While supply chain risks continue to proliferate across industries, sustainable product categories are becoming a strategic growth area for many. A study by the World Economic Forum demonstrated that businesses that apply sustainable practices reduce supply chain costs by 9-16 percent and increase brand value by 5-20 percent. Meanwhile, a recent report by Unilever showed that its Sustainable Living Brands grew over 50 percent faster than the rest of the business.
To take advantage of these upside opportunities, companies, specifically procurement teams, must ensure the tools and practices they use to assess and select suppliers are up to scratch. But many are still tempted to pull together their own supplier data, recruiting help from the sustainability department and launching self-assessment questionnaires with a spreadsheet or a generic online survey tool. And they still ask why it is a good idea to have their suppliers assessed by an external company.
A Successful Sustainable Procurement Journey
Mark Stevens, Corporate Social Responsibility director at Ciena, a leading provider of communications equipment, has worked on both sides of sustainability programs. Having managed the process of responding to assessment questionnaires for telecommunications, government, and corporate customers for many years, he believes the EcoVadis assessment is “more thorough” and takes longer to complete. But once the assessment is complete, he notes in a case study, “the ‘reward’ is that the accomplishment is acknowledged and Ciena is respected for great practices.”
At some point along its sustainability journey, Ciena started to receive more and more requests from clients for transparency into their own supply chain. Stevens began to consider how the company could solve this problem and kept coming back to EcoVadis. Starting in late 2016, Ciena selected the EcoVadis assessment for their supply chain and is rolling it out across the entire supply base.
The Benefits of an External Assessment
Having heard similar stories from a number of sustainability and procurement professionals we have looked at some of the trade-offs of self-assessment questionnaires. So if you are still unsure what you gain when you work with an external sustainability appraiser here are some key issues to consider:
- Fewer surveys and no duplicated work: Your suppliers often sell to other customers, which means many of those other customers are asking for similar surveys and data. In some cases, suppliers report replying to hundreds of surveys per year! This leads to survey fatigue, often resulting in poor quality responses, or none at all. EcoVadis results are thorough and standardized, and can be shared with multiple customers.
- An actionable rating: Many procurement teams find that having a database of sustainability survey answers, or a folder full of spreadsheets, is virtually impossible for buyers to act on. Data alone does not equal information. Buyers need clear indicators that they can easily understand and apply consistently. The EcoVadis rating gives both buyers and suppliers a simple, easy to understand rating covering all vital sustainability criteria, with benchmarks to compare sustainability performance to sector and region.
- Expertise: The other side of the “what you do with the data” coin is who will analyze it. Sustainability is not a core expertise in most procurement organizations. As soon as you add sustainability analysis to your role, this complicates the commercial relationship. This is where external expertise from a credible player can prove crucial in establishing the independence and integrity of the assessment. EcoVadis has assessed over 40,000 companies in 150 purchasing categories and 120 countries, and won the trust of over 175 multinationals.
- Scale: How can you scale up to evaluate thousands of suppliers? It is much more costly to do it yourself for equivalent results. Even if you hire a team of CSR experts to develop and run a meaningful program, it is difficult to scale. See this post on the cost of running a CSR monitoring program – to you as the buyer organization and also to the entire value chain – when compared to a centralized, standardized system, with analysis by independent experts.
- Value to the supplier, and motivation to participate – in earnest: Suppliers are far more likely to engage with processes that provide value for them. The CSR rating and scorecard is designed to provide not only the benchmarks of how performance compares to other companies in similar business or location, but also specific feedback on strengths and improvement areas. Procurement teams can use the ratings to set score goals for their suppliers and 3rd parties, and set targets for participation in “preferred supplier” or innovation programs.
Get the full case study with Ciena’s perspective both as a supplier and a buyer-side participant in sustainable procurement.
Read how companies are going Beyond Compliance to Engagement: 5 Pillars Of Sustainable Procurement Value Creation
Find out more about the EcoVadis assessment and what it involves.
To get a full picture on how we can help you with your risk and value creation challenges, Contact Us to book a consultation.
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