creating a sustainable supply chain -...

The Time Has Come

Creating a Sustainable Supply

Chain:

Global Sourcing Council

Wanda LopuchChair of the Board

Angeline JudexExecutive Director

sig.org/eval

Managing Risk in Global Supply Chains

Business Case for Responsible Sourcing

Wanda R. Lopuch, Ph.D.; Chairman of the BoardAngeline Judex, MPA; Executive DirectorGlobal Sourcing Council, www.gscouncil.org

About

Global Sourcing

Council

Who are we?

Global Sourcing Council

• Established in 2007

• Mission: Profit with Purpose through Sustainable Global Sourcing

• 20,000 sourcing professionals around the world

• Independent platform for business, academia, government organizations and NGOs

• Education, outreach, best practices, research

• Member of the UN Global Compact; consultative status with the UN ECOSOC

Global Sourcing Council

Program: Business Embraces the UN 2030 Agenda

Sept 24th 193 Member States of the UN signed SDG “Transforming Our World: The 2030 Agenda for Sustainable Development”

17 goals

15 years

Global Sourcing Council

• Programs: GSC 3SAwards• Best Practices in Responsible Global Sourcing

• Community Engagement• Employee Engagement• Diversity • Most Innovative Sourcing• People’s Choice

Grand Finale: March 2017 –New York Headquarters of The United Nations

Celebration of Social Entrepreneurswww.gsc3sawards.com

GSC presents the voices of global sourcing community in SDGs:

Half Billion $$$ Challenge

to turn Supply Chains into Responsible Supply Chains

By Sept 25th 2017

Business takes Action on SDGs

Risk Management in

Supply Chains

Vendor Management

Responsible Sourcing as an Enlightened Selfpreservation

Global Sourcing Council

Agenda:• Risks in supply chains• Evolution of vendor selection cards vs. risk•Current perspective on sustainability in sourcing

• business perspective• consumer perspective• investors perspective

•Apple Foxcon case study

•Objective:• Sustainability in Business is an Enlighten Selfpreservation• It Pays off to Run Responsible Supply Chains

Risks in Supply Chains

Supply Chain Management

Risk Management Identifying project risks

Understanding

Analyzing

Managing current risk

Mitigating future risk

Vendor Management Vvendors profiles for spec - rfp

Identifying vendors universe

Vendors selection* -Scorecard

Contractual/legal

Vendors relationship

Vendors development

Vendors risk management

Characteristics of Vendorsfor the Vendor Scorecard

Cost

Quality

Delivery time

Capacity

Flexibility

Lead time

Financial

Customer base

Product development

Location

Reputation

Certifications, recognitions

Social responsibility

Environmental compliance

Labor conditions

I. Cost AdvantageII. Vendor Mgmt

III. Risk Mgmt

Vendor Selection Scorecard-Evolution

Vendor Selection Scorecard1.1 Cost advantage

80-90% Cost

Quality

Delivery

10-20% Capacity

Flexibility

Lead time

Certifications

Location

Reputation

Customer base

Financial health

Social responsibility

Product development

Environmental compliance

Labor conditions

Vendor Selection Scorecard 2.1 Vendor Management

50-70% Cost Quality Delivery

10-30% Capacity Flexibility Lead time Certifications

10-30% Product development Financial health Customer base

Location Reputation Social responsibility Product development Environmental compliance Labor conditions

Vendor Selection Scorecard 3.1 Risk Management in Supply Chain

60-90%

Cost

Quality

Delivery

10-30% Capacity

Flexibility

Lead time

Location

10-30% Product development

Technical/innovation Financial health

Customer base

1% - 15% Reputation

Social responsibility

Environmental compliance

Labor conditions

Culture and values

Risk Management in the Supply Chains

Vendor Selection Scorecard 3.1 Sustainable Supply Chain

Economic: 60-90% Cost Quality Delivery Capacity Flexibility Lead time Location Product development Technical/innovation Financial health Customer base

Environmental -5-25% Location Local regulations Compliance Value and culture

Social: 1% - 25% Reputation Social responsibility Environmental compliance Labor conditions Culture and values

Nike – 25%Microsoft – 11%

Intel -7%Nintendo – 0%

Social, Environmental,

Citizenship Scores

0%-25%

Vendor Selection Score Card

Global Sourcing Council

• It Pays off to run responsible business

• Consumers vote with their valets

• Investors minimize the risk/maximize returns

• Communities demand accountability

Sustainability is a risk factor with real and material valueENLIGHTENED SELFPRESERVATION

• Consumers Reward Sustainable Brands

• Consumers Vote with their Packets

wanda@lopuch.com

• Nielsen Global Research 2014, 2015

• Sector-Based Experiences

Consumer Perspective

Around the World* Nielsen 2014 – 60 counties

67% - prefer to work for socially responsible companies

55% will pay extra for products and services from companies committed to positive social and environmental impact

52% made at least one purchase in the past six months from socially responsible companies

52% check product packaging to ensure sustainable impact

49% volunteer and/or donate to organizations engaged in social and environmental programs

• Returns/profits –

• Current results

• Growth & Development

• Future profits

Business Perspective

Profit ??????

Sustainability

• In 2014: Profit meets Sustainability

• Sustainability and Profitability are COMPLEMENTARY

wanda@lopuch.com

• BCCCC -2014 Research of 750 Executives

• Ethical Corporation UK – 2014, 2015

5%Sales increase fromSR oriented consumers

Business Perspective

Global Sourcing Council

Sacrificing

current results

For Business Sustainability is theENLIGHTENED SELFPRESERVATION

sustainable brands are more profitable

FoxconnAPPLE – May 2010

Investors Perspective

• Sustainability as the risk mitigation strategy

• Shareholders resolutions to turn supply chains into responsible supply chains

FoxconnAPPLE – May 2010

Wanda Lopuch©wanda@lopuch.com

Investors Perspective

2010 – Shanghai2012 - Mexico

Apple Stock Value fells 5% = $30B

Wanda Lopuch©wanda@lopuch.com

Did Foxconn Bring Down Apple Stock?

Wanda Lopuch©wanda@lopuch.com

StockRiters says: “The Foxconn riots and suicides have illustrated something all American companies with factories in (lower cost destination) countries should be strongly cautious about – that when American Consumers realize that behind the iPads they use, behind the bright LCDs and LEDs, the Nike shoes and the designer clothes they wear, that behind these there is an undernourished, underpaid, possibly underage laborer toiling away in some dank sweatshops (…) – that understanding has an immediate effect on the stock of the responsible company. A company that resorts to, condones, or ignores such business practices from its contractors, will get hurt where it matters most, its bottomline.

Wanda Lopuch©wanda@lopuch.com

CIELAG, 14.10.2014; Monterrey, Mexico

“….it is sound financial astuteness to spend money on removing this sort of incidents from ever happening”

StockRider 2012

Supply Chain ManagementFinancial Risk Mitigation

Supply Chain ManagementFinancial Risk Mitigation

Wanda Lopuch©wanda@lopuch.comCIELAG, 14.10.2014; Monterrey, Mexico

-October 2011 – MS Shareholders Meeting in NYC-Shareholders Resolution re. Socially Responsible Supply Chain

-Global Citizenship Standards-Auditing standards for Vendors Disclosure-Safety standards-Long-term compliance

Wanda Lopuch©wanda@lopuch.com

Supply Chain ManagementFinancial Risk Mitigation

21/July 2016

Shareholder Resolutions

by the NYS Employees Investment Fund

Vendor Selection ScorecardSustainability is Enlightened Selfpreservations

Economic: 60-90% Cost Quality Delivery Capacity Flexibility Lead time Location Product development Technical/innovation Financial health Customer base

Environmental -5-25% Location Local regulations Compliance Value and culture

Social: 1% - 25% Reputation Social responsibility Environmental compliance Labor conditions Culture and values

Half Billion $$$ Challenge

to turn Supply Chains into Responsible Supply Chains

By Sept 25th 2017

Make a Pledge – Take Action

Angeline Judex, MPA.

Executive DirectorAnjeline.Judex@gscouncil.org

Wanda R. Lopuch, Ph.D.

Chair of the BoardWanda.lopuch@gscouncil.org

www.gscouncil.org www.gsc3sawards.com

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Session #27

Creating a Sustainable Supply Chain:

The Time Has Come

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Angeline Judex, MPA.

Executive Director

Anjeline.Judex@gscouncil.org

Wanda R. Lopuch, Ph.D.

Chair of the Board

Wanda.lopuch@gscouncil.org

www.gscouncil.org

www.gsc3sawards.com