This is the second blog of a two-part series on supply chain sustainability and supplier engagement. To catch up on the topic or to reread the first blog, please see Are We Going About Supplier Engagement All Wrong?. This blog is also the product of an article posted in CR Magazine, which you can access as PDF here.
No doubt, supply chains are a critical element of sustainability success for most companies. Yet, working on supply chain sustainability is a challenging task. It’s hard enough to get people in your own company to change their behavior, influencing the actions of those in another company – even as a large customer – can seem nearly impossible.
Truth be told, sustainability management itself is messy, complicated, often frustrating work. And, acknowledging that is the first step to success in engaging your suppliers. Suppliers who are not responding to your information requests or are not scoring well on your assessments are simply in the same place your company was (or maybe still is) just a few years back.
If you are fortunate enough to work for a company that has a sustainability team in place, a little discussion and self-reflection can go a long way toward improving your engagement with your suppliers. Ask yourselves questions like: “Where do/did we struggle in accomplishing our sustainability goals?” “What helps/hurts our efforts when it comes to our relationships with our customers?” “What worked for us in overcoming challenges?” and “What did our customers do that helped us?”
The answers you come up will begin to pave the way toward building a better, more productive relationship with your suppliers around sustainability.
Listen and Educate
Beyond engaging in self-reflection, consider having informal, one-on-one conversations with your suppliers. This does not have to be a herculean effort. Simply reach out to a few (of varying sizes and from a variety of purchasing categories) to casually ask what they are doing around sustainability and how it is going. Ask them some of the same questions you asked yourselves. Not only will you learn something, you will begin to create a foundation of trust and communication around the topic that you can build on.
When you are ready to formally engage cohorts of your suppliers (see strategy below), start with general, helpful education. In education programs and webinars we do with customers and their suppliers, the objectives of the first outreach are simple. You want the supplier to understand:
· How you define sustainability and what you are doing to become more sustainable
· Why you have dedicated resources to sustainability, what wins you have had, and why working on sustainability will benefit them, too
· What you want to see from your suppliers and that you recognize it is a journey (you expect progress, but not overnight transformation)
· That you will help provide resources that suppliers can use to achieve sustainability wins
If you already have a supplier code of conduct in place, take this opportunity to explain it and educate on it. You can even create a recorded webinar on the code itself and make it a requirement for doing business with your most important suppliers.
To quote from supply chain expert, Jim Burke of Ecodesk, we desperately need to “STOP THE DATA GAME”! I couldn’t agree with Jim more. There is way, way too much data being collected and not being used. (And, yes, we know this for a fact.) The result is a massive waste of resources on the part of your supplier. It also drives up expenses (for them and you) and often keeps them from the sustainability work that will truly create value for their company – and yours. A few steps to avoid this trap:
· Identify what truly matters to you before you do anything – even before you collect data. Why you are even doing supplier engagement to begin with? Is it solely risk focused? Is it because of a broader goal the organization has set to reduce emissions along the value chain? Is it to identify opportunities for disruptive innovation? Whatever the case, everyone needs to be on the same page and clear on the goal you are trying to achieve.
· Be as specific as possible in stating those goals. A goal such as “we want to reduce our Scope 3 emissions” is laudable, but can be challenging to get engagement around. Determine exactly what part of Scope 3 you want to reduce, identify who contributes the most to this area, what opportunities will benefit both you and the supplier, and then set a goal.
· Break goals down into bite size elements. This helps manage, measure and drive achievement. For the goal above, an alternative such as “reduce Scope 3 emissions in our transport suppliers by 20% by 2020 through sustainable driver education programs”, tells each supplier immediately what their role in attaining this goal may (or may not) be. It enables you to ask for very specific data, which creates less work on the part of the supplier, and is more actionable. You can provide more specific resources, make a contribution to their success, and clearly attribute credit when the goal is achieved.
Meet Suppliers Where They Are
Listening first, creating a foundation of education, and being strategic, are all important to optimizing time and resources for both you and your supplier. Another important factor is to support your suppliers based on where they are they are in their journey. This may be the most challenging of all to implement, but a little legwork can go a long way.
· Record and post webinars on key topics you want your suppliers to understand, such as your code of conduct, your sustainability program, or how to complete your supplier assessment. Doing so shouldn’t take the place of direct communication and interaction, but can save your procurement staff (and suppliers) loads of time in answering questions.
· Create a well thought out resources page for your suppliers. The structure of such a library is critical. Don’t put everything and the kitchen sink on there. Focus on only those things that relate to what you are asking your suppliers to do and structure it logically. If you aren’t sure what resources are helpful, try asking your other suppliers that are doing well in these areas. You will get great ideas – and maybe an opportunity to make a supplier to supplier connection.
· Reduce redundancy in reporting whenever possible. This is a win-win opportunity. Whenever possible, allow suppliers to report using mechanisms they are already engaged with. If they report to CDP supply chain, Ecodesk or EcoVadis, get access to those responses or portals first, before layering in your own, different assessment.
· Consider incentivizing your supplier. Provide a benefit for responding to your request in the first 30 days, obtaining a certification, or meeting a milestone. Incentives do not have to be monetary. They can be things that make their life easier, such as paying invoices in 30 vs 60 days. Or, provide free passes to a conference where you are sponsoring. Scholarships to educational programs are great benefits as well.
· Focusing on the opportunity side of the equation. This can be a powerful motivator. Managing risk is often top of mind in supply chain sustainability. This is understandable. But, identifying new sources of revenue or cost savings that can be achieved by collaboration is a huge benefit to both parties and can turn out to be the holy grail of a successful supply chain strategy.
Bottom line? Be thoughtful and intentional about your approach to supply chain sustainability. If you are simply doing this as a check the box exercise to improve your score on an assessment or to meet the demands of your customer, you may want to think again. Weigh the resources required (on your part and your suppliers) and make sure the benefits are equal or greater than the cost.