Building a sustainable supply chain: the effectiveness of partnership

Companies committed to sustainability as a core business value are responsible for the social, economic and environmental impacts of their entire supply chain. Business relationships with suppliers can be a means of bringing about change towards more sustainable practices and reinforcing responsible practices.

One of the key issues is suppliers’ compliance with environmental and social standards. In the 1980’s when companies began increasingly to source from developing countries, the assurance that those standards would be met became more doubtful. Several developing countries have governments that are neither strong nor independent enough to enforce regulations on business. Companies had to find their own methods for discouraging sweatshops, child labor, and environmental degradation.

The great awakening in the corporate world for extended supply chain responsibility came in 1998, when Nike faced intense criticism from NGOs for working with suppliers that employed children and provided substandard working conditions. These NGOs run a public campaign against Nike. This brand was seriously damaged and sales plunged. Corporations around the world began to realize that consumers do care about the way their products are produced, and they are willing to demonstrate their feelings through their spending habits.

Some of the main issues for environmental standards in the supply chain relate to treatment and disposal of effluents, emission and waste (air, ground and water pollution), water and energy management (efficient use of resources), noise pollution, and the use of harmful metals and chemicals. Labor issues include child labor, workplace health and safety, adequate compensation, vacation and rest days, overtime policies, and anti-discrimination rules.

Ensuring positive impacts in the supply chain poses difficult questions and trade-offs for companies. For example: Is it enough that the supplier comply with local national standards or should they comply with the higher standard of the buyer’s country or company? If you find the supplier is lacking in an important standard, what is the appropriate action: to cut business ties  and look for another supplier, or work with the supplier to improve conditions? If you look for another supplier you may not affect the situation in that community. If you choose to work with the supplier to improve conditions, how far must you be willing to go? What type of resources should you bring to bear on this attempt? In short, the “right” answer is not always clear.

Companies use third party certification as a mean to ensure compliance with all kinds of standards. There several non-profit independent organizations providing those certifications. One of the most well-known for social and labor standards is the Social Accountability 8000 (SA 8000). For environmental management practices, the ISO 14000 series is widely used. In the rug industry, Rugmark Foundation certifies that the product was made without the use of child labor. Rugmark also promote educational opportunities for children in rug producing areas in South Asia.

There are several companies that conduct social and environmental audits for overseas manufacturing facilities. These audits do not necessarily lead to any certification. They are meant to provide an overview of the social and environmental situation of the supplier. An audit can be very helpful to point out areas that need improvement, and they are generally more affordable than a certification.

Auditing, however, takes an “arms-length” approach between buyer and supplier. It does not address the role of the buyer in bringing about certain undesirable practices for suppliers. Buyers typically want the lowest possible price and the highest quality – all in a very short delivery time. Sometimes it is impossible for suppliers to meet these demands without excessive overtime work, lower labor compensation, and less attention to health and safety issues. Companies that are committed to implement sustainable practices in their supply chain should also look at their own practices and the ways they work with suppliers. Changes in purchasing and product development practices may help suppliers meet higher standards.

There is a vibrant debate about whether the auditing model is the best way to achieve better labor and environmental compliance.  Recent research has concluded that, by itself, auditing has not improved conditions significantly. Rather, the key to success has been the implementation of modern and efficient management systems on the supplier side. This research has encouraged corporations to work more closely with suppliers to upgrade managerial and oversight capacity. It has also led corporations to seriously assess how their own processes have negatively impacted their suppliers’ standards.

Price is another key part of a sustainable supply chain. The Fair Trade movement advocates the payment of a fair price for products – a price that allows producers to provide workers with a decent standard of living while running a sustainable business. The Fair Trade movement is still more directed towards agricultural products and small producers and artisans, mainly because it is easier to determine what a fair price is in these contexts, as opposed to industrial production.

Finally, I would argue that a sustainable company has an obligation to improve the financial, economic and technical capacity of its suppliers. For many reasons, companies in developed countries are much better equipped in these areas in contrast to companies in developing countries. In the case of Merida, for example, we deal with several small companies that can readily benefit from our expertise and knowledge in product development, design and technical capability. We feel obliged to transfer skills and knowledge in order to help the supplier grow and develop as a result of the partnership. These types of collaborative partnerships exemplify the shared responsibility buyers and suppliers must accept for creating the conditions for a sustainable supply chain.

Tales from the recycle bin

I grew up with a grandmother I have often referred to as the first environmentalist I ever knew. She taught me by example how to save and conserve. She and my grandfather were avid sailors, a lifestyle that automatically confers the need to conserve in order to survive life in cramped quarters with others.

Onboard, each dinner plate was wiped with the user’s napkin before being lowered into the dish washing bucket. Plates were then swabbed with a soapy sponge, piled into the tiny sink and doused with just enough water to remove the suds. There, as well as at home, “tin” foil was saved for re-use, in the crisper of all places. No bread or crackers in there, just foil and re-usable wax paper. Cereal boxes and juice cartons were flattened underfoot so that we didn’t dispose of a canister of air that became a space hog in the trash can. To witness my diminutive grandmother crush these items while explaining her purpose was memorable.

As time has gone by, those lessons and what I thought were my grandmother’s idiosyncrasies have evolved into my own recycling habit. I live where many things can be recycled with minimum effort. However, sometimes I find myself going the “extra mile” to make sure I contribute to the greater recycling effort in my own small way. My husband thinks of me, as somewhat of a trash picker when he finds me correcting our trash bins, to make sure we are not throwing recyclables in with the garbage.

My “proudest” moment came recently when we were on vacation in Washington DC with our children. Empty drink bottles and cans began to collect around the kitchenette sink in our hotel room. After several days, it was clear that housekeeping was not going to take them. I called the front desk to ask whether the hotel would be recycling our collection of bottles. The answer was no.  Incensed, I began to think of a way to recycle while away from home. Should I give them to my cousin who planned to take us on a night tour of the city? Awkward.

I realized that I had seen bottle-recycling bins next to trashcans all around the Washington mall. On our last full day of sightseeing, I loaded our bottles into my re-usable grocery bag, rode the Metro downtown with my family and deposited them in a city recycle bin. It was a small gesture, but one that was very satisfying no matter how idiosyncratic. My grandmother would have been proud!

Upon my return home, I Googled the hotel chain to see what kind of marketing they do about sustainability. To my surprise, there was extensive information regarding their efforts as a corporation. Do they have any idea how that translates to their individual hotels? The next step will be for me to contact them with my story to see what kind of a response I get. Stay tuned….

Please feel free to share any stories you may have regarding your environmental mentors or recycling idiosyncrasies!

Saving energy at Merida

Last week, we took another step towards reducing our environmental footprint by converting the lighting in our Boston office to more efficient energy-saving bulbs. This is a small but significant step in our sustainability journey.

The new lamps have a 95% lumen maintenance which ensures that we get the same amount of light from bulbs that consume much less energy.  We are using Sylvania Octron T8 Ecologic lamps, which also pass the Federal Toxicity Characteristic Leaching Procedure (TCLP) criteria for classification as non-hazardous waste.

The project was completed with very minimal inconvenience to employees during the work day.  We highly recommend this change to all and would be happy to share more details. Just get in touch!!