Sustainable Development: is CSR a constraint or an opportunity for Purchasing?

Transcription

1 THE EUROPEAN INSTITUTE O F P U R C H A S I N G M A N A G E M E N T Sustainable Development: is CSR a constraint or an opportunity for Purchasing? Page 1

2 Constraint? Mckinsey CEO survey Sept «while pressure from employees, consumers, and other stakeholders plays an important part in this trend, some CEOs see the new demands as opportunities to gain a competitive advantage and to address global problems at the same time.» Opportunity? Page 2

3 The Wal-Mart effect transforming threats into opportunities We at Wal-Mart recognize that we have unique strengths and a unique opportunity to have a positive impact on the environment through our own actions, those of our customers, and those of our suppliers, Wal-Mart s packaging scorecard is a measurement tool that allows suppliers to evaluate themselves relative to other suppliers The 7 R s of Packaging : Remove, Reduce, Reuse, Recycle, Renew, Revenue, and Read. The packaging scorecard: 15% will be based on GHG / CO2 per ton of Production 15% will be based on Material Value 15% will be based on Product / Package Ratio This will impact R&D, 15% will be based on Cube Utilization design, logistics... 10% will be based on Transportation How can Purchasing 10% will be based on Recycled Content contribute for value 10% will be based on Recovery Value creation to the 5% will be based on Renewable Energy business? 5% will be based on Innovation Page 3

4 Purchasing and CSR Risk avoidance - cover supply chain risk - auditing suppliers for compliance - developing suppliers towards compliance - influencing decisions : design and supplier selection - integrating new regulations - Value creation - Providing supply market support for innovation - Reducing time to market to meet compliance - reducing TCO - Providing the right conditions for communities where suppliers are actives Page 4

5 Purchasing and CSR CSR Winners Environment CSR Qualifiers CSR Qualifiers Risk avoidance Meeting compliances Community Value creation Sustainability Page 5

6 Purchasing Maturity: how mature is your Purchasing for CSR? Value Creation FUNCTIONAL FOCUS CROSS FUNCTIONAL FOCUS Transactional orientation Commercial orientation Purchasing coordination Internal integration External integration Value chain integration Time Focus Serve the factory Reduce price Savings thru synergy Total cost of Ownership Supply Chain Optimisation Total Customer Satisfaction CSR Purchasing by itself cannot do much but can influence the movement Adapted : Van Weele 2002 Capabilities to: - influence design - select suppliers - reduce TCO - manage risk - develop suppliers Page 6

7 How to start a CSR journey in Purchasing? 1. Understand the CSR impact to the company - Risk and opportunity identification Purchasing asking questions to Marketing, R&D, HSE, logistics - Understand the main drivers on internal stakeholders coming from : Customers, Regulations and Opinion Makers - Identify existing internal CSR initiatives get involved, expand them 2. Create a Purchasing Charter and get CEO s signature what does CSR means to Purchasing how can Purchasing contribute to CSR Identify internal alliances 3. Identify and prioritize actions in line with the charter - prepare a road map: business impact vs. resources required Risk avoidance Value creation 4. Promote charter internally and externally 5. Implement: focus on few actions 6. Monitor and communicate Page 7

8 An idea to structure a CSR Charter What we expect from suppliers What suppliers can expect from Purchasing What the company can expect from Purchasing What our customers can expect from Purchasing What our stakeholders can expect from Purchasing What the communities where we operate can expect from Purchasing Page 8

9 How to measure Purchasing contribution? Avoid (if possible) aggregated indicators: Number of audits Number suppliers who have signed a charter global TCO reduction meaningless for stakeholders Prefer project based reporting: Few projects explained are more credible than a multitude of KPIs Explain TCO reduction for the specific project Show value creation extra sales, market share due to the project If difficult to explain the achievement show what could be he consequences if we have not done it (destruction of value!) if charter is accepted... it was the right ting to do! Provide a list of on going projects and their nature Page 9

10 EIPM CSR survey Skills of the Purchasing Community much to do with understanding the impact on stakeholders 37. What are the specific skills or characteristics you think necessary to successfully implement CSR in Purchasing? Integrating clear/measurable CSR objectives into traditional buyer's objectives 81% Understanding of the social aspects of CSR applied to a supplier 65% Understanding of the environmental impacts of a manufacturing company 59% Risk analysis skills 51% Understanding of the norms and regulations on CSR 48% Total cost of ownership analysis skills 46% Marketing awareness of CSR impact on customer's behaviour 35% Social auditing skills 35% Environmental auditing skills 31% Be sensitive to environmental aspects 29% Be sensitive to social aspects 29% Awareness of how to deal with media implication of CSR issues with suppliers 20% Legal knowledge 20% Understanding of NGO's drivers and operation modes 9% Other 2% No specific skills are required 2% Page 10

11 CSR and Purchasing How will you continue the journey? What are your main take-aways? What would be your expectations for the future? Page 11

12 Conclusion There is no silver bullet magic solution Each company, industry and situation is different, which requires a specific approach Do not wait corporate initiatives or frameworks tostart start JUSTDOIT Page 12

13 Conclusion Page 13