Supply Chain Expertise and Technology Blog by TMC, a division of C.H. Robinson

Standards Without the Red Tape

Greening of supply chains

A common complaint from time-constrained managers is that they have to comply with too many standards. But an area where there is a strong case for more standardization is in the greening of supply chains.

Supply chain sustainability projects are growing in number and scope. As part of these projects suppliers are expected to provide data on their environmental performance. When multiple customers demand these facts and figures the burden on suppliers can become overwhelming. 

A way to ensure that the form-filing does not get out of hand is to agree on common formats and reporting procedures. But how do companies establish such standards without tying up their suppliers – and themselves – in red tape? The answer is to join or create organizations to do the job, and these entities are proliferating.

The approach was analyzed in detail at the Sustainable Purchasing and Supply Summit, London, UK, March 31, 2011, organized by the UK’s Chartered Institute of Purchasing and Supply. Purchasing professionals from a diverse range of organizations explained how their sustainability programs impact the extended supply chain.

For example, an international food products company that is developing a sustainable procurement strategy has targeted sustainable agriculture as one of its main areas of focus. The company buys raw materials such as cream and sugar. Rather than writing new standards and policies to underpin its sustainability goals, the enterprise decided to engage with suppliers through collaborative groups.

It selected a relatively straightforward supply chain to start the initiative. Cream, an ingredient used in one of the company’s premium brand products, is procured from a single core supplier in Ireland. The procurement team helped the supplier to develop its own sustainability strategy, and plans to go public with the project this summer. But the effort does not stop there. A sustainable cream initiative has been created run by an advisory council that includes representatives from government and the agricultural industry.

The company is taking a similar approach to the procurement of sugar, but in this case found it easier to become part of an existing initiative. It joined Bonsucro, an industry group that has major sugar traders and growers as members.

Another element of the company’s sustainable procurement strategy is responsible sourcing. To meet this goal it joined Sedex, the supplier ethical data exchange with more than 400 purchasing organizations including retailers and manufacturers as members. Sedex connects these buyer organizations with suppliers, and there are some 28,000 members sites registered on the system. The suppliers provide standardized data on environmental performance that can be accessed by purchaser members.

The enterprise is also actively involved in a responsible sourcing program run by the European Brands Association. The initiative provides a standard platform for supplier audits. One member company, a multi-national consumer goods manufacturer, plans to carry out 1,000 supplier audits next year, and has been able to reduce this total by 30% by using the results of audits already carried out by members of the sourcing collaborative.

A third pillar of the food company’s strategy is improving environmental performance. Here, the procurement team is still trying to decide on the best way to engage suppliers. Of particular concern is ensuring that all participating trading partners derive value from exchanging environmental data. The team is particularly keen to avoid asking suppliers “to fill in data for the sake of filling in data.”

An option under review is to join the UK-based non-profit organization the Carbon Disclosure Project. More than 3,000 organizations in some 60 countries around the globe measure and disclose their greenhouse gas emissions, water management and climate change strategies through the organization.

The sustainability summit showed that there are many companies out there that are engaged on similar sustainability initiatives with similar data requirements from suppliers but using different languages. Common platforms for the exchange of data would benefit all these organizations.