Do You Want Competition or Collaboration in your Supply Chain
I’m busy, busy, busy writing my second tome for DoSustainability – this one on Greening the Supply Chain. Even a short book like this requires a huge amount of research, so I’ve been perusing loads of published case studies and articles and interviewing some leading industrial sustainability practitioners to gather my raw material.
One emerging issue which I’m mulling on is to what degree do you encourage competition amongst suppliers for your business and to what degree do you work with suppliers to find win-win solutions? Some companies are quite brutal with their suppliers, taking a blunt “my way or the highway” line. Others feel mutual loyalty towards their suppliers having built up a trusting relationship over many years and don’t want to ditch them on environmental grounds.
Let’s look at some fundamental points:
- You won’t hit ambitious sustainability targets with the supply chain you have now – it will have to change;
- That will inevitably mean losing suppliers who are locked into supplying unsustainable resources;
- There are usually some current suppliers who could supply more sustainable resources, but currently don’t for whatever reason;
- There will always be a stream of new businesses eager to meet sustainable business needs.
In my opinion, if you are serious about sustainability then you must be prepared to lose suppliers and replace them with greener equivalents. You don’t want a recalcitrant supplier to drag you down, or in the worse case, damage your reputation through their actions (or inactions). On the other hand, the ethical business will want to be completely fair and open about how they go about this, giving loyal suppliers ample chance to meet your future needs.
- Make your sustainability objectives crystal clear;
- Make the transition processes crystal clear – how, when and why you will assess suppliers and their products/service’s sustainability performance;
- Practice forward commitment procurement – announce what you will need in the future and by when;
- Be open to entering a conversation with each existing supplier on how they can become part of the solution;
- Be prepared (resources permitting) to invest in suppliers or a joint venture to develop solutions – if there is a clear case for doing so;
- Be clear that ‘do nothing’ is not an option;
- Be prepared to say “Thank you, it’s been great, but it’s over.”
Be tough but fair, in other words.