Protests against climate change and racial inequality and the coronavirus pandemic made for a challenging year for supply chains in 2020.
The role of procurement was brought to the forefront as firms sought to manage immediate issues such as supply chain disruption. However, many procurement professionals are now having to prioritise supply chain resilience and examine how sustainability can strengthen their business.
During the Ecovadis Sustain 2021 conference, CPOs from five of the world’s most well-known brands shared how their businesses had been impacted in 2020 and the resilience and sustainability lessons they learnt as a result.
1. Jan Geisler, VP, Purchasing Strategy at P&G
Geisler told delegates 2020 had been “the ultimate stress test” for P&G and its suppliers, but it had also provided an “incredible amount of learning” about how to strengthen supply chains and supplier relationships.
In 2021 and beyond, Geisler believes two of the largest issues on procurement’s agenda will be citizenship, including environmental and social concerns, and supply chain resilience.
“In purchasing, one of the statements we use at P&G is, 'We bring the inside out and we bring the outside in'. We have to share the consumer insights that we have with our suppliers, our agencies, our retailers, and then leverage that wisdom and expertise out there to bring back insight and develop solutions jointly that have the impact that we want to see,” he said.
Transparency, common standards and sharing best practice in areas such as reducing emissions and equality and inclusion was essential to set the mindset for companies, their employees and their suppliers to “drive large scale change”.
On resilience, Geisler added: “The supply chain needs a bit of redesign and a close look. We will invest more time in data insights and simulation to become even more robust.
“One special focus will be on supporting smaller and minority companies... they're harder hit by the pandemic. We've made tools like supply chain financing available to help with cash flow constraints that they might face right now. We're convinced volatility will stay so we have to do the best to deal with it.”
2. Barry Parkin, chief procurement and sustainability officer at Mars
Parkin said all 150 of Mars’s factories around the world were able to continue running throughout 2020, despite fluctuating supply and demand and logistics challenges.
“The real learning for me is just how resilient supply chains really are. These are difficult supply chains but incredibly resilient. Our belief is that by making them more sustainable over the last few years, they've become more resilient so we've reinforced our commitment to keep working at the supply chain,” Parkin said.
Parkin highlighted the “radical simplification approach” Mars had taken in its palm oil supply chain in order to become “deforestation free”.
“We've gone from more than 1,500 palm mills in our supply chain to under 100. We'll probably end up with under 10. That radical simplification and selection of the suppliers who share the same values as us has allowed us to put in place the management practices, the mapping, the monitoring that are essential to become deforestation free,” he said.
However he added: “Not all suppliers are making the journey with us and those that don't want to share our values will exit our supply chain after we've given them a chance.”
“We also requested that our top 200 most critical suppliers set the proper science-based climate goals. The sad fact is the starting point was only 20 out of 200 of our biggest suppliers had science-based targets, so it gives you a sense of how big the challenge is.
“We're going to try and do our best by encouraging them. The motivations will change. We'll use the carrot, we'll use the stick, and hopefully we'll move more and more of those suppliers to the right targets.”
3. Natalie Jaworski, VP, citizenship at Johnson & Johnson (J&J)
Jaworski told delegates the pandemic had “continued to emphasise the importance of our suppliers and the role that they play within our supply chains and why it is so important that we work as a full ecosystem”.
“We've always known those principles but given the environment and the issues that have emerged over the last year, it really has put that on a much bigger stage,” she said.
One of the actions J&J has taken is announcing the new position of chief sustainability officer, which Jaworski said is a “huge signal of the continued importance and additional importance that J&J is placing on this”.
She highlighted the importance of helping suppliers progress with their own sustainability journeys by assessing its supplier base as part of its sustainable procurement programme.
“We are very much pivoting to how we help them gain traction in the efforts they're making and use the resources and the power that J&J has to help them focus and improve and make our sustainable impact even stronger.”
4. Roberto Magana, SVP, CPO at Estée Lauder
One of the largest challenges Estée Lauder faced was the dramatic switch to online. Magana told delegates the firm had seen “explosive growth” in its online challenges as shops around the world shut their doors due to national lockdowns.
“The organisation was able to pivot very quickly to create online fulfilment, distribution, and customer service capabilities in order to serve the consumer. Our supplier relationships were critical in order to begin to grow with our fulfilment partners, our transportation partners to do it in a safe way,” he said.
The firm also put an emphasis on environmental initiatives, with one area of focus being the use of advanced recycled resin for product packaging. The company also piloted the use of blockchain to trace its vanilla supply chain, which it is looking to expand into other commodities.
“We'll continue to work with our suppliers on all of these various areas in order to continue to elevate and impact social, environmental issues, to improve our footprint, and to make a better world,” Magana said.
5. Anna Spinelli, CPO at DHL Deutsche Post
Spinelli said the pandemic had meant “procurement finally got a seat at the table”.
“It has been fully empowered by the board to really do their own sustainability and resilience of supplier base governance across all our spend categories, including transportation. That's kind of the holy grail for us,” she said.
“We have started making all our plans. We have redesigned our supplier code of conduct, a complete plan of how to train our suppliers, how they can join us on this journey to become more sustainable and adhere to our ethical standards.”
DHL Deutsche Post has also stepped up communication with suppliers to understand their sustainability concerns as well as ways they can work together.
“We did our first supplier survey and we asked them to tell us how we can do better on sustainability topics as well as innovation and what can be done differently.
“From there, we have been discussing individualised targets for suppliers for their engagement with us.”
Important challenges the firm is looking at include sustainable aviation fuel, the electrification of its huge worldwide fleet, and carbon neutrality for its buildings, she said.
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