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Sustainable Practices and Your Suppliers

Posted by Matthew Gardner on Jun 2, 2016 8:30:00 AM

Editor’s Note – Matthew Gardner, Ph.D., is Managing Partner of Sustainserv. He will serve as moderator of the AIM Sustainability Roundtable on June 16.

The boundaries of corporate sustainability programs are rapidly expanding to include not just the operations of a particular company, but also the impacts and actions of its suppliers and business partners.

InnovationSmall-4.jpgMany major corporations, such as Walmart, now require suppliers to provide detailed information regarding their environmental impacts, social and labor-related programs, and efforts to mitigate negative impacts they may be having on their environs. The environmental, social and labor records of a company’s suppliers may represent significant risk to the company’s business and/or carefully crafted public image.

Supply-chain sustainability has also entered the regulatory arena under the Dodd-Frank Conflict Mineral legislation, under regulations regarding human trafficking enacted by the state of California and Great Britain, and under other laws. These regulations compel companies to disclose the manner in which their supply chains source key raw materials or address the risks related to human trafficking and forced labor.

Social responsibility issues have also received attention of world leaders. In June 2015, following their summit meeting, the leaders of the G7 countries issued a statement recognizing “the joint responsibility of governments and business to foster sustainable supply chains and encourage best practices.”

But addressing supply chain sustainability is easier said than done. Small companies may interact regularly with as many as one hundred suppliers. Large multinationals in the retail sector frequently have more than 100,000 suppliers. Collecting information from a supply chain of any size is an exercise in disciplined data collection, risk assessment and strategic engagement.

Resources and tools are also available to help you prioritize your sustainable supply chain efforts. Programs such as Ecovadis (www.ecovadis.com) or Sedex (www.sedexglobal.com) have engaged thousands of suppliers globally, and offer access to large datasets of sustainability related information from these suppliers.

Other databases, such as the Social Hotspot Database (socialhotspot.org), offer information specific to social responsibility and labor/workforce related issues. These resources allow companies to prioritize which suppliers, sectors or regions may represent disproportionate risk, and thus necessitate greater scrutiny. Based on this, a company can focus its supplier inquiries, whether in the form of surveys or interviews, on those areas that represent the greatest risk, and deploy their limited resources effectively.

 

Attend the AIM Sustainability Roundtable

 

Topics: Supply chain, Sustainability, AIM Sustainability Roundtable

Lack of Supplier Sustainability Can Harm Your Company

Posted by Bob Pojasek on Sep 5, 2012 2:50:00 PM

Editor's Note - Dr. Robert Pojasek is the leader of sustainability at Shaw Environmental & Infrastructure in Stoughton and an adjunct professor at the Harvard Extension School where he teaches “Strategies for Sustainability Management.”

Do you really know about the ethics and practices of your suppliers? What will you do if one of those suppliers is cited for bad corporate behavior?

Sustainability RoundtableIt wasn’t long ago that your purchasing department was focused only on cost, reliability and quality.  Sustainability is now being added to your mix as a result of inquiries from your larger customers.  You may find yourself getting more involved with the way sourcing and purchasing is done looking forward.

Perhaps your organization is a supplier of services or products to customers who really care about sustainability.  It is not uncommon to be queried about your sustainability program as part of the purchasing or sourcing process that you go through with these customers.  You begin to realize that the customer is also holding you responsible for your purchasing.  So no matter where you may reside in the value chains (i.e., a supply chain that includes the customer) that use your products and services, you need to be sure that you can implement an effective sustainability program and extend it into your supply chain.

Despite what you may read, it’s not just about environmental stewardship.  Your suppliers may engage in human rights violations or outright corruption.  When they are caught, there is a media frenzy to find out what other companies are potentially complicit in this activity.  To build awareness of these risks, many companies include supplier “codes of conduct” in the purchasing cycle to make sure that the organizations that you do business with are following all environmental, health & safety, social and economic legal requirements

Environmental, social and economic problems in the supply chain cause operational, regulatory, and reputational risks to all of the companies in the value chain.  In today’s economic climate, you are exposed to more risk due to the increased responsibility for what your suppliers do or do not do.  Integrating sustainability criteria into procurement procedures (including the supplier code of conduct) will help your organization make better choices, not only with sustainability in mind, but also for your own bottom line.  Your “top line” can also improve as your results of sustainability efforts become known.

It is important that your supply chain management efforts go beyond just adding sustainability criteria to procurement specifications.  You need to determine what is happening with the criteria and collecting evidence of the changes actually taking place.

The key to engaging suppliers and creating effective partnerships involves two-way communication. Suppliers need to provide  evidence of their conformance to specifications.  They will want to know how this information will be used and how that use would affect their business with your organization.  You need to know about how your efforts will translate to more work with your customers.

Supplier engagement that leads to working partnerships should create continual improvement throughout the supply chain.  This, in turn, will lead to competitive advantage in the marketplace for reasons that go beyond sustainability.  In the next AIM Sustainability Roundtable, we will be taking a close look at supply chain management and sustainability.

Join an AIM Sustainability Roundtable

Topics: Supply chain, Business Center, Sustainability

GE Aviation Supply Initiative Spells Opportunity for Bay State Firms

Posted by Christopher Geehern on Aug 5, 2010 9:20:00 AM

Regional supply chainsAn initiative by GE Aviation in Lynn to meet companies that could potentially become suppliers of products and services underscores the importance of local supply chains in paving the way for economic recovery in Massachusetts.

GE is conducting an Indirect Sourcing Small Business Meeting at its Lynn facility on August 18 to present potential opportunities for small companies to supply everything from manufacturing equipment, machining fixtures and industrial supplies to facility services, IT/Telecommunications services and professional services. Owners and managers of small companies will have an opportunity to meet with GE executives to learn about the needs and requirements of one of the commonwealth’s cornerstone technology companies. 

The GE event is now full and registration is closed. Please email your company name, your name and your company's product or service to Chris Geehern at AIM (cgeehern@aimnet.org) and we will forward the information to GE Aviation.

Associated Industries of Massachusetts believes that the development of business relationships among Massachusetts companies is critical to long-term economic vitality of the commonwealth. Our belief is so strong that we created the BuyMass.org online business-to-business directory last year as a “statewide buy local” initiative to generate commercial activity among Massachusetts companies.

The GE Sourcing Small Business Meeting reflects a growing determination among world-class manufacturing and technology companies to strengthen regional supplier networks. A recent Global Benchmarks Study by Deloitte found that despite the pressures of globalization, most supply chain optimization is accomplished locally and that far-flung supply chains pose significantly more risk for companies that suppliers located down the road.

You don’t have to look far to see examples of Massachusetts companies doing business with one another. Raytheon Company successfully maintains a roster of carefully vetted suppliers to meet the demanding requirements of defense technology work. Elizabeth Williams, President of Roxbury Technology Corporation in Jamaica Plain, told the AIM Annual Meeting this year that her company has thrived as a supplier to Staples and in turn creates opportunity for its own suppliers ranging from trucking companies to caterers.

These collaborations represent an important potential source of fuel to the economy. Massachusetts generates a gross state product of more than $300 billion annually, more than 13 percent of which rests in the manufacturing sector. Raise the share of local output by just a few percentage points and revenues increase by tens of millions of dollars. The Berkshire Chamber of Commerce in Pittsfield, which sponsors a “Buy in the Berkshires” initiative, estimates that if consumers moved three percent of their purchases to Berkshire County businesses, the shift would create 350 new jobs.

AIM applauds GE Aviation for reaching out to potential new suppliers in its back yard. It’s now up to the companies that have been looking for the road to recovery to take advantage of the opportunity.

Topics: Supply chain, GE Aviation, Associated Industries of Massachusetts, Massachusetts Manufacturing

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