sustainable supply chain

Sustainability should start in the design phase. When engineers consider environmental impact during product design, they may be able to avoid toxic materials, reduce solvent and water use, improve energy efficiency during manufacturing, and make it easier to recover components at the end of the product’s life.

But a design cannot be realized if the chosen materials, chemicals, and components are not readily available on the market. Companies throughout the semiconductor manufacturing supply chain can work together to develop suites of products that are compatible with one another and offer more environmentally friendly options.

Scope 3 Emissions

The ultimate measure of sustainability is greenhouse gas (GHG) emissions. GHG emissions cover three scopes (see the first post in this series). Companies can reduce Scope 1 emissions by changing internal practices. They can power their buildings with solar or wind energy to reduce Scope 2 emissions. These changes will cost time and money, but it is not too difficult to determine how to proceed and to measure the results.

Scope 3 emissions — those from the supply chain — are much harder to grasp. Merely contemplating the supply chain brings up vexing questions:

  • How far upstream and downstream does a company need to go to find all sources of GHG emissions from its suppliers and their customers?
  • What is a manufacturer to do if its suppliers do not provide emissions data?
  • How can a company account for what happens to its products once they are no longer under its control?

Life Cycle Assessment

A life cycle assessment (LCA) gives a comprehensive evaluation of a product’s environmental impact. When done correctly, LCAs calculate the impact of all the materials that go into making a product, the manufacturing process, transportation, use over the product’s lifetime, and eventual disposal or reuse.

While LCAs are comprehensive, they are time-consuming and expensive. In the case of semiconductor chips, the complex manufacturing process and extensive supply chain make LCA analysis both extremely involved and potentially valuable.

Before making the investment, companies should decide what they plan to do with the data. LCAs can be used to compare two or more options when choosing a supplier, though in some cases a simpler approach might suffice. But an LCA might identify unseen opportunities to make a serious dent in GHG emissions or other environmental impacts.

Supplier Codes of Conduct

Where does your company stand in the supply chain? If you make raw materials, process chemicals, electronic components, or circuit boards, your customers probably require you to adhere to a Code of Conduct. Such codes go beyond merely meeting local laws and regulations in the countries where suppliers operate.

Some original equipment manufacturers (OEMs) and integrated device manufacturers (IDMs) only buy from suppliers that belong to the electronics industry’s Responsible Business Alliance (RBA). Others maintain independent guidelines.

Members of the RBA, which calls itself the “World’s largest industry coalition dedicated to corporate social responsibility in global supply chains,” must agree to adopt its Code of Conduct. The 15-page document outlines expectations for worker health and safety, ethical business practices, and environmental responsibility.

The various sections of the Code are interconnected. Mishandling of toxic chemicals, for example, endangers workers and pollutes the environment. Protecting employees, customers, and the local community from the risk of exposure is a minimum requirement for ethical behavior.

Companies often create policies and practices to meet a customer’s requirements. But they can also pass responsible practices upstream by auditing their supplier’s operations. The further upstream, the better.

“ASE also encourages suppliers to require their suppliers, contractors, services providers and subcontractors to adopt and comply with this Code.”—ASE Supplier Code of Conduct

IDMs and OEMs are putting more pressure on their suppliers to help make their products more environmentally friendly. If your company makes a product that allows your customers to reduce their carbon footprint, that is an advantage worth promoting. It might make the difference between securing a contract and letting it go to a competitor.

You can educate your customers about the most environmentally responsible way to use your products. If your product is compatible with processing at a lower temperature than standard industry practice, for example, the customer will save energy. But they will only reduce their operating temperature if they are assured that performance will not suffer.

Suppliers that go beyond minimum requirements have the opportunity for public recognition. Some manufacturers award suppliers that excel. One example is Intel’s Supplier Continuous Quality Improvement Program Awards.

The Issue of Location

The geographical location of your facilities and those of your customers and suppliers make a difference in social and environmental impact. Location considerations affect:

  • Regulations—labor and environmental laws vary around the globe
  • Resources—the availability of renewable energy sources and water supplies varies
  • Transportation—the further parts and materials need to travel, the more detrimental to the environment

There are many benefits to diversifying your supply chain or helping your customers diversify theirs. In short, diversifying helps mitigate risk. Developing relationships with multiple suppliers gives IDMs and OEMs more flexibility if a natural disaster affects one of their sources.

Companies that run manufacturing lines can benefit from multiple production locations if the volume warrants it. Facilities in North America and Asia, for example, can exclusively serve customers in those parts of the world. Transportation-associated GHG emissions go down, and it is easier to comply with local regulations.

Locating production near your customer’s sites also improves efficiency. Facilities can run more efficiently when supplies are readily available nearby and shipping delays are minimized.

The Bottom Line

Companies must look beyond their own operations when considering their environmental impact. Conducting an LCA will yield a wealth of data, but there might be simpler steps you can take immediately. Conversations between departments at your company, with suppliers, and with customers are a good place to start.

Julia Goldstein

Julia Goldstein is an author and business owner on a mission to make manufacturing more…

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