Improving Sustainability Within Your Supply Chain
You don’t have to do it all alone, says a senior director of procurement. Work with suppliers who are taking the initiative
“Recent events such as the coronavirus pandemic have resulted in major changes to business supply chains,” says Kevin Parke, Senior Director of Procurement in the Product and Supplier Team at RS. “In the months and years ahead, Environmental, Social and Corporate Governances (ESG) measures will mean further changes too.”
How can those responsible for Maintenance, Repair and Operations (MRO) purchasing prepare for this? Here Parke shares advice for improving sustainability within your supply chain and the role that RS can play in supporting this process – but first he shares more about what is driving this shift.
ESG As a Key Performance Indicator
Organizations have little choice about being part of this move towards more ethical and sustainable supply chains. Why? “The momentum behind ESG is growing,” says Parke. “When I talk to people, it is at the top of both theirs and their customer’s agendas.”
At the same time, ESG is increasingly becoming a key performance indicator (KPI) to measure business success. “Strong ESG performance has become a proxy for a well-run business and pressure from stakeholders, investors and regulators on businesses to act as good citizens is increasing,” he continues. “It therefore makes good business sense for any company that wants to be around in the medium and long term to adapt and lean in to robust ESG practices.
“People want to work for companies that have good ESG policies and procedures”
“As well as helping organizations to grow customers and markets, there are other benefits such as supporting employee attraction, engagement, and retention. People want to work for companies that have good ESG policies and procedures.”
Plan and Prioritize for Optimal ESG Performance
That said, improving sustainability within your supply chain is more than just a business opportunity. “It is also the right thing to do,” notes Parke. “We’re talking about a planet that has a problem and all businesses need to take action to decarbonize, reduce risks and invest in opportunities that support the transition to a low-carbon economy.”
“Talk to your suppliers, understand what they’re doing”
Organizations therefore need to incorporate measures to improve sustainability within supply chains into their wider business planning. To do this, Parke suggests that “Your plan needs to be well thought out but don’t try to do everything all at once. Break it up. Take learnings from other organizations. There’s lots of advice out there. Talk to your suppliers, understand what they’re doing.”
Parke also points out that time and money are needed to make more sustainable supply chains a reality: “It needs to be properly resourced. Integrate it into people’s objectives and workplans so it can be prioritized accordingly.” This means buy-in from senior management is essential too: “It must be supported from the top to get sufficient dedicated resources and to be actually implemented.”
Maximize the Benefits of ESG Investment
When it comes to initiating changes, if you are not sure where to begin then Parke advises following the 80:20 rule. “Where is 80 percent of your impact? Are there a few big things that you can do that will make the biggest difference?” he asks.
“Build confidence within your organization that you can act in a different way and doing so is not going to make you suddenly uncompetitive.”
Parke has an important reminder for anyone feeling overwhelmed at the prospect of trying make advances in this area. “Remember it will become easier to improve ESG, and more specifically sustainability, in your supply chain as more businesses adopt the same agenda and make the same demands,” he says. “Rather than being the lone voice, there might be 100 customers asking a supplier to act in a certain way.”
Find Suppliers with Identical ESG Goals
Furthermore, there are suppliers who have already introduced measures to strengthen ESG within their supply chains. At RS, for example, “We’ve measured our direct and indirect impact in terms of carbon footprint, and we’ve set targets for improvement,” explains Parke. “In our direct supply chain, we run fourteen distribution centers around the globe, dispatching 60,000 parcels a day, and we’ve made a commitment to be net zero by 2030.
“We’re working towards this goal by moving to lower carbon forms of transport and renewable sources of electricity as well as increasing use of recycled packaging while reducing the amount of packaging overall.”
“We’re…putting items as close to the customer as possible to minimize product miles”
That isn’t all. “We’re optimizing our supply chain to cut emissions, putting items as close to the customer as possible to minimize product miles,” says Parke. “We’ve set carbon emission targets for our supply chain, saying we will be net zero by 2050. One way we’ll get there is by partnering with 65% of our supplier base by spend value to set science-based initiatives for reduction.
“We’ve also set out clear policies on ethical and sustainable issues such as child labor and conflict minerals and we’re asking all our suppliers to comply with these. We’re measuring their compliance using independent thirty-party organizations such as Sedex and Ecovadis.”
“We’re trying to be good citizens by sharing the knowledge we have developed”
These improvements do not just benefit RS. “We’re trying to be good citizens by sharing the knowledge we have developed via platforms such as Design Spark and Connected Thinking. This supports others in growing and developing their knowledge,” observes Parke.
By using RS as a supplier, you and your organization benefit as well. “With us adopting such extensive responsible procurement policies,” says Parke, “our customers can be assured that all our products comply with ethical and sustainable legislation around the world.”
There is still a long way to go on the ESG journey, though. “More difficult is creating sustainable products without having to add a green premium to the price,” admits Parke. “We’re in the process of developing a range of sustainable products that will have clear justification for why they are sustainable.
“They will have either been sourced sustainably or help our customers reduce energy or water usage and have eco labels approved by independent auditors so there’s no danger of greenwashing. Then there will be no barrier to making the right choice.”