At Sustain 2016 in Paris, the annual innovation conference, organised by solution provider EcoVadis, procurement and sustainability leaders from European and North American multinationals came together to exchange ideas and best practices. There were three key lessons that stood out from the day: that it is essential to know your data, that communication and collaboration brings value creation, and that sustainability should not be a competitive issue.
Know your data
We are living in an exciting age where information is becoming more and more accessible. A big driver of this trend is the ‘open government’, which holds that citizens have the right to access documents and proceedings of the government, to allow for effective public oversight. Using scorecards for internal CSR and supply chain management strategies is also becoming increasingly common.
As with any opportunity, there are threats - the challenge is to make the masses of data reflect how you sit within the global economy. Not only is it desirable to ensure the data is reliable and all-encompassing, it is also essential that you have the capacity to make sense of it. Data gaps notoriously exist in certain sectors and organisations, such as the creative industry, and SMEs are particularly poor in recording company data.
Rosey Hurst, CEO of Impact, highlighted at Sustain 2016 that high-capacity, well-performing suppliers tend to record higher volumes of and more reliable data than their ‘problem’ peers. With the minefield of questionable data and information black holes out there, CPO of Coca-Cola Enterprises, David Cowell, concluded that sorting through swamps of data for innovation is becoming an increasingly important skillset in procurement.
Communication and collaboration brings value creation
Sustain 2016 designed a session entitled, Why is sustainability an opportunity to improve supplier-buyer relationships. It aimed at informing procurement people about suppliers’ needs and the importance of creating a sustainable SRM process. The bottom-line was spelt out by Lilian Furrer, CSR Director of Adecco, who called for more joint initiatives and a horizontal hierarchical relationship between suppliers and buyers.
A common theme running through the event was the importance of soft skills and people management for the ‘collaboration-satisfaction-motivation-labour retention-skills development-increased capacity-sustainable innovation delivery’ knock-on effect. Both Hurst and Ma Yingying, Green Supply Chain project Manager of IPE, stressed that job satisfaction is just as important as infrastructure provision.
Satisfaction is generated by being shown respect, knowing there is possibility of career progression, and confidence in having a regular income. An example given at the event was that many Chinese factories have the technology for developing innovative products and services, but lack the motivation in delivering them. This problem could be solved by initiating long-term joint ventures between suppliers and buyers for value creation.
In relation to the first lesson about data management, positivity is key when communicating with company suppliers, added Hurst. Businesses have a tendency to only use data for risk identification, in order to manage underperforming suppliers. However, it is also important to measure and communicate the ‘upside’ - for example worker satisfaction - and reward the-best-in-class and put them on a pedestal.
For the Coca-Cola Enterprises annual award for supplier good practice, suppliers are rated by a scoreboard process; the results are communicated through the publishing of award winner best practices and sharing the scorecard results amongst suppliers. This way suppliers can monitor their own progress and compare themselves to other suppliers.
Sustainability should not be competitive
Sustainability goes beyond territory and should not be a competitive issue. Cowell stated that collaboration is essential for CSR value creation, not only between suppliers and buyers, but also between competitors who are using the same supplier. He said that if procurement teams consolidate when making risk requests, this would reduce the duplication of requests and free up more time, that would be spent on repetitive tasks, to deliver innovative, quality products and making good economic sense. For example, reducing transport packaging means more products can fit into one cargo and logistic costs can be significantly reduced.
Plenty of lessons, then, and some impressive progress as businesses look at new approaches to build sustainable functions, supply chains and industries. Procurement must pay attention.
This article is a piece of independent writing by a member of Procurement Leaders’ content team.