You don’t have to look far to see the reputational damage caused by poor supplier decisions.
According to recent figures by the consumer-insight network Kantar, nearly half of us changed our shopping habits following the horse meat scandal. Following this, Tesco chief executive Philip Clarke pledged to increase orders of UK-sourced meat from 20 per cent to 90 per cent and ordered a review of how the company’s relationships with suppliers could be made more “transparent and collaborative”.
So how do you guarantee acceptable levels of transparency and collaboration and select suppliers based not just on price, but good practice and shared brand values? Much depends on how you choose providers and then how well and often you communicate with them. Brand-aware companies are beginning to understand and monetise the reputational risks of taking a narrow, cost-based approach to supply chain management. Increasingly, smart companies are implementing a more holistic approach to managing their supply chain, led by CPOs.
Most carbon emissions from the impact of activities are created outside the boundaries of a business. And since purchased goods and services is often the largest category, there is a real opportunity for companies to improve their public profile by looking at their supplier relationships. If you’ve got poor resource management in your supplier base, ultimately these inefficiencies will lead to reputational risks and future cost increases. By collecting and analysing data on supplier behaviour and performance, it’s possible to identify hotspots and risks and work with them to improve their environmental footprint.
BT expects suppliers to meet high standards on human rights, employment, and environmental practice. The Carbon Trust helped it run a series of carbon reduction workshops to raise awareness in the supply base. This helped underpin BT’s Climate Change procurement standard, one of the first of in the UK, to help reaffirm its credentials in this area.
This improves the long-term sustainability of your supplier’s business, too. If you signal you’re there long term, it can invest in efficiency projects. You’re building your relationship with your supplier so it knows what you want and you know what it does. It’s a two-way process – are you inadvertently asking your supplier to act in an inefficient way, for example? Collaborating helps you identify pain points and address them for mutual benefit.
☛ Laura Timlin is the associate director at the Carbon Trust
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