Editor’s note: This is a guest post by Pete Dinham, Director of Risk Product, Tradeshift
It’s not often that one is invited to contemplate the infinite before your second cup of coffee of the day, but this was the prospect offered by the keynote speaker, Andrew Winston, at EcoVadis’ Sustain2016. The estimated cost to the global economy of not dealing with Climate Change is $72 trillion, which, as he said, as a number might as well be infinity. But – borrowing from Richard Branson – dealing with it represents perhaps the greatest wealth production opportunity of our generation.
And it’s happening. As consumers demand more impact-awareness from their brands, companies are in turn engaging their supply chain and challenging their suppliers to share in a common goal of meeting their customers new requirements. This new ask of supplier relationships is one of greater commitment, requiring them to sign up to monitor, measure and track a multitude of other environmental concerns, including greenhouse emissions, ethical sourcing, the elimination of forced labour, and others. How is a buyer to measure and ensure these new metrics? Ecovadis provides the answer. Featuring supplier self-declaration, multi-source verification and actionable scorecards, buyers get the most comprehensive view available in the industry into their supply-chain’s compliance covering a huge range of Corporate and Social Responsibility conditions.
But meeting these demands is not without cost to suppliers which is, to some extent, unavoidable. The best that suppliers can hope for is that this cost is not multiplied by the number of companies that they supply – worst case scenario, each one will demand similar but separate views of the same metrics which increases the effort and cost burden. Here’s where the power of the network steps in: by allying Ecovadis’ CSR intelligence with Tradeshift’s unparalleled network platform, which allows collaborative, selective sharing of profile information and survey results, the buyer will get the information they need and the costs of providing it on suppliers will be minimised. This in itself lowers the cost bar for supplier entry and provides further support for CSR goals: democratising access to businesses for smaller suppliers.
We also heard from a couple of speakers how the effort of imposing and measuring compliance in their supplier network had forced them to rationalise and minimise their supplier numbers as much as possible, but, paradoxically, a lack of diversity in supply can itself be a risk! Once again the automation and oversight that EcoVadis and Tradeshift’s network platform can provide in combination should make management of larger supply-chains simpler and support a more diverse supplier network.
Significantly, several participants emphasised that what was powering many of these changes was challenging accepted wisdom and adopting disruptive approaches. Who first dared propose UPS delivery routing algorithms should be changed to eliminate left turns, and who could have predicted it would save 72 million litres of fuel (and associated carbon emissions)? As Rosey Hurst said: “Slavery is economically very efficient” so trying to simply optimise very low-pay economies using tactics from high-pay ones is unlikely to compete. Instead, establish a trading market in efficient but better paid jobs.
Engaging the power of the network and the employment of constructive disruption is key to how Tradeshift operates, and it was great to hear both messages along with case studies and loads of practical advice throughout EcoVadis’ informative and thought-provoking Sustain2016.
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