Category Archives: CSR

Key Questions When Selecting a Multi-Criteria Supplier Sustainability Monitoring Solution

In our last post on why Supply Risk Management Can Not Be Siloed, we noted that the average organization was not properly managing risk, and this was not only costing the organization time and money, but putting it at significant risk. We noted that there were a number of reasons for this — which included a lack of time, resources, and even immediacy — but the biggest reason was because there is a lack of cohesion in the fragmented risk management approach employed by many organizations. But we also noted that there was something the organization could do, namely, take a holistic approach to sustainable risk management.

In a holistic approach to sustainable risk management, risk management is centralized through a Centre of Excellence (CoE) that holistically manages risk for the entire organization. This CoE will put together policies and procedures that not only ensure that

  • every supplier is covered
  • on all relevant dimensions
  • but not on irrelevant dimensions
  • without any duplication of effort

but also ensures that

    • there are no false positives in the risk assessment and
    • there are no false negatives

Part of these procedures will include regular monitoring for risk and the regular re-examination of risk and sustainability of organizational suppliers and potential suppliers. And best practice will dictate that part of this monitoring and review will be automated by a multi-criteria supplier sustainability monitoring solution and supported by a provider that specializes in this type of platform as the monitoring will need to be maintained and adjusted as new data sources become available, old data sources go offline, and the depth of data changes over time.

But how do you select a good provider, and, most importantly, how do you select a good platform to meet your multi-criteria sustainability needs? The first thing you do is understand what makes a good platform and what the platform needs to do to take away your risk and sustainability management and your risk and sustainability monitoring pain.

To help you achieve this goal, the doctor recommends that you download Sourcing Innovation’s latest white paper on 5 Essential Criteria for Selecting a Supplier Sustainability & Risk Monitoring Solution, sponsored by Ecovadis, that will help you understand what a good sustainability and risk monitoring solution needs to do, not just what features or functions need to be in the brochure.

Stop Blaming the Supplier! Melamine in the Milk is STILL Your Fault!

This article originally ran three years ago. (Link) It’s continued relevance is why we are repeating a slightly updated version of it.

Three years ago, research revealed that only 6% of procurement managers and directors have ever been made aware of unethical activity in their supply chain. (Source: EY.com) This was a surprising statistic since we know that supply chains in certain verticals run rampant with unethical behaviour, including violations of workers rights, child labour, and even human trafficking. However, when you think about it, it’s not all that surprising as E&Y’s recent 14th Global Fraud Survey found that 42% of executives could justify unethical behaviour to meet financial targets! Who would want to stand up to the CXO who could fire you if you know the CXO probably authorized the unethical behaviour in the supply chain in the first place!

The reality remains that as much as we’d like to believe that only 6% of supply chains have unethical activity, given that almost 86% of North American companies have a supply chain reliant upon China alone for key parts1, and 42% of CXOs will turn a blind eye, that’s a pipe dream. Depending on how rigid you want your definition of ethical to be, I’d guess that the number should be closer to 60%. Or more!

So why is it your fault if your supplier does it? Simple. As per the original survey, it’s because less than half of your organizations do any due diligence in their supply chains! Only 48% of UK firms do any due diligence at all! Even worse, 14% of respondents to the original EY survey did not even know what third-party due diligence meant, for crying out loud! You have to do due diligence and you have to ask tough questions and someone who can be trusted has to do a site visit to major suppliers at some point. If you do all this, and the supplier lies through their teeth, then, while your company may still be held financially responsible, it won’t be held criminally responsible and ethically you will know you did all you could (except cut the supplier loose before they did the unethical act, but at least you can cut them loose as soon as they do).

This is why you need good supply chain visibility, document management, and CSR monitoring. There are companies that do this, including Resilinc, Integration Point, and Ecovadis. (See the Vendor Post Index for more.) Reach out and get these types of solutions if you don’t already have them. They will be worth it.

And if you want more information, Ecovadis recently sponsored a trilogy of white papers by Sourcing Innovation on the importance of sustainability and social responsibility monitoring in your supply chain, the first two of which are available for your reading pleasure:

and the following is coming soon:

  • 5 Key Questions to Ask When Selecting a Multi-Criteria Supplier Sustainability Monitoring Solution

1 Supply Chain Disruptions, Ted Landgraf, Above the Standard Procurement Group, July 15, 2012.

When Are We Going To Wake Up and Stop Wasting Food!

Recently, Italy introduced a new law designed to reduce food waste which is being celebrated by farmers and restaurant owners as it simplifies the donation of excess food that ends up becoming food (or field) waste. Approximately 100 Million tonnes of food across the EU is wasted each year. (Source: European Commission) That amount of food would sufficiently feed at least at least another 100 Million people annually (as the amount of food a person needs in a year varies between 0.5 and 1 tonne depending upon diet, weight, etc.). This is just in the EU. In the US, recorded food waste exceeds 30 Million tonnes, and is probably much higher. (Source: Feeding America) That’s at least another 30 Million people that could be completely fed. Putting these numbers together, and assuming the average amount of food consumed by a person a year is 0.75 tonnes (and not 1), that’s about 175 Million completely satiated. There are almost 800 Million undernourished people in the world. If we assumed that they were surviving on only half the food they needed (which is not reasonable, as that’s barely sustenance, and a lot of these undernourished people are in developed countries and still eating enough to work), this says that the recorded food waste in 1/7th of the world’s population could cut the number of undernourished people in the world by half! By Half!

Italy is only the second country in the EU to adopt such laws (following a similar move by France earlier this year – Source: The Guadian), so let’s hope that at least in the UK, sanity reigns. Because in North America, and in the US in particular, it does not. It’s illegal in many cities to feed the homeless (Sources: NPR and MIC), even if the food is not passed its expiration date and untouched, or you are a Pastor (Source: The Daily Signal)!. In some states, game meat donated to shelters is burned (Source: Daily Caller). And even if you can donate food without getting fined and arrested, and someone gets sick because, while it was still good when you donated, by the time it was prepared and eaten it wasn’t (or it was contaminated when you received it with e-Coli and you didn’t know), then you can get sued for millions of dollars, so why take the risk?

This is why, as per our post from August, 2012 on why it’s Not Criminal, But it Should Be, America Trashes 40% of its Food Supply. It’s insane!

Food reserves have not recovered from the all time low, over 800 Million people, including almost one third of children in developing countries, are malnourished and the two richest economies in the world (the US and the EU) are collectively wasting enough food to solve over HALF of the problem. All this in a time when agriculture produces 17% more calories per person per day than it did 30 years ago. This is enough to provide everyone in the world with at least 2,720 kCal per day, which is 30% more calories than an average person needs. Instead, the cost of staples is rising, access to food by the lower class and malnourished is falling, and, because of stupid, stupid laws made by stupid, stupid lawmakers, the situation is getting worse. When it should be 10 times better!

As per our research from four years ago, there is no excuse for wasting more than 4% of food. (That’s still too much, but the 100% solution is always difficult to achieve right away. And when the 90% could be achieved tomorrow, let’s start there!) Not only would sanity (and laws mandating food donations and feeding the homeless instead of laws preventing this) reduce costs by $150 Billion and methane emissions by 22.5% (as rotting food makes up 25%), but the US would NOT have anyone undernourished! (14% of households in the US are food insecure! Fourteen Percent! The US is the richest country in the world, how can this be???)

Bravo France and Italy for finally doing something right! Let’s hope the rest of the EU follows suit so at least some people won’t go hungry!

Economic Sustentation 21: Climate Change

When it comes to damnation, this is a doozy. While many damnations have a silver lining — a pocket of hope in a coat of despair — this is not one of them. Climate change is wiping out your crops, closing your shipping lanes, and, sometimes, killing your people.

Let’s consider the climate change shock waves discussed in our initial damnation post.

Hotter summers

More drought. More wildfires. More loss of crop, and more loss of life.

Colder winters

More blizzards and ice storms that shut down cities. More cold spells that freeze people to death.

More regulations

More paperwork hell as a result of dumb politicians, who confuse feelings with facts, that pass laws that often do the opposite of what they intend those laws to do (and almost never what they should do).

What can you do?

Very little, except do your best to prepare for the coming apocalypse and mitigate it as best you can.

1. Geographically Diversify Sourcing of Raw Materials

While major natural disasters can be devastating, they are usually localized to a small region so if you are sourcing from multiple regions, your entire supply is never affected at one time.

2. Maintain multiple options

In food and beverage, substitute fresh with frozen. In electronics, have designs that can use alternate materials, even if those materials are more expensive or slightly less preferable. For example, maybe you want silver for your devices (because it is more conductive), but if silver becomes scarcer than expected, copper might still get the job done.

3. Artificial options

For example, field grown is usually preferable (better, cheaper), but greenhouse grown is viable if it’s the only way to guarantee supply. (But not GMO over heirloom. Don’t believe the extravagant claims by those that profit most from GMO.) Zirconia can often replace diamonds. With a hardness of 9.5 on the 10 Mohs scale, it can often be substituted in high pressure experiments and in high power SiC electronic devices. Be creative. We’re coming into a world where only the strong, and ingenious, survive.

Siloed Supply Risk Management Just Wastes Time, Money, and Resources

In our last post on why Why Supply Risk Management Cannot Be Siloed we noted that, despite the fact that an organization’s supply chain is full of risks that could not only cripple the organization’s supply chain but cost it 100 Million or more in fines, the average organization’s supply chain is overflowing with risk (despite the fact that many of these risks could be mitigated).

Why? Because the average organization is not properly managing risk. Why? As per our last post, there are a number of issues including lack of resources, lack of time, and lack of immediacy, but the biggest issue is lack of cohesion. Even organizations that have risk management and sustainability efforts in place tend to be relatively ineffective overall because most of these efforts grew organically over time as individual functions encountered risks and needed to deal with them. This results in a very fragmented approach to risk management that is very inefficient and ineffective. Why? Each department sends its own surveys and questionnaires and reviews its own data sources and this results in:

  • a duplication of effort where
  • some suppliers will be assessed on the same dimensions twice while
  • other dimensions for the same suppliers go unassessed and
  • some suppliers do not get assessed at all while the process generates
  • false positives as well as
  • false negatives.

How can this happen? And just how much time and money is wasted? And what should be done? For the answer, check out Sourcing Innovation’s latest white-paper on Why Sustainable Supply Risk Management Cannot Be Siloed: Lessons From Leaders Who Beat the Odds, sponsored by Ecovadis. And you’ll learn not only what the correct approach is, and what it involves, but what it can do for you.