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MIT GLOBAL SCALE NETWORK WHITE PAPER ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS BY DR. EDGAR BLANCO RESEARCH DIRECTOR MIT CENTER FOR TRANSPORTATION & LOGISTICS AND KEN COTTRILL GLOBAL COMMUNICATIONS CONSULTANT MIT CENTER FOR TRANSPORTATION & LOGISTICS SUMMER 2012

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MIT GLOBAL SCALE NETWORK WHITE PAPER

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS

BY DR. EDGAR BLANCORESEARCH DIRECTORMIT CENTER FOR TRANSPORTATION & LOGISTICS

AND KEN COTTRILLGLOBAL COMMUNICATIONS CONSULTANTMIT CENTER FOR TRANSPORTATION & LOGISTICS

SUMMER 2012

CONTENTS

Executive Summary...........................................................................................................................................3 Project Drivers.....................................................................................................................................................4Keys to Success.................................................................................................................................................15Future Implications.........................................................................................................................................17Acknowledgements.............................................................................................................................................20

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 2

Executive Summary

As companies advance their sustainable development initiatives into

the extended supply chain, their suppliers become a crucial source

of information and market expertise. Consequently, suppliers are

under increasing pressure to participate in these programs. How

best to involve trading partners in green supply chain projects and

develop mutually beneficial relationships is an urgent challenge for

enterprises worldwide.

According to the Carbon Disclosure Project (CDP) in its 2012 Supply

Chain Report , “suppliers that do not measure, quantify, and manage

their greenhouse gas emissions will soon see their business move to

competitors that can provide better information and clearer evi-

dence of change.”

Of the 50 CDP Supply Chain member enterprises surveyed in the

report, some 62% reward suppliers with good carbon management

practices, up from 28% in 2010. Moreover, 39% of these member

organizations “will soon begin deselecting suppliers that do not

adopt such measures,” says CDP. This compares to 23% of member

organizations in the previous report. Even though the CDP sample is

biased toward environmentally aware organizations, there is “grow-

ing momentum for supply chain engagement,” CDP asserts.

These larger engagements influence the success of carbon mitiga-

tion supply chain projects on a number of levels. Unrealistic expecta-

tions for the exchange of data can discourage supplier participation,

for example. On the positive side, the active support of vendors

helps companies to achieve quick wins and to “sell” future projects

to their senior management.

A number of factors need to be considered when planning and

executing the involvement of suppliers in sustainability projects. The

objectives, the complexity of the supply chain, and who is managing

the relationship are examples of these considerations.

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 3

To shed more light on how companies are including supplier net-

works in these initiatives, we asked six companies based in Asia,

Europe, Latin America, and North America to explain their engage-

ments and to offer advice on what makes these collaborations suc-

cessful.

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 4

Project Drivers

The rationale behind supply chain sustainability initiatives shapes the way in which companies interact with suppli-

ers on these projects. To begin with, the companies we in-terviewed are driven by an overarching commitment to sus-tainable development. “Climate change and climate change mitigation are significant topics for many of our stakeholders,” says Barbara Kux, Member of the Managing Board and Head of Supply Chain Management at the German multinational, Siemens AG. The company has achieved exceptional deliver-ables along the value chain. These include:

• Helping customers to reduce their carbon dioxide emissions by

an accumulated 300 million tons in fiscal year 2011.

• Growing the company’s Environmental Portfolio revenues from

19 billion Euros in fiscal 2008 to 30 billion Euros in fiscal 2011;

growth rates were higher in the Environmental Portfolio than in

the remaining portfolio.

• Continuous improvement of internal carbon dioxide efficiency.

Global consumer products manufacturer Unilever has a corporate

goal called the “Compass” strategy, which aims to halve the envi-

ronmental impact of the company’s products while doubling the

size of its business. Supply chain is a key element of the strategy.

“Our focus has also been on streamlining essential business sup-

port functions, such as procurement and supply chain, HR, IT, and

finance. This not only helps us save costs, but also makes us better

able to respond to our customers and consumers,” the company

says.

Large multinationals aren’t the only players that have set ambitious

targets for their sustainability programs. Tackling climate change

is also a top priority for food products company Grupo Nutresa,

based in Medellín, Colombia. The organization has set a goal to

become carbon-neutral in its chocolate and coffee businesses.

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 5

Targets like these drive the overall direction of sustainability pro-

grams, but the real work takes place within individual project groups

tasked with meeting more specific goals. The agendas of these

groups shape collaborations with suppliers. Here are examples of

the different approaches from the companies interviewed.

ASICS: A learning exercise

Deep-dive engagements with suppliers on the environmental impact

of products can provide unique learning opportunities for compa-

nies. In addition to supporting specific programs, these lessons can

be applied widely to help organizations meet their sustainability

goals.

This is the approach taken by ASICS, the Kobe, Japan-based manu-

facturer of athletic footwear, apparel, and accessories. ASICS chose

a single high-profile, high-volume legacy product as the subject of

a detailed environmental impact study that took more than a year

to complete. It worked with a major contractor in China that makes

more than 40% of the company’s products, including the athletic

shoe it studied in detail.

“We wanted to look at the impact of our products on the supply

chain,” says Seiko Inoue, Corporate Strategy Department, ASICS. “We

are now trying to apply the learnings from this project in a broader

scope within our company.” The study looked at the carbon foot-

print and water usage associated with the product, and involved the

collection of data on materials, scrap, and the many manufacturing

processes required to assemble the finished article.

Contrary to most of its competitors, ASICS still manufactures some

of its footwear products in wholly owned facilities in Japan. Further-

more, the company seeks competitive advantage by conducting

its own structural Research and Design into new materials for shoe

soles, improved product biomechanics, and innovative production

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 6

methods around machinery, molds, and digital design solutions.

That aside, in general ASICS designers specify features such as the

look, the color, and the line of the company’s shoes, but it is the sup-

plier that turns these prototype specifications into an actual product.

The ASICS team used the study results to generate a list of oppor-

tunities for reducing energy and water consumption. Their analysis

highlighted a number of critical steps in the manufacturing process

that make up most of the item’s carbon footprint.

These findings are now being used in a number of ways. With the

benefit of new information on production methods and materials

choices, ASICS designers are working on ways to make prototypes

more environmentally friendly, for example. The same thinking also

can be applied to other products. “Good examples [of evaluations

like these] exist outside our company, but doing it ourselves is a

learning process,” says Inoue.

Grupo Nutresa: Know thyself, know suppliers next

Recruiting suppliers can be part of a phased approach to reducing

the environmental impact of supply chains. Colombian food con-

glomerate Grupo Nutresa has a two-stage plan to achieve carbon

neutrality in its core businesses. In the first stage, the food products

company created an inventory of greenhouse gases (GHG) emitted

by its production plants in Colombia and other countries.

The second phase, currently under way, is more expansive in that

Nutresa is evaluating the carbon footprints of its main products –

roasted and soluble coffee, chocolate bars, and cookies sold in vari-

ous markets, including Europe, Japan, and the United States – and its

distribution network in Colombia. “Since we started this initiative, we

have worked with our main suppliers of packaging materials,” notes

Jorge Eusebio Arango, Grupo Nutresa’s Vice President of Sustainable

Development. The group has also included raw materials suppliers in

the program.

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 7

The suppliers were selected “basically by the volume and type of

material they supply – carton and laminate material – which are used

in the final products that we sell,” Arango explains. These vendors are

now part of Nutresa’s sustainable development strategy. Every year,

the group organizes an event to communicate its plans to the sup-

pliers, discuss possible areas of collaboration, and integrate the work

into the group’s sustainability strategy.

HP: Developing new methodologies

Suppliers’ expertise not only is a valuable resource when implement-

ing a low-carbon supply chain strategy, but trading partners can

also provide vital support when developing relevant standards and

methodologies.

Technology company Hewlett-Packard (HP), headquartered in Palo

Alto, CA, USA, “fully supports our customers’ ability to understand

the environmental impacts of our products, including carbon foot-

print,” says Alexandra Degher, a program manager in the company’s

Supply Chain Operations program.

The problem is that product carbon footprint (PCF) standards vary so

much that it is difficult for customers to compare products. So HP has

engaged with various stakeholders, including suppliers in Asia, on a

project to develop “a PCF methodology that is transparent, objective,

scientifically rigorous, credible, and relevant to customers.”

The Product Attribute to Impact Algorithm (PAIA) project is being

managed out of the MIT Materials Systems Lab, and focuses on note-

books, desktops, monitors, and TVs. Current PCF initiatives do not al-

low for product comparisons due to large variability and uncertainty

in results. This is due to:

• A lack of standardized PCF methodologies and assumptions.

• PCF results that vary drastically simply based on the assumptions

used.

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 8

• A lack of accurate and consistent data behind the calculations,

making it complicated to measure and track emissions for thou-

sands of components per product due to the lack of data stan-

dards, data capture, and management systems and to the depth

of the supply chain.

• A great variability even among single components due to mul-

tiple suppliers in different locations worldwide.

• The difficulty in allocating total facility carbon emissions for facili-

ties that produce multiple products/components, again due to

the lack of standards and systems to manage such data.

• Components rapidly being improved and updated, making data

difficult to keep current.

• Most suppliers, especially those deep in the supply chain, not be-

ing sufficiently sophisticated to measure and report environmen-

tally relevant product-specific data.

• Generic data that must often be used in place of specific data,

that is not product specific, and that is subject to gross inaccura-

cies.

Through the PAIA project, HP, along with other PAIA members, identi-

fied product “hotspots” – processes and/or components that have

the greatest impact on the PCF – and engaged with suppliers in

these areas to improve the methodology and obtain more accurate,

reliable data. These suppliers were sent a questionnaire designed

to elicit component-specific carbon footprint data on these critical

components.

Siemens: Multi-level programs

Complex supply chains that support many products often require

supplier engagements on a number of levels. Siemens AG, the Ger-

man electronics and electrical engineering multinational with rev-

enues of some 74 billion Euros, has operations that span multiple

businesses. The company – recognized by the Dow Jones Sustainabil-

ity Index and the CDP based on its overall performance and supplier

management – claims to be the world’s largest provider of environ-

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 9

mental technologies. About 40% of its total revenue comes from

green products and solutions. Meeting its sustainability goals across

such a complex supply chain requires the organization to interact

with suppliers on a number of levels.

“Our suppliers are of central importance to our company, as pur-

chased products and services account for approximately 50 percent

of our total revenue. The 21st century is all about networks – with

customers as well as with suppliers – and being really intertwined

with partners is the key for success. We are currently working on es-

tablishing such a network with our strategic suppliers, a network that

has to be sustainable,” says Kux.

Siemens has implemented a comprehensive program for “Sustain-

ability in the Supply Chain.” It assures the sustainability of suppli-

ers with a globally binding corporate responsibility self-assessment

(CRSA) system that is monitored by external auditing companies via

external sustainability audits (ESA). In addition, the company has

developed an energy efficiency program for suppliers. When select-

ing suppliers to participate in the program, Siemens looks for ven-

dors that not only are competitive and innovative, but also set high

sustainability standards. The company has “integrated sustainability

requirements in all relevant supplier management processes since

2009, and is planning to constantly develop them in the future,” says

Kux.

Specifically, Siemens uses supplier data for an ABC analysis for the

selection of relevant suppliers. Two main criteria are used when

choosing which vendors to engage in improving energy efficiency:

high energy intensity in production and high purchasing volume.

The company has developed an IT-based platform for the exchange

of data with these suppliers.

Various initiatives fall under this umbrella. Increasing energy effi-

ciency is an important part of the organization’s efforts to cut green-

house gas emissions; the company has created the Energy Efficiency

Program for Suppliers as one of the first major enterprises. “Based

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 10

on the Energy Health Check for our own production facilities, a

staggered assessment has been developed for Siemens suppli-

ers,” says Kux. The model is suitable for each supplier’s purchasing

volumes and the energy intensiveness of its production process-

es. “The tool helps suppliers to optimize their energy balance and

carbon emissions, and to achieve savings through the provision

of defined measures,” she explains.

Logistics is another operational area on which the company is fo-

cusing. In fiscal year 2011, Siemens asked its top logistics services

providers to define common approaches to reducing greenhouse

gas emissions in its supply chain. These measures encompass net-

work improvements, such as shifting from air to ocean transport

modes, and efficiency increases.

The effort has already yielded some advances. A project to op-

timize inbound logistics for transformer manufacturing sites in

Germany, Hungary, Croatia, and Austria resulted in a switch to

intermodal cargo movements using rail and truck. This change,

combined with other optimization measures, achieved significant

cost savings and a 40% reduction in carbon emissions.

Siemens participates in numerous national and international

sustainability programs run by organizations such as the Carbon

Disclosure Project. For example:

• It works with leading global sustainability organizations,

including the World Business Council for Sustainable Devel-

opment (WBCSD), the World Economic Forum (WEF), and the

World Resources Institute (WRI).

• The company shares experiences it has gathered in the Scope

3 project run by the WRI and WBCSD’s Greenhouse Gas Proto-

col Initiative to promote greater transparency in carbon emis-

sions reporting.

• Siemens is a member of the steering committee of the Global

Compact’s Caring for Climate Initiative.

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 11

However, the complexity of its supply chain means that no single

initiative can comprehensively meet the organization’s sustain-

ability needs. “Due to our diverse product portfolio, size, and

global setup, we do not see a specific industry initiative that

covers all individual requirements of our businesses. This is also

reflected in our energy efficiency program for suppliers, where

experts from Industrial Services units address efficiency potentials

in production processes, while experts on Building Technology

and Lighting cover the building area. Siemens addresses GHG dis-

closure and management in various internal projects and initia-

tives,” Kux explains.

On a product level, Siemens carries out case-by-case Life Cycle

Assessments to help it understand the intensity level of carbon di-

oxide (CO2) over the complete supply chain. Allocating emissions

to measure cradle-to-gate exposure within the supply chain, how-

ever, would require comprehensive assessments at the individual

product level. “In addition to our above-mentioned activities, we

are evaluating approaches to further integrate GHG disclosure

and management requirements for suppliers into our Supplier

Management processes,” says Kux.

Unilever Americas: Manage globally, act locally

Local supplier networks can provide valuable insights into lo-

cal markets and business practices. Unilever Americas, based in

Bogotá, Colombia, works within the framework of the company’s

global sustainability strategy. However, the company also uses its

connections with regional suppliers to develop environmental

programs that are geared to local supply chains.

This dual approach is an intrinsic part of the Unilever environmen-

tal agenda. “A key element of our Compass strategy is to get bet-

ter efficiencies through our global scale. We need to get the right

balance between becoming more efficient and remaining close to

the local nuances of our consumer needs,” says the company.

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 12

In the case of Unilever Americas, the organization’s area of opera-

tion covers Central America from Guatemala in the north to the

more southerly nations of Ecuador, Colombia, and Venezuela. The

company is implementing a three-step sustainability strategy in

the region.

The first stage involves collaborating with suppliers to reduce the

environmental impact of raw materials supplies by cutting materi-

als consumption. In the second phase, the program will be ex-

tended to manufacturing processes. The third phase will include

materials recycling.

In 2011, Unilever Americas selected 25 of its top raw materials and

packaging suppliers in the region to work with on the sustain-

ability plan. This list is being extended in 2012. The company is

working with the Center for Latin American Logistics Innovation

(CLI) to evaluate the carbon footprints of these local enterprises.

Another joint project with CLI is measuring the carbon footprint

from supplier to the point of sale.

“We are one of the pioneers of this type of initiative in the region,”

says Roberto Chaves, Capabilities Manager for Middle Americas.

“We are very focused on sustainability, and these suppliers are

learning with us.”From the suppliers’ perspective, achieving such

goals as a smaller carbon footprint is not easy in a region where

the concept of sustainable supply chains is not as advanced as

in other areas of the world such as Europe. Moreover, national

environmental agendas vary in scope across the region. Some

countries in the region, for example, do not have formal recycling

programs, points out Chaves.

This is changing in response to increased consumer demand for

environmentally friendly products and mandates from major cus-

tomers outside of the region. Even so, suppliers need the support

and expertise of leading companies such as Unilever to help them

improve their environmental performance. Unilever Americas

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 13

also gains from closer relationships with suppliers. These regional

companies bring valuable local expertise and market know-how,

and are also a source of innovative ideas. That’s why Unilever

makes a particular effort to visit local facilities to discuss sustain-

ability projects and learn more about their operations. “Many

suppliers in middle America are not used to this kind of effort.

But we don’t see that as an obstacle – we see it as an opportunity

because it is a win-win relationship,” Chaves says.

Chiquita: Leveraging existing knowledge and control

In a specialized business where a company already knows enough

about the supply chain to make an initial evaluation of its carbon

footprint, extensive engagements with suppliers may not be

needed until the scope of the evaluation is broadened. This was

the case at leading international marketer and distributor of food

products, Chiquita Brands International Inc.

The company started a project to track the carbon footprint of

its banana products in 2005, in collaboration with the MIT Cen-

ter for Transportation & Logistics. “We really thought that it was

a good opportunity for us from a product supply perspective to

find out where our emissions were coming from,” says Ana Lucia

Alonzo, Director of Product Supply Planning, who championed

the project. The company was already involved in several sustain-

ability initiatives. For example, it joined the SmartWay initiative

– a program run by the US Environmental Protection Agency that

reduces transportation-related emissions by creating incentives

to improve supply chain fuel efficiency. The banana project “was

really going to highlight the aspects we needed to prioritize. We

wanted to validate and confirm what the main drivers of emis-

sions generation were.”

By 2009, the company had quantified the banana carbon foot-

print in North America. It had engaged with third-party logistics

services providers, but not with suppliers of materials such as

packaging and fertilizers. “We have a lot of internal intelligence

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 14

on the different types of materials and other components,” ex-

plains Alonzo. “It’s such a specialized type of production that over

the years we have developed huge internal expertise.” An internal

technical group manages this area of expertise, with intelligence

on the use of fertilizers and pesticides. They also have extensive

information on fuel consumption for inland and ocean freight.

As the company’s sustainable supply chain endeavors progress,

however, Alonzo can see more interactions with suppliers. “We

will have to reach out,” she says, particularly to suppliers of pack-

aging and shipping materials. At the present time, she does not

see a need to join an industry initiative to take the carbon foot-

print initiatives with suppliers further. “For certain aspects of our

business, we would like to understand what the specific supplier

is doing. In most cases, we will abstain from associations and fo-

cus on these suppliers ourselves.”

Keys to success

As illustrated by these different initiatives, companies engage

with suppliers in a variety of ways when working on sustainability

projects. We asked the companies what lessons they had learned

from the experience that might help other organizations to en-

gage with suppliers.

Clear communications

Programs to reduce carbon footprints and improve environmen-

tal performance in the supply chain may not be well received in

supplier networks. Such initiatives bring change and additional

responsibilities. So communicating one’s intentions – and the

benefits – is important. “The first time you approach a vendor

there is definitely apprehension, so you really need to do a good

job at communicating,” says Jimmy Adames, Corporate Social

Responsibility and Sustainability Manager, ASICS. Make efforts to

show that the benefits are mutual and not one-sided. “The better

the job you do at the beginning, the easier it will be later on.

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 15

You really have to explain and clarify,” he says. This clarity in

communication should be tied to a solid corporate sustainability

strategy designed to gain buy-in from suppliers.

Organizational awareness

Chiquita’s carbon footprint evaluation project was well advanced

when the team discovered that similar efforts were under way

in Central America and Europe. In the case of Central America,

a national directive to promote carbon neutrality was the main

driver. Checking for sustainability projects in other parts of the

organization may save you some legwork. Also, it will be easier

to socialize standard approaches and align on key environmental

performance indicators across the organization.

Go direct or join an organization

You can engage with suppliers directly or join an industry initia-

tive to make these connections. The decision depends to a great

extent on why you are launching the initiative. If, for example,

you need to learn about a specific process or product, then join-

ing an industry group might be counterproductive because the

information will not be detailed enough. Also, group members

– especially large organizations that are well advanced in the

sustainability area – may have developed methodologies that are

not relevant to your needs. On the other hand, if you have limited

resources and lower bargaining power with your suppliers, join-

ing an industry group will allow you to leverage the knowledge

and momentum of the collective.

Other factors to consider are the size and complexity of your

supply chain; the more complex, the less likely you are to find an

initiative that will cover all the supplier bases you need to address.

Industry associations will allow you to scale up programs and

make them accessible to a wider range of suppliers.

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 16

Who is Managing the Program?

Different departments or disciplines have varying levels of ex-

posure to the groups that are key to these projects. For example,

“My role was in network planning and optimization, and I needed

to have full control over product supply data; so my team was

extremely resourceful in getting data. That was key,” notes Chiq-

uita’s Alonzo. As an example, “we had key contacts in production,

transportation, and logistics in North America and in the tropics

who could provide us with critical information. We also had sub-

ject matter experts who helped us estimate proxies for data we

were going to be able to measure directly.” In the case of ASICS,

the product design team was the most suitable group to be close

to the process given its in-depth knowledge of the processes and

materials. The group already had connections with manufactur-

ing and sourcing that allowed it to kick-start the process.

Regional differences

The global sustainable supply chain playing field is slowly being

leveled, but there are still notable regional differences in how

advanced these efforts are. In Latin America, for instance, “cli-

mate change is becoming a main issue but is still not reflected

in consumer behavior in a massive way,” says Nutresa’s Arango.

Country regulations and the interest of reaching European and

North American markets are powerful incentives that have driven

awareness and an increased focus on the subject. The global pro-

grams supported by multinationals such as Unilever are raising

the subject of sustainable supply chains with smaller suppliers

through their regional subsidiaries.

Future implications

Looking ahead, an important lesson cited during the company

interviews is the need for more standardization when exchanging

data with suppliers. The time and resources needed to partici-

pate in these projects – particularly for vendor companies that do

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 17

business with numerous customers in multiple industries – can be

extremely burdensome.

Degher believes that in HP’s industry, although product carbon

footprint methodologies and standards are being developed,

there is “a lack of standardized methods for collecting the data

that is needed in order to use these methodologies.” Ideally, the

industry needs to develop a standard supplier questionnaire and

“rules” for data collection, she suggests. The lack of such a system

makes product carbon footprint evaluation methodologies less

useful and the results less certain.

At the time of writing, HP was in the process of finding an organi-

zation to help it develop a standardized data collection process.

“Once developed, we will train our suppliers on this process and

require key suppliers to fill out the questionnaire,” she says.

Standardized methodologies for measuring emissions levels and

scope, and for data collection, “is one of the things we are missing

in general in the carbon footprint world,” says Alonzo. “Currently,

we don’t have a unified platform for that in our industry.” Work

is also needed to help organizations replicate programs across

countries. “Before you expand into a new geography, how do you

build an internal process that will guarantee repeatability and

sustainability? The processes have to be acceptable in different

regions,” suggests Alonzo.

These issues relate to the role of cross-industry sustainability ini-

tiatives, and whether these groups can develop standardized ap-

proaches to supplier engagements. ASICS is an active participant

in the development of such a coalition in the apparel industry, for

example. Going forward, ASICS will benefit from the coalition’s

work.

“Overall, the coalition provides us with a viable chance to be part

of a standardized, systemic, and to a certain extent harmonized

industry approach to Sustainability Management across our

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 18

whole value chain, thereby creating ample opportunities,” says

Dai Forterre, Manager Sustainability EMEA, ASICS.

The initiative should help the company to circumvent some of the

innate limitations associated with its size and resource base, he

explains. In addition to the apparent potential for economies of

scale, ASICS sees structural opportunities over the long run, such

as:

• More transparency along the value chain to better disclose,

measure, and compare environmental performance.

• Efficiency gains through increased and varying economies of

scale that should decrease the barriers to enter into active sus-

tainability management and collaboration across the industry,

in particular for materials suppliers, manufacturers, and retail-

ers.

• Through increased transparency and more robust and mate-

rial sustainability management disclosure, it will be easier to

compare different companies thereby potentially stimulating

competition between them.

Over the long run, convergent, more salient, and relevant perfor-

mance disclosure should have a knock-on effect on reporting, by

creating opportunities to include external factors in mainstream

corporate accounting and appraisal practices, says Forterre. These

benefits should give ASICS “the best shot at solving some system-

ic issues in our industry that go beyond the capabilities of even

the biggest and most advanced companies,” he concludes.

However, “The coalition is, at the moment, broader in scope and

measuring many things,” points out Adames. It is not a substitute

for the lessons that ASICS learned when it collaborated with a

major supplier to study a specific product. Essentially, the overall

findings could only have been achieved through such an in-depth

and focused analysis.

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 19

Still, as the demand for standardized approaches increases, cross-

industry coalitions could become a more attractive option, par-

ticularly for companies that are committed to a systemic, stra-

tegic, and performance-based sustainability approach, yet lack

the resources to include multiple suppliers in their sustainability

programs.

Acknowledgments

The authors would like to acknowledge the support of the following people:

Jimmy Adames, Corporate Social Responsibility and Sustainability Manager, ASICS.

Isabel Agudelo, Executive Director, Center for Latin American Logistics Innovation

Ana Lucia Alonzo, Director of Product Supply Planning, Chiquita Brands Interna-tional Inc.

Jorge Eusebio Arango, Vice President of Sustainable Development, Grupo Nu-tresa.

Roberto Chaves, Capabilities Manager for Middle Americas, Unilever Americas.

Alexandra Degher, Program Manager, Supply Chain Operations Program, HP.

Dai Forterre, Manager Sustainability EMEA, ASICS.

Suzanne Greene, Project Manager, Environmental Footprinting Initiative, MIT Materials System Laboratory.

Seiko Inoue, Corporate Strategy Department, ASICS.

Barbara Kux, Member of the Managing Board and Head of Supply Chain Manage-ment, Siemens AG.

This white paper was partially funded by the MIT Global SCALE Network (scale.mit.edu) and the MIT LEAP consortium (leap.mit.edu).

For more information, please contact Dr. Edgar Blanco at [email protected].

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 20

ENGAGING WITH SUPPLIERS TO MEET SUPPLY CHAIN SUSTAINABILITY GOALS | 21

ABOUT US

The MIT Center for Transportation & Logistics (CTL) has been a world leader in supply chain management research and education for more than three decades. Combining its cutting-edge research with industry relationships, the Cen-ter’s corporate outreach program turns innovative research into market-winning commercial applications. And in education, MIT is consistently ranked first among business programs in logistics and supply chain management.

The Global SCALE (Supply Chain and Logistics Excellence) Network was initially formed in 2004 with the opening of the Zaragoza Logistics Center (ZLC) in Zaragoza Spain. It expanded in 2008 with the opening of the Center for Latin American Logistics Innovation (CLI) in Bogotá Colombia in 2008 and then again in 2011 with the creation of the Ma-laysia Institute for Supply Chain Innovation (MISI) in Shah Alam, Malaysia. Collectively, the SCALE Network, which includes CTL, now spans four continents. The primary ob-jectives of the SCALE Network are to:

• expand MIT CTL’s reach for both education and research• create local supply chain management human capital

and expertise in different regions of the world • open up new opportunities for innovation • develop new educational models and paradigms • create a worldwide network of executives, alumni, and

students who were educated or trained by MIT, or with MIT material and influence.

For more information about CTL, please visit http://ctl.mit.edu.

For more information on The MIT Global SCALE Network, please visit:http://ctl.mit.edu/scale