Responsible sourcing: Getting it right from the start
Wednesday, 28 May 2014 00:00
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Sustainable business performance in the food, beverage and agri sector
Responsible sourcing is by no means a new issue, but it is becoming progressively more prominent in the food and beverage sector, driven by the increasing elasticity of our supply chains, globalisation and lack of visibility. The recent horsemeat scandal in Europe shone a light on the complexities involved in sourcing and supplies chains and highlighted the extent of public anger and backlash when it goes wrong.
For business leaders, responsible sourcing should be very much integrated into their strategy. They’re diving deeper beyond their tier one suppliers into the intricacies of their supply chains, acutely aware that they, as the purchaser, are accountable for every aspect of the products they sell.
“It is a clear business case to have control of your entire value chain, and it starts with the farmers. By setting demands and working proactively with your suppliers to produce in a sustainable way, you can better handle quality, environmental and ethical risk. And you signal to the end customers that you have their well-being in mind. It is a win-win-win for the farmers, the manufacturer and the consumer,” said Stefano Crea, Global Manager Food & Beverage at DNV GL – Business Assurance.
On the invitation of DNV GL – Sri Lanka, Stefano Crea, will be visiting Colombo to present at the forum on ‘Sustainable Business Performance in the Food, Beverage & Agri Sector’ at 6:30 p.m. on 29 May, at the Crystal Room, Taj Samudra Hotel, Colombo.
Direct engagement
For many organisations, there’s a realisation that interaction and collaboration directly with the farmers that supply them makes perfect business sense. Through sustainable agricultural sourcing, they can reduce one of the primary contributions to their greenhouse gas emissions and carbon footprint, as well as driving improved quality through capacity building, training and technical assistance to farmers.
Over the long-term, this direct engagement with suppliers will reduce volatility and ensure the security of future supply, whilst also mitigating against potential price shocks.
The 2013 Tomorrow’s Value Rating (TVR), a DNV GL report which assesses the sustainability performance of leading businesses worldwide, reinforces this trend. Companies like Unilever and Nestlé are forging direct relationships with the farmers that supply them, with the aim of increasing their level of influence and control over this initial stage of their value chain.
Through the instigation of capacity-building programmes to promote better agricultural techniques, mutually beneficial outcomes are for the taking. Farmers benefit from increased yields and productivity, greater stability and profitability to secure their livelihoods and future welfare. Meanwhile, the food and beverage giants thrive off improved sustainability performance, greater visibility and control of their suppliers, and the ability to safeguard against potential risks.
Human and labour rights are intrinsic to a sustainable supply chain, and the more savvy business leaders are tackling these challenges. Unilever’s creation of the new role of Vice President of Social Impact and Coca-Cola’s introduction of a human rights metric to its sustainability scorecard are cases in point.
Collaboration is key
But with all of this activity, how should companies monitor their suppliers’ progress? The auditing process is paramount to guarantee compliance with industry standards, as well as the expectations of the customer.
However, there’s a need for collaboration within the industry to help the sector to evolve efficiently. Currently, suppliers are required to manage multiple customers’ expectations, regardless of the fact that the desired assurances are often the same. Suppliers could better spend their time proactively improving their processes and operations to evolve a more sustainable business rather than reacting to the expectations of multiple audits on a near-constant basis.
Sedex supports this premise by offering suppliers a platform through which to provide information to multiple customers on their operations and labour standards. The leaders in the TVR report have all signed up to the programme with the aim of delivering efficiencies to both parties.
The frontrunners in the food and beverage sector are making huge strides towards effective supplier management and responsible sourcing, but it’s not an easy challenge. After years of outsourcing, offshoring and a reliance on labour from far-flung corners of the world, our supply chains have become over-stretched; the ‘out-of-sight, out-of-mind’ attitude just won’t wash any longer. Reining in control of the supply chain makes good business sense all round, and will provide the big food and beverage conglomerates and their suppliers with the security and resilience needed to tackle the future head on.
As of 12 September 2013, DNV and GL have merged to form DNV GL. Driven by its purpose of safeguarding life, property and the environment, DNV GL enables organisations to advance the safety and sustainability of their business.
