Category Archives: CSR

Is Your Supply Management Ethical?

Corporate Social Responsibility (CSR) and Corporate Ethics are becoming more important by the day. Just ask BP, the Gap, Chick Fillet, and Monsanto, who have all had to deal with Boycotts in recent years (for oil spills, supply chain factory fires resulting in worker death, stance on gay rights, and genetically modified food). You don’t want to get caught in the cross hairs of an organized activist group like PETA, GreenPeace, or Anonymous.

It only takes one slip up somewhere in your supply chain to become the target of globally organized boycott. Thus, you need to take a step back and ask if your supply management is ethical.

A code of Supply Management conduct, as described in The Procurement Game Plan, is a good start, but it’s not enough. You also need a supplier code of conduct, and you need to insure that not only do your suppliers honour the code of conduct they agree to, but themselves have a code of conduct for their suppliers. The buck stops with you, so you are responsible for making sure the buck is spent ethically. Turning down free World Cup tickets from a potential supplier is a good start, but making sure the supplier adopts a code of conduct that prohibits them from even offering such a wasteful, lavish gift in the first place is better — especially if that money is redirected to safety improvements and community programs for its workers.

Supply Management Ethics provide the foundation for CSR, so it’s important that your organization get them right. One of the experts on this topic is Stephen Guth, Chief Corporate Counsel and VP Vendor Operations for the National Rural Electric Cooperative Association and author of “The Contract Negotiation Handbook”, “The Vendor Management Office”, “Hotel Contract Negotiation Tips, Tricks, and Traps”, “Project Procurement Management”, and a set of free “Procurement Contract Templates”. This fall, Stephen is going to be giving a session on Building a Strong Foundation with Supply Management Ethics at the NLPA Conference where he will go beyond the usual horror stories of supply management professionals in jail jumpsuits and look at supply management ethics through the eyes of a forensic auditor. In this session, you will go beyond the process of learning how to put a code of conduct together and learn what investigators look for, who is most likely to violate supply management ethics, and why. You’ll learn how to identify potential problems and violators before they occur.

If you haven’t already, consider registering for the NLPA Conference today.

The Other 1%!

These days, we’re hearing a lot about the 1% — the percentage of the population who control over 35% of the nation’s wealth, and control, at a minimum, 23 times the wealth controlled by the average person. And while it looks good on the books, right now, this isn’t the 1% anyone wants to be in, given the ire directed their way. But that’s not the 1% this post is about.

This post is about the 1% of companies that have implemented ILO (International Labour Organization) compliant supplier codes of conduct that are monitored and enforced. As per a recent publication by Zurich and Rockwell Automation entitled “Safe Supply Chains Help Produce Sustainable Business”, only 43% of major US companies have implemented supplier codes of conduct. Of these codes, only 10% reference ILO conventions. In addition, only 25% of companies perform even minimal monitoring against their supplier codes of conduct. In other words, the percentage of companies that have codes of conduct that reference ILO conventions and that are monitored is 0.43 * 0.10 * 0.25 = 0.01, or 1%! Ouch!

This is a disgrace! This is not the 1% we want in the Supply Management world! Every organization needs to shape up and do something about this right now.

  • Step 1: Get a supplier code of conduct. If your organization doesn’t want to invest the time drafting its own, borrow one (such as the publicly available JLP Responsible Sourcing Supplier Workbook) and modify it as appropriate or simply state that your organization complies with all relevant ILO labour standards, summarized in the Brief Introduction to International Labour Standards, and you have the right to monitor and inspect supplier operations to make sure they do the same.
  • Step 2: Make sure all relevant ILO standards are referenced.
  • Step 3: Monitor suppliers and, with other customers, insure an audit is done on an annual basis (by a responsible, neutral third party)*.

This isn’t hard. Just do it!

*It’s too disruptive to a supplier, and too costly, for every customer to audit the supplier every year. Instead, big customers should band together and hire an independent third party who’s good at conducting audits to perform an annual audit and make the results available to all customers, who can collectively apply pressure to a supplier violating ILO and individually take issue with any aspect of the supplier code of conduct that goes beyond ILO that is specific to that customer.

Poor Working Conditions in the Supply Chain Start at Home!

Last month, we told you that new estimates put the driver shortage at 240,000 drivers and that it’s all our fault. Why? Despite the fact that 40,000 new commercial licenses are granted annually by the DOT (Department of Transportation), turnover is 100+ percent per year due to poor working conditions.

But it seems that poor working conditions aren’t limited to our drivers. It seems that our dock and warehouse workers are also getting the short end of the shaft when it comes to working conditions (to the point where the high salaries commanded by the dock workers, which can exceed $120,000 in the Port of LA for example, might not be worth it). As per this article in the National Business Review on why we should “stop hurting our container opening dock and warehouse workers”,

  • imported sea containers increasingly have toxic substances in them
    such as glues (from shoes), emitted gasses (from wood or MDF), and residue from fumigants,
  • unprotected workers who enter these containers can die
    and those who don’t typically get very sick and some develop long term health issues, including cancer, and
  • up to 30% of shipping containers contain dangerous levels of toxins
    with 18% of containers containing toxins at a level legally reportable as unsafe and almost 90% contain some toxic fumigant or volatile organic compound. WTF?

Kind of puts the salary demands in perspective when you consider that their jobs contain more potential dangers than a coal mine!

And if this isn’t bad enough, we also have the warehouse workers who, according to this recent infographic on Warehouse Safety and BLS data,

  • have a 14% of being injured on the job,
  • have a 3% chance of being seriously injured in a forklift accident on the job, and
  • have a 0.02% chance of being killed, most likely from a forklift accident!

Ouch! Our dock workers have it bad. Our drivers have it bad. And our warehouse workers have it bad. I think it’s time to stop focussing exclusively on the outsourced supply chain in a search for poor working conditions. There’s plenty of poor working conditions to fix here at home!

Can Beer Build a Better Business?

And now that I’ve got your attention, yes SI is serious!

As per a recent article over on Inside Supply Management (ISM) on “Brewing a Better Future”, Heineken plans to Improve, Empower, and Make an Impact! As part of its three-part strategic initiative, Heineken plans to increase partnerships, source local, and, most importantly, reduce CO2 emissions and water consumption.

With respect to CO2 emissions and water consumption, Heineken plans to:

  • reduce emissions by 40% in its breweries,
  • reduce and track emissions throughout the value chain,
  • implement the concept of a CO2 neutral brewery in at least three sites (by 2015), and
  • reduce water usage by 20%.

That’s one heck of a sustainability initiative, especially for a brewery where water consumption can be as much as 8 cubic meters per cubic meter of beer produced and where CO2 production can be as much as 10 kg per hecto-liter. If it succeeds, the improvements will be very significant, with over a liter of water being saved per liter of beer (as consumption will be reduced from 5.1 to 3.7) and kgs of CO2 emissions disappearing per hecto-liter (as output will decrease from 10.4 kg/hl in 2008 to 6.4 kg/hl in 2020).

If Heineken succeeds, the innovations that it will introduce could revolutionize not only the brewing industry, but the food and beverage industry as a whole. Let’s all hope that they manage to brew a better business (without sacrificing the quality of the beer, of course).

A Starter’s Guide to Zero Waste

A recent article (“if gm can do it: a starters guide to zero waste”) over on ThomasNet pointed out how General Motors, which has made a high-profile commitment to zero waste, has turned more than half of its manufacturing plants into landfill-free facilities. For a company as big as GM, manufacturing a wide-range of products, that’s impressive. (As is the fact that its zero-waste best practices have helped it turn its own waste byproducts into a 1 Billion per year revenue generator.)

If GM can do it, you can to. How? Start by following the 10 steps to zero-waste as outlined in A Starter’s Guide to Zero Waste. And pay particular attention to these steps:

  • Commit to the Triple Bottom Line
    In other words, adopt social, environmental, and economic performance standards and pursue them unwaveringly.
  • Adopt the Precautionary Principle
    Before committing to any product or service, audit the full life-cycle for the presence of anything that will be wasteful or toxic. If there is waste, figure out if it can be eliminated before the product or service is committed to. If there are toxic (by) products, they have to be eliminated (or substituted with non-toxic products), or the product (or service) is a no-go.
  • Manage Products and Packaging Responsibly
    You, your suppliers, and their suppliers need to take ‘financial or physical responsibility for all of the products and packaging’ produced and figure out how you reduce, reuse, or recycle at every step of the product and service life-cycle.
  • Use Economic Incentives
    Simply put, they work.

Andy, most importantly,