Sustainable Procurement: Meeting Corporate Social Responsibility Objectives through Your Supply Chain
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The document discusses sustainable procurement through supply chain management. It begins with an agenda that includes defining sustainability in the market, overviewing product offerings from Ariba Network and SAP Product Stewardship Network, and a round table discussion. It then provides more details on each product's capabilities to help companies meet corporate social responsibility objectives by managing economic, social, and environmental risks and opportunities across the entire value chain.
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Sustainable Procurement: Meeting Corporate Social Responsibility Objectives through Your Supply Chain
- 1. #AribaLIVE Sustainable Procurement: Meeting Corporate Social Responsibility Objectives through Your Supply Chain Achim Voermanek, Head of Solution and Product Management Office @voermanek Dieter Haesslein, Vice President, Natural Resources Industries and EHS & Sustainability Products and Solutions, SAP AG Geoff Elliott , Procurement Lead, Property & Corporate Services Deloitte LLP 04/2014 © 2014 Ariba – an SAP company. All rights reserved. @ariba
- 2. “Safe Harbor” Statement • This information reflects the status of Ariba Inc., an SAP company, solution planning as of March 2014. All such solution planning information is the Confidential Information of Ariba (per the contract between our companies – or an authorized distributor), and must not be further disclosed, as stated in the confidentiality clause of that contract. This presentation contains only intended guidance and is not binding upon Ariba (or its affiliates) to take any particular course of business, product strategy, and/or development. Its content is subject to change without notice. Ariba assumes no responsibility for errors or omissions in this document. Ariba shall have no liability for damages of any kind including without limitation direct, special, indirect, or consequential damages that may result from the use of these materials. 2 © 2014 Ariba – an SAP company. All rights reserved.
- 3. Agenda • Sustainability Market Definition • Product Overview Ariba Network SAP Product Stewardship Network • Round Table Discussion © 2014 Ariba – an SAP company. All rights reserved.3
- 4. Drive business success through holistic management of economic, social, and environmental risks and opportunities © 2012 SAP AG. All rights reserved. 4 SUSTAINABILITY Internal
- 5. SAP’s carbon footprint along the value chain
- 6. 6 Design Source & Procure Produce & Comply Store & Ship Sell & Use EOL Information Technology is key to holistically manage economic, social, and environmental risks and opportunities Products, Recipes, Regulations, Specs, BoM‟s Assets, Parts, Equipment, Regulations Customers, Distributors, Channels Raw Material/ Component Suppliers Take-back, Reuse, recycle, dispose
- 7. Sustainable Supply Chains Competitive advantage through Sustainability Source: An Avnet Case Study, September, 12, 2012 Definition of Sustainable Supply Chain Integrating environment, economic and social aspects into supply chain management.
- 8. Sustainable Sourcing and Procurement Business Impact Trends – Brand value at risk – Increasing regulation – Changing customer requirements – Resource scarcity and price volatility Investment – Build new sourcing and procurement capabilities (varies by industry and region) “McDonalds„ to Recall 12 Million „Shrek‟ Glasses Citing Cadmium Health Risk” (NY Times) “Underage Workers Found in Apple Supply Audit” (BBC News) “Mattel Issues New Massive China Toy Recall” (NBC News) “Oil Spill Panel Urges Major Reforms” (BBC)
- 9. Sustainable Sourcing and Procurement Introduction Sourcing Procurement practices aimed at finding, evaluating, and engaging suppliers of goods and services Sustainable sourcing Source products and services in line with the principles of social, economic, and ecological sustainability, beyond the traditional aspects of cost, quality, and consistent supply – Less resource intensive – Less polluting – Less harmful to human heath and the environment Sources: Wikipedia + Worldwatch Institute Design Source ProduceStore & Ship Sell & Use Recycle Raw material, fertilizer, energy, water, cleaners, dyes, waste, packaging, chemicals, etc.
- 10. Sustainable Sourcing and Procurement Overview: How Industries Change Supplier Risk and performance More Sustainable Products Compliance (legal and customer requirements) Active management (suppliers and products) Supply Chain Optimization (link sourcing and design) Sophistication
- 11. Sustainability Requires Supply Chain Collaboration © 2014 Ariba – an SAP company. All rights reserved.11 Company Product Category Product Raw Materials 1000‟s of Suppliers EH&S, Legal, Sustainability Sourcing & Procurement R&D, Engineering Sustainability performance of.. Certifications, Compliance declarations / sustainability data exchange Producer/Manufacturer
- 12. New Tasks in Sourcing & Procurement Suppl.Perf.Mgmt.ProcurementSourcingDiscovery • Qualify material • Meet Form-Fit- Function • Compliant • Sustainable • … • Qualify supplier • Financial • Sustainable • … • Negotiate T&C • Decide (“design-in”) Direct materials souring / procurement process • Ask supplier rep’s • Ask disti rep’s • Search catalogues • Issue RFI on supplier hubs • Visit tradeshows • … • Establish Master Purch. Agreement • Issue PO (MRP or “spot”) • Volume, date • Verify compliance • … • Analyze performance • Quality • Compliance (tests) • Delivery volume, schedule • Improvement program • Sustainability Indirect Materials (MRO) Services Annual spend in manufacturing industries Direct Materials Red = new tasks
- 13. Problem: Collecting Compliance Data is Hard E.g. Access to EU market requires RoHS/REACH/.. compliance Disk drive Manufacturer: “It takes 18 months to collect 1 round of substance data ..” Connector Supplier: “We receive over 1300 inquiries per month ..” Component manufacturer: “My biggest spend is retyping declaration data ..” What’s in my materials? Images and logos for illustrative purpose only 13 © 2014 Ariba – an SAP company. All rights reserved.
- 14. Solution: SAP Product Stewardship Network E.g. Access to EU market requires RoHS/REACH/.. compliance SAP Product Stewardship Network • Easily connect supply chain • Share material data • Automate change management • Share insight • Faster time to market • Reduce compliance risk • Save cost Note: company names/logo’s for illustration only 14 © 2014 Ariba – an SAP company. All rights reserved.
- 15. PSN Supports 3 Scenarios • Product Environmental Compliance (substances) • Conflict Minerals Declaration (smelters) • Product Category Sustainability Assessments (footprint, based on KPI’s from The Sustainability Consortium) • … © 2014 Ariba – an SAP company. All rights reserved.15
- 16. Product Environmental Compliance Leverage embedded regulatory content 17 © 2014 Ariba – an SAP company. All rights reserved.
- 17. Compliance Declaration Easily create and share compliance declarations 18 © 2014 Ariba – an SAP company. All rights reserved.
- 22. Product Sustainability Assessment Leverage TSC® Product Sustainability Toolkits
- 23. Supplier Responds to a Survey Use TSC® Toolkit questionnaire to perform assessment
- 24. Supplier Can See their Relative Score Impression of product category average
- 25. Retailer Has Detailed Analytics Progress, category improvement potential, supplier rankings
- 26. SAP’s procurement products Enable sustainable choices for requester
- 28. © 2012 SAP AG. All rights reserved. Integrated Reporting
- 29. © 2014 Ariba – an SAP company. All rights reserved.31 Thank You !
- 30. Please Complete Session Survey Locate Session 32 Click Surveys Button Select Breakout Survey Rate Session Thank you for joining us © 2014 Ariba – an SAP company. All rights reserved.
Editor's Notes
- SAP systems in use by our customers today cause about 20 timesthe emissions of our own operationsHinweis auf Möglichkeiten, dies entlange des gesamten Software Lebenszykluszureduzieren – vom Design, überImplementierungbishin zur WartungUtility company > 90% from own operationsRetail/CDP > 90% from supply chain
- week 3, unit 3.Last Unit „Sustainable Design“Now UNIT „Sustainable Sourcing & Procurement”. Sourcing is finding, procurement is buying.
- If we look at the maturity model for sustainable sourcing and procurement, we are at the inflection point between active management and supply chain optimization !!!!Compliance : meet legal and customer requirements at the lowest point and secure ‘right to play’Supplier code of conduct: - minimum requirements to do business - supplier standards, audits, etc.Transparency - REACH(restriction of certain chemicals), RoHS (restriction of hazardous substances)Product provenance - conflict mineralsImpact: - license to operateActive Management: Transparency about suppliers and product attributes; brand building and brand risk managementCorporate reporting: framework (GRI), industry (SASB), impact (CDP), customer (P&G, Walmart)Product attribute ecolabels: 600+ private ecolabels, government (EnergyStar)Impact: - subject matter complexity - transparency - mulit-tier netwoprk (address hotspots wherever they exist in supply chain)Supply Chain optimization: Linking sourcing and design; Business Continuity through supply chain operational risk mgtIndustry network transformation - m:n business network - multi-tier visibility - scalable across industry and impact category - data granularity - data needs to be material - data needs to reside in system of recordIT Levers: - cloud-based connectivity - Big data transparency and analytics
- Engineering specifies the materialLegal/sustainability
- Increased regulatory complexity + continuous change + proprietary declaration formats result in increased effort to collect and maintain compliance data
- Danone have already passed their 30% carbon reduction target – an impressive achievement.How did they do it? They used a combination of information and incentives. On the incentives front, 30% of every plant manager’s bonus was made dependent on carbon reductions. While on the information front, Danone rolled out a carbon calculation and management system which made the full lifecycle carbon emissions of every aspect of every one of Danone’s 35,000 products readily availablethis project led to Danone’s needing to revisit all their processes, many of which hadn’t been examined in quite some time. This re-assessment identified inefficiencies and led to many reductions and simplifications of processes.But now with 80% of the data needed for the calculation being pulled through from SAP EPR systems(the rest stems from supply chain primary data), it is well automated and gives the company the monthly reports needed to help it towards its ambitious goal of driving down its carbon footprint by 30% in four years.Source: http://greenmonk.net/2012/04/16/danones-carbon-reduction-collaboration-with-sap-has-additional-cost-recruitment-and-retention-benefits/Stonyfield Farm has now calculated the complete lifecycle carbon emissions of three quarters of its 200 products,The system, which has been validated by PricewaterhouseCoopers, covers all of Stonyfield’s suppliers and every stage of product life from farm to spoon. This includes raw material production, manufacture, transportation of raw materials and finished products, storage by retailers and consumers, packaging and end-of-life disposal.Its past environmental achievements include an 11 percent drop in facility energy and GHGs from 2007 to 2010, saving $2 million; a 46 percent reduction in transportation GHGs from 2006 to 2010, saving $7.6 million; and a 39 percent cut in solid waste from 2007 to 2010, saving $450,000.
- Integrated reporting drives integrated thinkingSAP new DM solution usedAll data in BW (up to 95% of datautomat.collected in some areas)Not just driving sustainability strategy to reduce carbonNot just driving employee engagement to feel goodWe want to highlight the connection between financial and non-financial performanceMoving closer to make corporate strategy sustainableSustainability is about value creation; best way to articulate value is to bring it into context of our overall performance as a companyWe found many connection between elements of a financial report and sustainability reportWe are a pilot of IIRCInstead of integrated report representing integrated thinking we use report as catalyst to more integrated thinking; so we pay more attention to all forms of capitalIR shows Holistic approach to value creationSnabe:Shift thinking about how resource efficiency & productivity serves as a basis for integrating business strategy and sustainability. Business growth is impacted byConstraining of resources through volatility of resource pricesIncreased competitionPotential disruptions
- Click the schedule icon, select Full Schedule, select the day your session occurs at the bottom, and search on the session titleYou can also click the speaker icon and search for session speakers to find the sessionClick on the session to bring up detailsYou’ll see 3 tabs on the page, Details, Speakers, and Surveys, as shown on the slideClick on the Surveys tabClick on Breakout Session SurveyRespond to survey and click submit