Interview with Tom Smith, Sedex
This is the last in my series of interviews with leading sustainability practitioners which I carried out to gain examples and pithy insights from the front line for my latest publication, Building A Sustainable Supply Chain.
Sedex is a not-for profit ethical supply chain management service with about 29,000 members in 156 countries. As Director of Insight and Planning at Sedex, Tom Smith lives, eats and breathes supply chain sustainability and he is uniquely placed to give vital insights into this most important issue.
Where did the idea for Sedex come from?
We were founded by a group of UK retailers back in 2004. They had gone off in the mid-90s to set up their individual ethical trading programmes – each with their own audits, questionnaires, certifications, processes etc. By 2000 they had come across two big challenges:
1. There was a huge amount of duplication in questionnaires between different companies and suppliers were spending more time responding to questionnaires than actually fixing the problems. There was also huge duplication in ethical audits and the expense incurred;
2. The sheer volume of data. As ethical trade became more complex and covered more issues right down the supply chain, the volume of data that could be managed by Excel and people’s inboxes became limiting.
So the retailers said, we may all interpret and prioritise data in a different way, but the data we are looking for is the same. So this group, companies like Marks & Spencer, Tesco and the John Lewis Partnership, decided to create an on-line platform where any supplier of goods and services can complete a common set of questions, upload anything they’ve got onto one place – all their questionnaires, audit reports and certifications etc and share that out with multiple customers.
Are suppliers obliged to use the service?
It was created to be a bottom up supplier driven service, not just first tier suppliers, but factories, farms, mines etc – the whole works – and to capture information at a site level, not the top line corporate reporting level.
So in 2004 it was launched as a not-for-profit member organisation to help drive practical ethical trading, not talking about the why, but about the how and helping the CSR managers view the data and make decisions, rather than spending 95% of their time collecting it.
So, 10 years later, is the focus still on retailers?
No, we have very much diversified as a reflection of this whole movement. We started on ethical trading, labour standards, health etc – the classic teas, coffees and teeshirts kind of thing – and the platform has evolved as different industries and sectors have become interested. One of the interesting things is that the way the system collects data is on a site – it doesn’t matter if you’re making a suit or putting together the final packaging on a tin can or an office chair – the questions are exactly the same.
As retailers push it down the supply chain, we’ve had the big consumer goods companies – the Nestlés, Unilevers and Diageos – come on board and then they push it down, you get a big growth in packaging companies and with packaging you get chemicals. You get a snowball effect across multiple sectors and then you throw into the mix that new sectors are generally interested in all this. They are being driven by new legislation or things like the London Olympics pushing it out into new areas like service industry labour providers. This has diversified the membership. You also get the big globalisation effect, so gone are the days that this is just a question for UK retailers. We’ve now got retailers from South America, Southern Africa and Continental Europe – there’s big growth out in the States, too.
In the wake of the Rana plaza disaster, many UK retailers claimed they were going to set up their own supplier monitoring systes – how does this affect Sedex?
Bangladesh is one of many different hot points. What they tend to do is use Sedex to look at the wider impacts of their supply chain. We have a risk assessment tool which will help them understand where those hot points are and then they can do their own deep dive to address the issue. Those very specific problems are not what we are about eg fire safety in Bangladesh. We flag up the risk and you take those off line and use a local initiative or partners to address the problem.
If you’ve got hundreds of thousands of suppliers from different sectors, you need to spot the Rana Plaza before it happens,. Use can the data to identify where the problems are and then deep dive into the specific problems.
Is Sedex mainly self assessment?
No, it starts with a self assessment process, it then builds into ethical auditing – third party accreditations – we don’t do this ourselves. There is a huge debate about the effectiveness of auditing. It’s not a magic bullet, but it tells you what is going on and it is down to you to actually take the next step.
If you have a supplier and ask them to have an audit by an auditing company, the audit report will get uploaded onto the suppliers’ account, with all the recommendations. The issues are broken down and that data is mined across the system. If a problem is fixed, the evidence is verified by the auditor.
If you are a supplier and you have had the audit done for one customer, it only takes the flick of a button to release that data to another customer or potential customer.
It is all about data, really. If you are a small company and have 3 or 4 main suppliers then you can speak to to people, meet them and you know what’s going on. But if you’re a large business and you have thousands or hundreds of thousands of suppliers and you’re asking everyone to get audited and you’re getting ten issues per audit, then there’s a huge amount of data to keep track of.
What’s the future evolution of Sedex?
Keeping up with the changes! This landscape is changing so much – we started in ethical trade, moved in Health & Safety, then into environment and then into anti-corruption/bribery we added industry specific questions we’re looking beyond auditing to cover training and capability building, impact assessment. This whole landscape is changing so rapidly, if you stand still for one moment you end up out of date.
Our members look to us to keep up to date with the issues. There’s 101 different topic areas for us to keep up to date with, which is really exciting.
But the big thing is to try to encourage people to use data in sustainability – every other area of business, be it sales, HR, marketing, whatever, people make decisions based on data but in sustainability people seem to jump that little step and are quite reactive to issues – some of which aren’t relevant to them.
Is aversion to using data issue a cultural issue particular to CSR teams?
The more you look down your supply chain the more problems you find – there is often a cultural issue to over come that reluctance. Too many people say “Oh, the supply chain is difficult, we’ll do that next year.”
You also have the issue that many people just don’t know where their supplies come from. The key thing for us at Sedex is to cover the whole supply chain – not just the first tier, but going all the way down. As you go down, the risks are greater, you have less visibility is less and you have less influence. But how can you say you have a good quality, efficient supply chain when you don’t know where you goods are from?
We do lots of unglamorous work of tidying up peoples’ data, to make transparency happen.
Can Sedex flag up problems in the supply chain?
Up to a point. You can’t do everything with everybody. We can flag up the risk areas for our members to deep dive into. Our members have a huge number of suppliers across the globe and the trick is to decide which specific areas to focus on – that’s what we do for our members.
And your final advice?
It’s tempting just to scratch the surface, but you’ve got to go all the way down – it’s a dirty, nasty, difficult business, but that’s the only way of doing it properly.