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Responsible Supply Chain Responsible supply chain - what is it about ? ISSUES social › Responsible supply chain management refers to the integration of corporate responsibility (CR) issues into procurement practices of an organisation. › It can take the form of: economic environment © 2008 BITC - All rights reserved Supplier management Supplier selection Assess proposals Defining requirements Sourcing strategy PROCESSES Integration of SEE (social, environmental and economic) criteria across each step of the procurement process Fair relations with suppliers The issues – general overview Supplier management Supplier selection Assess proposals Defining requirements Sourcing strategy PROCESSES • Compliance w/ Human Rights incl. wages (cleaning services) • Suppliers’ excellence on H&S (couriers) • Other social issues (e.g. migrant workers, skills, diversity) ISSUES social economic environment • Fair treatment of suppliers incl. payment terms (all) • Local sourcing (catering) • Suppliers development (all) • Bribery & Corruption (all) © 2008 BITC - All rights reserved • Preference for eco-friendly goods and services (paper) • Suppliers’ performance: consumption of non-renewable, greenhouse gas & other emissions, waste etc. (events) › Social issues in the supply chain refer to social conditions in which procured goods and services are produced › Economic issues in the supply chain means in this context taking into consideration the economic impacts of procurement strategy on the supply market › Environmental issues in the supply chain refer both to environmental conditions in which goods and services are produced preferment for eco-friendly goods and services The business case © 2008 BITC - All rights reserved Business cases Examples Exposure to reputation risks • Living wages issues in the supply chain Exposure to legal risks • Non compliance with standards related to bribery & corruption Exposure to operational risks • Supplier’s failure to comply with quality standards Definition of business needs • Select more efficient product / reduce consumption Supplier loyalty • Become your strategic suppliers’ best customer Attract & retain talent • A CR approach can make a difference in the recruitment of experienced staff Competitive advantages • Both public & private sector assess suppliers on CR, incl. supply chain issues Internal cohesion • Encouraging & fostering collaborative actions in the company at er & W Te T M ch ele ul no co tIu m lo til gy m iti u E e ni H l ca ec s ar dw tio tri ci n ar ty & e D m & iv Eq ed e R et rsi ai fie uip ia m Fo ler d od s & ind ent u ,b s ev up stria er erm ls ag e ark & e Ph to ts ba ar R c m e al co a& Es Ac sp ta co ec Fi te un ia ta lity nan nt s che ce & Ba C mic si on a Pe c & su ls rs e l G on xtr ov tan ts al ac e tiv rnm D & iv er Ho e in en si fie use dus t C d s hold trie on up s st po Go ru ct rt S ods io n erv & ic M es at er Le Tr ials Ae is an ro ure sp o sp ac & H rt e ot & e D ls ef en ce as , © 2008 BITC G - All rights reserved 80.0% 40.0% 20.0% LSA ? 2007 Global performance on green supply chain 100.0% Office based companies 60.0% Responsible Supply chain management model › Start at Companies’ overall strategic level to ensure consistent objectives and targets are set Company’s overall strategy on CR Responsible supply chain strategy CR issues mapping Policy & targets Category A Category B Organisation management Category C Internal & external reporting Category D Procurement plan incl. responsible sourcing strategy › CR issues should feed strategic sourcing analysis (processes, spend, supply base etc.) Selection of suppliers incl. CR criteria Contract management © 2008 BITC - All rights reserved Monitoring of CR performance › Fully integrate CR in existing tools and processes in order to target comprehensively purchasing categories How to get started? © 2008 BITC - All rights reserved Baseline (ongoing initiatives) Detailed spend analysis › Undertake a simple spend analysis and define the current baseline Opportunities & risks mapping › Identify key issues on your main categories Prioritised actions in a dedicated action plan › These initiatives are extremely useful to build the big picture … Implementation of prioritised action › …an ideal way to get started ! The baseline and the spend analysis results should help you to prioritise future action How to get started? › To be successful… › Focus on easy initiatives first (i.e. Quick wins on ‘obvious’ categories) › Set achievable targets Develop global strategy Develop case & execute › Liaise with internal stakeholders and meet your top suppliers © 2008 BITC - All rights reserved Initiate projects Generate ideas › Manage lessons and then, increase the scope of the project Quick win: example on fleet › Extend selection criteria: Fuel consumption & CO2 emissions By sub-category of vehicles -environmental: CO2, particles, NOx -social (free external safety ratings based on crash tests ) › Choose most competitive vehicles › Work with suppliers on a long term basi to improve data collection on vehicles © 2008 BITC - All rights reserved › Results expected: Total cost Environmental impacts Safety © 2008 BITC - All rights reserved Towards a collaborative approach Towards a collaborative approach › Opportunities of collaboration might be in the following area LEADERSHIP IMPLEMENTATION © 2008 BITC - All rights reserved CONTINUOUS IMPROVEMENT ? Leadership: agree on the issues and common standards Implementation: share knowledge and tools Continuous improvement: monitor progress and benchmark against peer companies › Limits - where you can not collaborate (examples) Exchange detailed information on price & costs Any perceived anti-competitive initiative Towards a collaborative approach Applying sustainable procurement concepts to legal services firms › Our indirect impacts are the most significant › Tension between upstream and downstream impacts (perceived client demands) › What is a realistic scope – environmental and social impacts – given the focus of international reporting tools and indices? › Sustainable procurement must be embedded in decision making throughout the supply chain: from defining need to supplier management › Are different models required for small vs larger firms? › How can we tap into the key drivers for suppliers: certainty and economies of scale? › Engagement vs exclusion Towards a collaborative approach Key issues/challenges faced by legal services firms Identification, measurement & verification of environmental and social impacts Understanding the issues Lack of existing systems to measure performance Tracking & measurement is difficult Contractual requirements Ability to choose a lower environmental / social impact product Scope for influencing standards of supplier conduct Perceived insufficient leverage to set minimum environmental / social standards Reluctance to undermine relationships with existing suppliers Suppliers need strong consumer signals Responsibility / Accountability Decentralised procurement functions Engagement with suppliers / knowledge of sustainable procurement Both law firms & suppliers are often inexperienced in relation to sustainable procurement Awareness of the ways in which their suppliers are able to assist in relation to improving environmental / social performance & the process for engagement Encouraging competition between firms on sustainability A perception that law firms' purchasing decisions are driven entirely by individual client demands, rather than by cultural and other factors Fear of public embarrassment if a firm performs poorly Towards a collaborative approach Some ideas for discussion in your workshop groups Scope: from carbon to broader sustainability objectives, including social issues? LEADERSHIP Collaborating with other industries / lobbying for regulations / education? A common vision on sustainability for the legal services industry: what signals do we need to send to suppliers and clients? IMPLEMENTATION CONTINUOUS IMPROVEMENT Guidance on understanding the supply chain and its most significant impacts? Developing best practice guides for sustainable procurement in law firms / policies and tools to measure supplier performance? Raising team capacity through workshops and seminars by leaders in sustainable procurement? Building a baseline: at what level is the legal services industry performing? Is an index tailored to the particular characteristics of law firms required? Monitoring progress by setting short and long term targets Engaging with major corporate clients as to how to improve sustainability and client service