THE BUSINESS REVIEW FOR PROCUREMENT LEADERS
Global supplier assurance standards are needed to avoid ‘evaluation
fatigue’ in corporate responsibility initiatives
by Uwe Schulte
It has long been recognised that the environmental and social “footprint” left in the supply chain by companies operating on a global scale extends way beyond the impact of their direct operations. Unacceptable practices of suppliers – for example, the use of child labour or the depletion of rainforests – have caused damage to brands and corporate reputations that are slowly built but easily lost.
We all work for companies that condemn such practices, and we are keen to embrace our responsibilities as part of our wider business sustainability agenda. Yet the globalisation of the world economy continually redefines business and supply chain boundaries. This shifting of the goalposts means that compliance monitoring of acceptable performance in each element becomes an increasing challenge to supply managers, who are often held to account for supplier behaviours by their CEOs.
The process of compliance monitoring consumes the resources of both suppliers and customers alike – a precious commodity in times of increased market volatility, global competition and reduced product innovation cycles. Is the evaluation of every supplier by every customer a sustainable way of working in the future?
My belief is that this “unilateral” approach will eventually become too heavy a burden for business. Separate evaluations, the use of different processes and the lack of consistent standards will ultimately confuse and exhaust suppliers struggling to meet the wishes of diverse customers. “Evaluation fatigue”, if not already reached, will set in and lead to poor quality, “tick-box” solutions.
A collaborative approach by both suppliers and customers within their common interest sectors to share information regarding operational practice and standards is the only sustainable way forward. Success and stakeholder credibility will be highly dependent upon a crucial enabler – a set of internationally agreed standards, externally certified, that cover all the dimensions of the corporate social responsibility agenda: environmental care, health and safety, social employment conditions and business integrity. A good model would be the ISO 14001 framework, which sets out the systems, practices and performance monitoring required for good environmental impact management.
A final enabler, the “icing on the cake”, would be the provision of registration systems that would permit information and data exchange between suppliers and customers of external certification profiles. Run along commercial lines, these systems would provide a low-cost alternative to the development of bespoke information management systems that any individual company needs to develop in order to track and collate its suppliers’ profiles.
Such programmes would be a major advancement in the management of supplier assurance and corporate social responsibility. It would simplify the work of evaluating the vast numbers of suppliers, and enable risk assessment to be used as a discriminating tool to allow real focus on those suppliers in need of most scrutiny and improvement measures.
So what, if anything, is new about this approach? After all, external certification
of international standards is now commonplace in most industries. Unfortunately,
there is currently no universal agreement on the merits or otherwise of certain
standards. For example, SA 8000 as a standard for social employment conditions
is not recognised by all industry and business operations, and cannot be considered
a true global standard.
Will other standards become better accepted and widely adopted? Should some
companies continue to invest in internal resources to develop and maintain
their own operating standards, separately from adopting external ones? And
if so, who will judge the merits of each?
Much is still to be done, and industry-wide collaboration is the obvious next step. The expectations of consumers, shareholders, governments and non-governmental organisations will increase rather than diminish. Global standards can increasingly be a common language to ensure consistency and credibility.
We all need to work together to ensure that this happens. Then we can really focus our attention on the suppliers that need it most.
Uwe Schulte (uwe.schulte@unilever.com)
vice-president of global supply management at Unilever
