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Supplier Engagement: Shifting from Defensive to Collaborative

3p Contributor | Thursday July 7th, 2011 | 0 Comments

This post is part of a series on Stakeholder Engagement sponsored by Jurat Software.

By Nicole Sherwin

Companies are only beginning to uncover the best practices for engaging suppliers on sustainability.  With suppliers providing the major inputs for the operations of businesses, it would only make sense that companies would be eager to engage this specific stakeholder on sustainability issues, but many companies are still fumbling over how to approach it. One of the main issues is that companies are stuck in a top-down mentality when it comes to supplier relationships; they implement policies and resort to monitoring suppliers, rather than engaging them.  Yet, changes are afoot as companies begin to realize the importance of supplier engagement and collaboration as part of their sustainable procurement strategy.

Sustainable Procurement itself is a late bloomer in regards to the evolution of all corporate social responsibility practices.  Companies need to look internally at their own environmental and social practices before requiring those around them to conform.  Still, even large corporations that have been involved in Corporate Social Responsibility for some time are just beginning to take the most basic steps towards establishing Sustainable Procurement management systems.  For example, Mattel Inc., under pressure from Greenpeace, has recently agreed to establish a sustainable procurement policy and just a few months ago Dow Chemical Company launched their first Code of Business Conduct for Suppliers. These companies are not small unsuspecting organizations, and yet the essential foundations to build a sustainable supply chain are just being laid.

While policies, supplier codes of conduct, or CSR clauses within supplier contracts, are a critical first step, the act of engaging suppliers has been traditionally conducted from a defensive position. Suppliers are inundated with questionnaires, obliged to forgo audits, and subject to other monitoring practices. These one-sided business processes have their purpose, but they usually focus on the negative or aim to punish suppliers for non-conformity.  With this approach, suppliers are not encouraged or motivated to change because they are not included in the process.

Monitoring suppliers is certainly part of a sustainable procurement strategy, but a complete strategy will also include a means to engage and support supplier improvement.  Some of the emerging best practices include:

  • Capacity building:  Suppliers can grow up to be big, strong and sustainable companies their own, but they will do it a lot faster with the support of their buyers.  Supplier capacity building aims to train suppliers on both the general and the company’s sustainable management practices. Capacity building can also support implementation of specific sustainability practices. For example, Ford Motor Company has a training program for all suppliers and also facilitates detailed improvement actions alongside strategic suppliers.
  • Engage buyers:  A supplier’s direct connection to a company is through the company purchasers or buyers. Preparing these individuals for their new engagement role is a key element to success. Many companies have started training buyers on sustainable purchasing such as Alstom which has trained over 1500 buyers on sustainable development practices and how they specifically relate to the purchasing function and internal sustainable purchasing objectives.
  • Reward exceptional performers:  Suppliers which surpass CSR expectations should be praised! Some companies offer special supplier sustainability awards such as Coca-Cola and Siemens AG. A better incentive which will both encourage supplier CSR improvement and generate internal value is to leverage top performing suppliers for sustainable product innovation.

There is no doubt that engaging suppliers requires time and resources to develop and is not as simple as sending an auditor.  Engaging suppliers on sustainability and not solely focusing on compliance is a key aspect of sustainable procurement and is a means to ensure that the sustainable practices of the supply chain will continue to grow alongside those of the company.

[Image Credit: Peter Shanks via Flickr - under creative commons license.]

Nicole Sherwin holds an MBA in Sustainable Management from Presidio Graduate School. She currently works for EcoVadis as a CSR Analyst in Paris, France.

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