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In this guest post, Procurement Leaders invites Asia Pulp & Paper's Ian Lifshitz to offer some tips on refining a supply chain in order to achieve impactful sustainability goals.
What do companies like Unilever, Johnson & Johnson, Proctor & Gamble, Wilmar International and Mars have in common? They've all made public commitments to implement a zero-deforestation policy throughout their supply chains. With several of these announcements happening over the last few months, it's clear that major corporations are recognizing what's good for the environment can also be good for the bottom line.
When done right and systematically, sustainability and zero-deforestation policies lead to improved brand image and build stronger business relationships with other organizations and customers. But while there are obvious long-term benefits to more sustainable practices, a major challenge for corporations – and procurement professionals in particular – is ensuring that the entire supply chain meets the standards to which they have committed.
At Asia Pulp & Paper (APP), we announced our Forest Conversation Policy (FCP) in February 2013 and are still learning how to successfully navigate our commitment to zero-deforestation across our supply chain. Although refining a supply chain takes time and dedication, here are three ways to reduce the inherent risks to procurement:
Regulatory frameworks throughout the world, particularly those within the forestry sector, have established a strong basis for companies to follow. This includes the U.S. Lacey Act, Indonesian Legality Assurance System (SVLK) and the European Union Timber Regulation (EUTR). However, the regional nature of these regulatory frameworks lack the unified global enforcement mechanisms to achieve what is necessary to cover an entire supply chain. That's where businesses can help.
Aim to make your commitment go beyond compliance to meet a standard that exceeds the regulatory frameworks in all regions in which you operate.
Engaging a third party to act as a partner that provides oversight of a company's sustainability efforts is a smart and proactive move. It allows you to authentically back your sustainability claims and can also help unveil risks in your supply chain, or breaches from suppliers that you may not have realized existed. At APP, we've worked closely with The Forest Trust in order to stay on track and achieve our established goals. Internal monitoring is also important, but the involvement of a separate organization shows a true dedication to genuine transparency.
The reality is that when taking on a comprehensive commitment to sustainability practices, mistakes and oversights are likely to be made. As the change is implemented, you may find that important members of your supply chain are violating your new standards. Be proactive – address any issue before someone else does.
Suppliers must be held to your new standards and oversight is critical. If you are working with a supplier that isn't willing to comply, replace them immediately. The same goes when you bring a new company into your supply chain. Conducting due diligence to investigate their supplier's sustainability practices is mission critical to delivering on your word.
Consistency and taking the long-term approach are vital if you want to succeed with a serious sustainability commitment. Procurement officers must be diligent because the supply chain is one of the most important pieces of the puzzle and evaluating/monitoring sustainability within your entire supply chain can be a major challenge.
He will be hosting a roundtable at the Procurement Leaders Boston Forum on 24th September.