Sustainability in the food industry shines a light on aligning goals

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Your suppliers, stakeholders and buyers do not speak the same language. At least, when it comes to sustainable standards, there’s no compelling reason for those three parties to align. Or at least, they might all value better supply chain performance from an environmental perspective, but they have completely different views on how to get there. Enter procurement…

 

…or at least, enter one of the most interesting contemporary business challenges: how to interpret a huge, epoch-defining challenge and develop standards and measures that allow people to agree on what action to take.

 

Which is why, when sustainable procurement initiatives make progress and create the setting for suppliers to change their actions to help organisations advance towards their lofty environmental targets, we should take notice.

 

Agribusiness Cargill recently published its 2019 report on supply chain sustainability: the real power in this is in the company’s work to assess and understand its supply market, as well as identify and invest in collaborative efforts to empower suppliers to work with them to meet standards that have meaning from the perspective of a large business that is trying to better serve its customers.

 

I’m not suggesting that Cargill is the best or only example, or suggesting they are or aren’t the benchmark, but by putting collaborative efforts and meaningful metrics in the foreground – training cocoa suppliers, developing standards in decarbonising the maritime value chain, engaging with fishery improvement projects – the company is demonstrating the power to drive change by connecting supplier-centric projects with stakeholder needs.

 

Companies such as Mars – winners of the Corporate Social Responsibility Award, partnered by EcoVadis, at the World Procurement Awards 2019 – provide a powerful demonstration of the ability to scale up sustainability practices across a segment of the supply base, in this instance working with small-hold farmers in India. Again, the team’s dedication to combining a performance-driven approach with a collaborative mindset allowed it to ensure this project created real value.

 

Procurement Leaders has been working with a cross-industry group of members, including Mars, to explore this problem of metrics and influencing suppliers: how can functions align internally, but also translate that into a clear picture of supplier performance and opportunities to affect that.

 

From the most recent report: “Most businesses tend to have a supplier sustainability policy in place, but few require that all suppliers adhere to it […]

  • Eight of the 10 companies have policies that set out their expectations of suppliers.
  • Two of these eight require all suppliers to fully comply with their policies, but most vary somewhere between 65% and 90% of suppliers.”

In the course of working through these discussions around key performance indicators, some threads emerged about what comprises valuable metrics in this space. Here are a few suggestions that deserve scrutiny:

  • Sustainable over time: it’s no good measuring performance increase if the supply base is unable to keep consistency.
  • Customer-translatable: Commercial value comes from demonstrating the impact of the improvements you make. In certain areas, this is difficult to achieve: customers may not yet be interested in a strategy that reduces fuel consumption in the supply chain, but being able to show that a particular metric relates to reduced cost, reduced total emissions and more, provides an opportunity to align to value.
  • Be clear on what good looks like: Setting expectations is one thing, but being able to pilot activities with suppliers helps calibrate reasonable performance expectations and gives a guide to how other suppliers can work towards similar performance levels.

It’s an intriguing challenge and one that many organisations are just beginning to assess. I’d be interested to hear more about what others find important or valuable when looking at how they use measures and standard to drive sustainable performance in the supply chain.

 

Procurement Leaders members who want to know more can join the Sustainable Procurement Leaders community.

Stephen Hall
Posted by Stephen Hall

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