Amy Longsworth, Managing Director, Sustainable Business Solutions, PwC
Amy Hargroves, Director of Corporate Responsibility, Sprint
Is there hope for overcoming supplier survey and scorecard fatigue? Have individual leading companies' custom scorecards worked well to drive supplier sustainability, and is there a clear need to design overarching industry-level standards? What brands and other organizations are best positioned to lead such efforts, and why?
The Coffee Bean & Tea Leaf(CBTL), Business strategy case study
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Beyond Supply Chain Scorecards: New Approaches to Elevating Supplier Responsibility
1. Beyond Supply Chain Scorecards: New Approaches
to Elevating Supplier Responsibility
The New Metrics of Sustainable Business 2013
Amy Longsworth, PwC
Amy Hargroves, Sprint
2. Playing to Win:
New Approaches to Supply
Chain Management
The New Metrics of Sustainable
Business Conference
September 2013
www.pwc.com
3. PwC
Why PwC cares about supply chain engagement
3
⢠Build resilience
⢠Address material risks
⢠Meet their goals and commitments
Help our clients
⢠Work to identify and measure costs
⢠Find opportunities to create strategic value
⢠Continuously improve strategy
⢠Tell the story through integrated reporting
Help all companies become aware of
their footprint and material issues
4. PwC
As supply chains become more complex, managing sustainability
risks has become even more critical and difficult
4
Examples of sustainability-related incidents and their impact, 2010-2012
5. PwC
Supplier standards alone are not sufficient
1 Final
Product
American
Cheese
Pickle
Slices
Onions
Lettuce
Sauce
Bun
100% Beef
Patty
7 Components
29 Sauce ingredients:
Soybean oil, pickle relish,
vinegar, corn syrup, onion
powder, mustard seed, etc.
1 Lettuce ingredient:
Iceberg lettuce
33 Bun ingredients:
Flour, corn syrup, soybean
oil, sesame seed, etc.
3 Patty ingredients:
100% pure beef, black
pepper, salt
1 Onion ingredient:
Chopped onions
14 Cheese ingredients:
Milk, cheese culture, sodium
citrate, salt, etc.
10 Pickle ingredients:
Cucumbers, vinegar, salt,
calcium chloride, etc.
90 Ingredients21+ Tier 1 Direct
Suppliers
Patty Supplier A
Patty Supplier B
Patty Supplier C
Pickle Supplier A
Pickle Supplier B
Pickle Supplier C
Bun Supplier A
Bun Supplier B
Bun Supplier C
Sauce Supplier A
Sauce Supplier B
Sauce Supplier C
Lettuce Supplier A
Lettuce Supplier B
Lettuce Supplier C
Onion Supplier A
Onion Supplier B
Onion Supplier C
Cheese Supplier A
Cheese Supplier B
Cheese Supplier C
1,000+ Tier 3/4
Farmers,
Processors, &
SuppliersFlour Supplier A
Flour Supplier B
Flour Supplier C
Corn Syrup Supplier A
Sesame Seed Supplier A
Corn Syrup Supplier B
Corn Syrup Supplier C
300+ Tier 2
Ingredient
Suppliers
Sesame Seed Supplier B
Sesame Seed Supplier C
Supplier
Code of
Conduct
5
6. PwC
Why managing your supply chain matters
6
Managing risk1
Managing resources2
Finding efficiencies3
Creating value opportunities4
7. PwC
Top challenges encountered with regard to implementing
supply chain sustainability initiatives
7
Ranked as the #1 obstacle to supply
chain sustainability
âLeadership does not provide the mandate,
incentives, and resources to turn
sustainable strategies into action.â
Generally marked as a challenge by
larger ($1bn+) companies
âThe impact on shareholder value is not
measurableâ
Respondents were less likely to
indicate an increase in supply chain
sustainability focus for the next 3 years
âOur customers are not asking for itâ
The clearer a companyâs strategy and
goals are, the more likely the company
achieves value from sustainability
âThere is significant confusion about the
scope and company goals on sustainable
supply chainâ
Respondents indicated that ethics and
compliance are the major
sustainability drivers
âCompliance drives the majority of actionsâ
Question: Check all the applicable challenges within your organization, then rank the top three
challenges with regard to implementing sustainable supply chain initiatives. (N=109)
8. PwC
Those who realized value from sustainability efforts were
far more likely to have an established strategy
8
⢠77% of those who did not achieve value from sustainability said their strategy does not
exist or strategic approach is undocumented
ď âRealized valueâ: those who indicated revenue gains, cost reduction, market share gains,
market size gains, or environmental impact reduction from sustainability efforts
ď âOthersâ: those who did not indicate value achieved in any of the five areas above
A strategy does not exist
General discussion exists, but the
corporate strategic approach is not
documented
A strategy does exist, but the plan is not
communicated to all levels of the
organization
A strategy exists and is fully communicated
across the organization
Realized Value Other
(N=60) (N=35)
8%
34%
35%
23%
37%
40%
14%
9%
9. PwC
The perceived existence and communication of
sustainability strategy differs between levels
9
⢠More managers say that an SCS strategy does not exist at their companies
⢠Almost half of respondents, regardless of level, don't have a documented SCS strategy
Strategy does not exist
General discussion exists, but the
corporate strategic approach is not
documented
Strategy does exist, but the plan is not
communicated to all levels of the
organization
Strategy exists and is fully communicated
across the organization
Executive & Director Manager & Below
(N=20) (N=85)
21%
34%
28%
17%
5%
40%
25%
30%
10. PwC 10
What are you trying to accomplish in managing your supply
chain?
Supplier
standards
Sustainability
criteria in
procurement
Sourcing certified
or alternative raw
materials
Dedicated or
integrated supply
chain
Supplier and
stakeholder
collaboration
Set minimum
performance
standards for
suppliers on social,
environmental and
ethical issues
Integrate
sustainability
criteria alongside
traditional
procurement criteria
of cost, quality and
performance
Source 3rd party
certified raw
materials or
alternative raw
materials to reduce
reputation risk
exposure
Take control of
components of the
supply chain
through acquisition
or long-term,
dedicated supplier
agreements
Collaborate with key
suppliers and
stakeholders to
address pervasive
environmental and
social issues in the
supply chain
Examples:
⢠Supplier codes of
conduct
⢠Sustainability
criteria in RFPs
Examples:
⢠Walmart and
P&Gâs supplier
scorecards
⢠Annual reviews of
suppliers that
consider
sustainability
performance
Examples:
⢠CPGs sourcing
certified cocoa
have reduced
reputation risk
while procuring
better quality cocoa
⢠Unilever testing
algal based
substitute for palm
oil
Examples:
⢠Unilever
announced plans to
build palm oil
refinery in
Indonesia
⢠Partnering with
suppliers on
packaging
innovation
Examples:
⢠Walmartâs Supplier
GHG Innovation
Program
⢠Partnering with
suppliers to pilot
new products
Play not to lose Play to win
Source: PwC, âResilience: Sustaining the supply chain,â July 2012
11. PwC
Engagement is the new process design
Business process
focused (1980âs to Present)
Stakeholder engagement
focused (2000âs to Present)
Source Make Deliver
Target Acquire Retain
Ideate Develop Launch
Stake
holder
Stake
holder
Stake
holder
Stake
holder
Engagement
11
12. PwC
Cargill engages key customers to align on supply chain
issues and identify shared value
Cargillâs Responsible Supply Chain (RSC)
approach:
⢠Engage key food and beverage customers
⢠Rapidly identify and assess areas of risk and
opportunity in shared supply chain
⢠Evaluate financial value at stake â risk, cost or
revenue
⢠Facilitates collaboration and alignment across all
partners in the supply chain to move quickly to
address issues and opportunities
Source: www.cargill.com/news/releases/2013/NA3075837.jsp
Cargillâs RSC framework:
Farmer Aggregator
Retail/Food
Manufacturing
Customer
Consumer
12
13. PwC
Creative sustainability-based supplier engagement is just
getting startedâŚ
13
⢠Margin increase: An apparel company provides suppliers with training, coaching,
and technical assistance, increasing productivity and profitability, and reducing cost
of a t-shirt by 60%
⢠Share growth: A technology company used its own supplier diversity program to
differentiate itself with customers; over 12 years, this contributed to $6 Billion worth
of business
⢠Cost savings: A retail chain launched a supplier initiative to drive environmental
innovation in product manufacturing, packaging and distribution; in phase 1,
suppliers targeted sustainable packaging and identified $100m in savings
⢠Market expansion: A food and beverage company created a âmicro-distributionâ
model in Africa that creates jobs, promotes entrepreneurship, and strengthens local
economies; it employs 19K+ people and generates more than $950 million in annual
revenue
14. Thank you!
Š 2013 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved.
PwC refers to the United States member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see
www.pwc.com/structure for further details.
This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
PwC US helps organizations and individuals create the value theyâre looking for. Weâre a member of the PwC network of firms in 158 countries with more than
180,000 people. Weâre committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at
www.pwc.com/US
Amy Longsworth, Managing Director
Sustainable Business Solutions
PricewaterhouseCoopers LLP
1800 Tysons Boulevard
McLean, Virginia 22102
amy.p.longsworth@us.pwc.com
202-365-6638
16. Clear goals for supplier engagement
ďź Identify and reduce our supply chain risks
ďź Reduce our âscope 3â impacts
ďź Increase the sustainability of our suppliers â
improve their triple bottom line
ďź Enrich our partnerships, increase opportunity for
innovation
ďź Engage authentically
Š2013 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates and may contain restricted,
confidential or privileged materials intended for the sole use of the intended recipient. Any review, use, distribution or disclosure is prohibited without authorization.
17. Š2013 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates and may contain restricted,
confidential or privileged materials intended for the sole use of the intended recipient. Any review, use, distribution or disclosure is prohibited without authorization.
Š2013 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates and may contain restricted,
confidential or privileged materials intended for the sole use of the intended recipient. Any review, use, distribution or disclosure is prohibited without authorization.
Prioritized engagement based on spend and risk
level
90%
by 2017
5,000
Active
40,000
On Record
100+
Sprintâs Supply Chain
Which suppliers?
⢠âSourceableâ spend â
biddable
⢠Top down, based on
spend
⢠Suppliers in specific
categories with
increased risk
18. Š2013 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates and may contain restricted,
confidential or privileged materials intended for the sole use of the intended recipient. Any review, use, distribution or disclosure is prohibited without authorization.
Š2013 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates and may contain restricted,
confidential or privileged materials intended for the sole use of the intended recipient. Any review, use, distribution or disclosure is prohibited without authorization.
Š2013 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates and may contain restricted,
confidential or privileged materials intended for the sole use of the intended recipient. Any review, use, distribution or disclosure is prohibited without authorization.
Largest portion of Sprintâs footprint is in
the supply chain and concentrated with
our top 10 vendors
Identification of supply chain hot spots
19. Sprint Supplier Criteria
Sprintâs criteria (for all suppliers within the top 90% of spend), complete
and publicly disclose:
ďź Materiality assessment
ďź GHG measurement, reduction goal
ďź Human rights policy
ďź Safety policy
ďź Environmental policy
Guiding principles
⢠Base criteria on standards whenever possible
⢠Donât ask them to do more than we do ourselves
⢠Use a materiality lens â theirs, not ours
⢠Be reasonable â understand the impact of what you are asking
for (KISS)
⢠Will it make their business stronger?
Š2013 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates and may contain restricted,
confidential or privileged materials intended for the sole use of the intended recipient. Any review, use, distribution or disclosure is prohibited without authorization.
20. Supplier assessment and engagement process
Survey -
Assess
Review
responses
Identify GapsBuild
Capacity
Raise Bar
Short, but high
impact
Strategy for non-
respondents
Personal interaction
Simplify and show
the benefit
Expect continuous
improvement
Š2013 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates and may contain restricted,
confidential or privileged materials intended for the sole use of the intended recipient. Any review, use, distribution or disclosure is prohibited without authorization.
21. Results: Materiality and GHG were a problem
Iâll do it if
you make
me, but I
need help
It doesnât
apply to me
Web
resources are
confusing
I donât have
enough time
or people
It doesnât
help me -
WIFM
Š2013 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates and may contain restricted,
confidential or privileged materials intended for the sole use of the intended recipient. Any review, use, distribution or disclosure is prohibited without authorization.
22. Solve for them, solve for many
Guidance consistent with standards
Accommodation for a range of supplier profiles
Sprint criteria consistent with standards
Efficient and productive â DIY model
Guidebook,
webinars
Focus on
benefits
Personal,
non-technical
voice
Input from
suppliers
Expert review
Public
resource
Evergreen
Challenges
Solution
Š2013 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates and may contain restricted,
confidential or privileged materials intended for the sole use of the intended recipient. Any review, use, distribution or disclosure is prohibited without authorization.
23. Meeting Sprintâs Supplier Criteria, version 1
Publicly available at: (will need to add web link)
Š2013 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates and may contain restricted,
confidential or privileged materials intended for the sole use of the intended recipient. Any review, use, distribution or disclosure is prohibited without authorization.
24. Results so far
⢠55% to 79% 2011 to 2012,
meet criteria
⢠Positive feedback from
suppliers
⢠Positive feedback from experts
⢠Growing base of supplier
success stories â Sprintâs goals
have helped usâŚâŚ.
â Get new customers
â Improve our processes
â Reduce our costs
Š2013 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates and may contain restricted,
confidential or privileged materials intended for the sole use of the intended recipient. Any review, use, distribution or disclosure is prohibited without authorization.
25. Key lessons
⢠Start with the goal in mind â engaged
suppliers that become more
sustainable
⢠Shoot to inspire, not force compliance
⢠Understand your leverage points and
use them
ďź Executive engagement for the largest
suppliers
⢠Be authentic â directly engage with
your suppliers, listen, modify to make
it more effective
Š2013 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates and may contain restricted,
confidential or privileged materials intended for the sole use of the intended recipient. Any review, use, distribution or disclosure is prohibited without authorization.