice on all aspects of waste minimisation and overall environmental management with the underpinning objective of integrating environmental management practices into their business operations. The performance of the companies during the programme has been monitored but analysis of assessment has not been completed.
Workshops on eco-design were developed to keep existing participants engaged after the programme ended. At the workshops the suppliers learnt how to review Smiths products for raw material input, assess the design of the product for ease of disassembly for end of life recovery, and consider potential for recycling or re-use. Opportunities to re-use packaging and reduce packaging were also considered.
The business benefits
The main benefits of the programme to the participants are: it strengthens the relationship with Smiths Aerospace Electronics Systems; it seeks to achieve cost savings of at least 1% annual turnover; it minimises the business risks associated with environmental issues; it gains a competitive edge and identifies new business opportunities in eco-marketing.
For Smiths, the EMP fits within Smiths business strategy of addressing customer requirements for lower cost, higher quality, with products being designed and manufactured with shorter lead times. Clearly, if suppliers can demonstrate environmental management through the EMP, then they will receive a higher assessment than if they did not. Ultimately, these suppliers will provide Smiths with environment-friendly cost-effective parts. This in turn reduces its risks and makes the business more competitive.
Why is it CSR?
Certain aspects of environmental management are about compliance. However, this programme is a voluntary initiative by Smiths. It demonstrates how it can share its skills and experiences and those of others to help improve the environmental performance of its suppliers and it does so because it recognises its responsibility for reducing environmental impacts.
What next?
The EMP will keep rolling to include new UK suppliers. A broader goal currently being considered is EMP’s extension into Europe and the USA, where the majority of Smiths’ suppliers are based.
For more information on Smiths, please contact Terry Bridgewater on terry.bridgewater@smiths-group.com and for specific information on the EMP, please contact Phil Capener at phil.capener@smiths-aerospace.com.
© Article 13 and CBI – CSR Case Study Series, September 2005
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