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.
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
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
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