IS YOUR SUPPLY CHAIN FIT FOR THE FUTURE?

Transcription

1 IS YOUR SUPPLY CHAIN FIT FOR THE FUTURE? October October 2014 SAFER, SMARTER, GREENER

2 Methodology and Survey Sample 2

3 Methodology and survey sample The questionnaire was administered using the CAWI (Computer Assisted Web Interviewing) methodology The survey was conducted in July 2014, on a sample of 2,061 professionals who work at companies in the primary, secondary and tertiary sectors across different industries in Europe, The Americas and Asia. North America 6,9% Europe 39,2% Asia 45,7% Africa 0.7% Center South America 6,1% Oceania 0.9% 3

4 Methodology and survey sample The sample is qualitative and not statistically representative 24% of the firms involved employ less than 50 people, 32% from 50 to 249 and 41% 250 or more Companies involved are in the primary sector (3%), secondary sector (61%) and tertiary sector (31%) The sample (2,061 respondents) includes 68 companies defined as leaders based on a selfassessment of maturity in managing supply chains 4

5 Introduction Supply chain sustainability is attracting increasing attention, especially after tragic incidents such as Rana Plaza, in April 2013, in Bangladesh With globalization, a secure and defendable supply chain has become just as important as the quality of the products Businesses are making concrete efforts to take sustainability issues into account Identifying and managing potential risks is key for the companies (because supply chain sustainability is becoming increasingly important both to customers and to the business) 5

6 Analysis of current scenario 6

7 Sustainable supply chain management When choosing a supplier or making buying decisions, 96% of companies consider sustainability aspects Q.2 To what extent does your company consider the sustainability aspects listed before, when making buying decisions? TOTAL N= N= Leaders 68 To a great extent 31,5% 83,8 To some extent 64,0% 16,2 Not at all 4,5% - 7

8 Relevant aspects for a sustainable supply chain Relevant aspects for a supply chain: Low environmental impact (56%) Health and safety of workers (51%) Economic aspects (43%) Q.1 In your opinion, what are the relevant aspects for a supply chain in order to be considered sustainable? TOTAL Low environmental impact Health & safety at work Strong financial management Ethics Fairtrade Certainty of employment for workers Safe use Human rights N= ,6% 50,6% 42,8% 28,6% 25,6% 23,3% 17,1% 12,2% Ethics (29%) LEADERS: top positions don t change much Health & safety at work (53%), Economic sustainability (49%) and Environmental impact (49%). Ethics comes immediately next (38%) Labour rights Cause related marketing Equal opportunities Community investment Philanthropy 10,5% 10,3% 9,0% 5,9% 3,9% 8

9 Maturity in supply chain sustainability 42% of companies have a formal supply chain strategy contemplating sustainability aspects Q.3 Are sustainability aspects formally included in your company's supply? TOT ,6 Up to to and more ,0 34,1 56,7 Leaders 68 80,9 Q.4 Where would you position your company on a 5 point maturity scale for supply chain sustainability, where 1 is beginner and 5 is Leader? TOTAL N= On a scale that measures maturity,only 22% rated their companies as advanced 1 Beginner ,3% 22,4% 39,7% LEADERS are a minority 4% 4 17,9% 5 Leader 3,7% 9

10 Main reasons for sustainable management 80% of firms experienced pressure to demonstrate the sustainability of their supply chains Q.5 To what extent does your company feel under pressure to show it has a more sustainable supply chain? TOTAL To a great extent To some extent 15,8% N= ,4% Not at all 19,8% Main drivers for more sustainable supply chains: Customers (80%) Q.6 Which are the main drivers influencing your market/business in order to manage a more sustainable supply chain? TOTAL N= Customers Regulators and other authorities Corporate leaders/policy 32,5% 30,2% 79,5% Leaders 68 80,9 44,1 44,1 Compliance with regulations (33%) Corporate policies (30%) Suppliers Competitors Final consumers Employees Investors Local community Non-governmental organisations Unions None of the above 28,6% 26,9% 22,6% 14,8% 7,8% 6,5% 3,6% 1,9% 2,1% 35,3 41,2 35,3 26,5 13,2 14,7 7,4 5,9 2,9 10

11 Key initiatives undertaken Sustainability Audit of suppliers is the most common action. (41% have undertaken one in the last three years) Q.7 In the last three years, which of the following sustainability actions regarding your supply chain has your company taken? if To a great extent OR To some extent in Q2 Implemented and communicated a sustainable supply chain policy+information from suppliers about sustainability Directly undertaken an audit +External audit against your own audit protocol+ External audit using a recognized audit methodology Directly undertaken an audit of some suppliers TOTAL N= ,8% 41,2% 36,0% Leaders 68 83,8 57,4 51,5 Communication initiatives are central (34% required suppliers to provide information about sustainability of products and 25% implemented and communicated the policy) Required suppliers to provide information about sustainability Undertaken dialogue with suppliers to share understanding of sustainability challenges Implemented and communicated a sustainable supply chain policy Commissioned an external audit of suppliers against your own audit protocol Provided training for suppliers on sustainability management Required an external audit of suppliers using a recognized audit methodology Other actions 34,2% 30,6% 25,2% 11,6% 9,2% 4,6% 13,0% 60,3 52,9 58,8 20,6 19,1 5,9 22,1 No actions undertaken 23,1% 4,4 11

12 Key initiatives undertaken Initiatives are still limited and far from widespread: 30% of firms take sustainability actions across their entire supply chain. Twothirds of companies limit their initiatives to the tier one suppliers only Q.8 How far do the above mentioned actions, implemented by your company, extend across your supply chain? if at least one action in Q7 A few tier 1 suppliers only TOTAL N= ,9% Across the majority of tier 1 suppliers only 29,1% Across the majority of tier 1 suppliers and some interactions at all levels of trading partners 22,6% Complete penetration of all tiers of the supply chain 5,4% 23,7% 12

13 Key initiatives undertaken To improve sustainability, companies focus on: health and safety of workers (56%) use of hazardous substances (44%) assessments to understand sustainability risks along the supply chain (44%) Q.9 Which of the following aspects has your company addressed in its own supply chain in order to improve sustainability? TOTAL if at least one action in Q7 Health and safety of workers Use of hazardous substances Assessment to understand the sustainability risks in your supply chain Energy use Waste generation Avoidance of corrupt business practice Implementation of a code of conduct Increase awareness of good environmental or health and safety practice through education programs Water use A fair price is paid throughout the supply chain Undertaken a life cycle assessment to quantify product related impacts Consumption of non-renewable or scarce resources Conflict minerals Climate change impacts Investments in local communities Donation to charities related to sustainability impacts Creation of jobs in disadvantaged communities or promotion of equal opportunities Animal welfare Trade in endangered species 56,4% 44,4% 43,9% 42,0% 39,7% 36,9% 36,6% 34,3% 27,1% 22,3% 17,8% 13,8% 13,4% 12,2% 10,8% 8,5% 8,3% 2,7% 2,1% N=

14 Main benefits The benefits outweigh the costs for 40% of the companies Customers require sustainability practices Companies take actions in order to keep operating and make a profit Q.10 Overall what benefits did your company achieve from the actions implemented? TOTAL N= if at least one action in Q7 Improved ability to meet customer needs Reduced social or environmental risks from supply chain Improved relationship with stakeholders Gained brand reputation & awareness Gained competitive advantage Increased market share/sales Other benefits 53,6% 40,1% 35,9% 34,2% 29,0% 17,0% 10,2% leaders 65 72,3 56,9 58,5 58,5 52,3 44,6 16,9 No benefits achieved 5,3% - 14

15 Main obstacles Obstacles preventing the companies from making more progress : & Q.12 What prevents your company from making more progress on sustainable sourcing? TOTAL Lack of financial resources+ Focus on short term results+ Lack of return on investment Conflicting requirements of customers+ Lack of consensus about what to do Lack of financial resources N= ,7% 37,9% 23,6% economic shortages lack of a clear frame of reference LEADERS manage obstacles much better: 43% do not see any barrier Conflicting requirements of customers Lack of consensus about what to do Focus on short term results Resistance of the supply chain Lack of return on investment Other 22,2% 21,3% 21,2% 19,9% 19,8% 12,9% No barriers perceived that prevent progress 17,3% 15

16 Raising awareness To raise awareness of what the company is doing: made claims in marketing activities (25%) published information about their supply chain (21%) Q.13 In the last 3 years, have you taken any of the following actions to raise awareness of what your company is doing? if at least one action in Q7 Made claims in marketing activities Published information about your supply chain Used an externally recognized sustainability label or certificate Made sustainability claims directly on the product label Other actions No actions undertaken TOTAL N= ,3% 21,3% 19,4% 10,3% 16,6% 27,8% Small companies: 42,6% Leader:1,5% 16

17 Future Outlook 17

18 Performance expectations For the future, companies expecting to hold skilled positions (4 and 5) in the maturity scale for supply chain sustainability are more than double compared to the present Q.1T Where would you like your company to be positioned on a 5 point maturity scale for supply chain sustainability in 3 years time, where 1 is Beginner and 5 is Leader? Beginner 2 TODAY 16,3% 22,4% TOTAL N= TOMORROW 5,5% 10,4% 66% of firms expect to improve sustainability of their supply chains within three years time 3 4 Leader 39,7% 17,9% 3,7% 27,1% 35,9% 21,3% Improvement 66,3% Same 28,0% Worsening 2,6% 18

19 Future drivers Companies expect sustainable sourcing to become more central to their business Market drivers will mainly push companies to engage in sustainability initiatives: Meeting customer needs (55%; +2%) possibility to gain competitive advantage (48%; + 19%) Q.2T If you would like to improve compared to your position today, what are the reasons for this? % PAST % FUTURE Competitive advantage Market share/sales Brand reputation & awareness Meeting customer needs 29,0 % 17,0 % 34,2 % 53,6 % 34,3 % TOTAL N= % 50% 100% 48,2 % 41,3 % 55,1 % market share (34%; +17%) enhance brand reputation (41%; +7%) Reduction of social or environmental risks Relationship with stakeholders 40,1 % 26,8 % 41,4 % 35,9 % 19

20 Future drivers Customers will continue to be the most pressing stakeholder group (77%) Q.3T Which will be the main drivers influencing your market/business in order to manage a more sustainable supply chain TOTAL in three years time? N= Customers Regulators and other authorities Corporate leaders/policy Suppliers Competitors 35,4% 33,1% 28,5% 27,9% 77,4% Leaders 68 82,4 38,2 45,6 39,7 41,2 followed by regulators (35%) Final consumers Employees Investors Local community 25,8% 20,1% 9,3% 9,3% 41,2 36,8 17,6 14,7 Employees will be particularly important for Leaders (+17%vs average) Non-governmental organisations (NGOs) Unions 5,4% 2,6% 7,4 5,9 None of the above 1,6% 1,5 20

21 Future initiatives Companies will keep working on several initiatives: keep relying on audits (51%; +10% vs present) Require suppliers to provide information (35%) Implement and communicate a policy (34%; +9% vs present) Q.4T Which of the following sustainability actions regarding your supply chain will your company take in three years time? Directly undertaken an audit +External audit against your own audit protocol+ External audit using a recognized audit methodology Implemented and communicated a sustainable supply chain policy+information from suppliers about sustainability Require suppliers to provide information about sustainability Implement and communicate a sustainable supply chain policy Undertake dialogue with suppliers to share understanding of sustainability challenges Directly undertake an audit of some suppliers Provide training for suppliers on sustainability management Commission an external audit of suppliers against your own audit protocol Require an external audit of suppliers using a recognized audit methodology Other actions No actions will be taken TOTAL N= ,9% 38,0% 35,5% 34,4% 32,8% 31,1% 15,5% 11,7% 8,1% 9,3% 6,6% 21

22 Future initiatives Aspects to improve sustainability: Sustainability risk assessment (60%) health and safety of workers (49%) energy use (42%) waste generation (39%) % PAST % FUTURE Assessment to understand the sustainability risks in your supply chain 43,9% 59,5% Undertake a life cycle assessment to quantify 17,8% product related impacts 26,6% Consumption of non-renewable or scarce resources 13,8% 20,3% Increase awareness of good environmental or health and safety practice through ed. prog. 34,3% 39,4% Climate change impacts A fair price is paid throughout the supply chain Water use Investments in local communities Creation of jobs in disadvantaged communities or promotion of equal opport. Trade in endangered species Energy use Animal welfare Waste generation Donations to charities related to sustainability impacts Conflict minerals 0% 20% 40% 60% 80% 100% 12,2% 22,3% 27,1% 15,3% 24,8% 10,8% 12,1% 8,3% 9,5% 28,4% 2,1% 3,0% 41,9% 2,4% 2,7% 39,3% 7,6% 8,5% 42,0% 39,7% 10,0% 13,4% Implementation of a code of conduct 31,9% 36,6% use of hazardous substances (36%) Avoidance of corrupt business practice Health and safety of workers Use of hazardous substances 32,1% 35,5% 36,9% 49,3% 56,4% 44,4% 22

23 Profiling the leaders 23

24 LEADERS FEATURES 1. In buying decisions they consider sustainability aspects to a great extent (83,8%) 2. The relevant aspects for a sustainable supply chain are: health & safety (52,9%), economic sustainability (48,5%) and environmental impact (48,5%). An attention also to ethics (38,2%) 3. They adopt formal supply chain strategies (80,9%) 4. Customers are the main driver to sustainable management (80,9%) 5. Auditing is a key instrument (83,8%) Communication is a priority, especially: adoption and communication of ad hoc sustainability policies (58,8%) requiring suppliers to provide information about the sustainability (60,3%) 24

25 LEADERS FEATURES 6. Risk assessment is carried out to manage their supply chain sustainably (66,2%) 7. Benefits obtained are greater than costs (59,3%). They increased their ability to meet customer demands (72,3%) and improved their market performance 8. They manage obstacles much better than others (no barriers to improvement 42,6%) 9. Communication to the public is essential especially for: publication of information about their supply chain (47,7%) claims in marketing activities (46,2%) use of recognized labels or certificates (36,9%) 10. They believe that Supply chain sustainability will become increasingly important in the future 25

26 Is your supply chain fit for the future? SAFER, SMARTER, GREENER 26