The Do’s and Don’ts of Sustainable Supply Chain Engagement
Sustainability now has been at the forefront for several years, and as companies have become more adept at managing their own environmental impact, they are beginning to ask their suppliers to do the same.
Wednesday, May 03, 2017
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Many companies have programs, goals or targets, measurement tools, and performance indices. But aside from broad programs, how do you truly engage your supply chain to mitigate impact?
For most companies, this is a daunting task. Supply chains are often made up of hundreds, if not thousands, of suppliers who provide products and services that may or may not be mission-critical. Here are a few things to consider when venturing into sustainable supply chain.
Do: Focus your efforts
Chances are, the majority of impact in your supply chain is the result of a only a subset of your suppliers. By categorizing your suppliers by direct/indirect as well as annual spend, you will find that most impact is with a handful of suppliers. It doesn’t much matter where you set your threshold – suppliers with over $1 billion in spend, top 80% of spend – as long as you start with the largest suppliers. These suppliers likely truly matter to your business and have solid relationships with your procurement colleagues. Befriend those in procurement and leverage their existing relationships.
Don’t: Bite off more than you can chew
Attempting to engage your entire supply chain is difficult and even ill-advised. Chances are, your supply chain is large and diverse, and trying to reach everyone is challenging to say the least. Unless sustainable supply chain management is your sole responsibility, you likely will not have the time or energy to reach every supplier on sustainability. Also, not all of your supply base is critical. For example, direct suppliers (e.g., the supplier of raw materials for your product) are typically more important than indirect suppliers (e.g., the media agency that places company press releases for you).
Do: Streamline your process
There are many tools and clearinghouses for supplier sustainability information out there – CDP, EcoVadis, EICC-ON, The Sustainability Consortium, the Higg Index, and more. Choose one (or many) that is a good fit for your organization, and use that tool to collect supplier information. Consider asking a few of your largest suppliers if they already submit to one of these organizations. You may find that many of your suppliers are already reporting through one or more outlets.
Don’t: Send them a custom questionnaire
While writing a custom supplier questionnaire might get you exactly the information you want, it is important to consider that you are one of many customers of your suppliers. Often suppliers get so many requests for information that they need a full time employee to field them all. Most of your suppliers likely do not have a resource dedicated to answering sustainability questionnaires, so the responses you get may be few and of low quality. Not to mention that someone at your organization has to write, distribute, collect and analyze all of those questionnaires, which is no small task.
Do: Show them how you use their data
Once you have a rich repository of sustainability information from your suppliers, put it to good use! Provide feedback to your suppliers through a feedback call, a scorecard, or an email summary of results. If you can, show how they stack up against peers. This feedback will help those within your supplier organizations who are responsible for sustainability make the business case for ongoing effort in this area.
Don’t: Fail to follow up
Some of your suppliers may not respond to outreach and engagement requests, but many of those that do put considerable time and effort into disclosing sustainability risks, performance, and program details because they value your business and want to support your sustainability efforts. Not being clear how you use the information that you request may decrease future response rates.
Do: Share your story
You have an opportunity to lead by example, and that starts with transparency about your sustainability journey. Publish a sustainability report, and use it not only to celebrate your successes, but also to share your hardships. Talk candidly about goals you didn’t achieve or programs that didn’t thrive. More importantly, discuss why and how those things happened. Show your suppliers where you are now, and how you got there.
Don’t: Keep your challenges and successes to yourself
Your organization’s journey to sustainability has likely not been paved in gold. You didn’t implement sustainability overnight, and there were probably challenges along the way. If all your supplier can see are your aggressive sustainability goals and impressive achievements based on your own public reporting, they might struggle to continue to make the case for sustainability within their organization.