salterbaxter - directions supplement - avoid the low hanging fruit
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Why tough choices are needed if companies want their supply chain strategies to be genuinely fruitful.TRANSCRIPT
DIRECTIONSMONTHLYSUPPLEMENT
JULY 07
TRENDS AND ISSUES IN THE WORLD OF CORPORATE REPORTING
AVOIDING LOWHANGING FRUIT
WHY TOUGH CHOICES ARE NEEDED IF COMPANIES WANT THEIR SUPPLY CHAIN
STRATEGIES TO BE GENUINELY FRUITFUL
Welcome to the July edition of Directions Monthly. The 2012 Olympics bringswith it an opportunity to present the benefits sustainable procurement canbring – so we thought it was only right to give the supply chain managementissue some much needed attention. We have invited Shaun McCarthy, Directorof Action Sustainability and Chair of the Commission for a Sustainable London2012, to give us an insight into why businesses need to resist ‘low hanging fruit’andavoidthequickwinapproach.Hesuggeststheprocurementprofession needsto shape up and create a more ‘fruitful’ strategy to tackle supply chain issues.
Pavan AthwalLucie Harrild
Directions Monthly July 2007 Issue 14
Over the past 50 years, one third of the earth’sspecies have become extinct, a further thirdare set to follow if mankind does nothing tohalt the environmental degradation we seetoday. Some professions, such as procurement,also face extinction if they do not evolve. SirNeville Simms, the Chairman of the SustainableProcurement Task Force, defines sustainableprocurement as ‘using procurement to supportwider social, economic and environmentalobjectives, in ways that offer real long-termbenefits’. So how high is a sustainable supplychain on your business agenda? Is your supply chain in fact a liability rather than anasset? Now, more than ever, is the time forbusinesses to prioritise their impacts andactions, re-think their supply chains and beginwork on a ‘fruitful’ strategy!
IwasamemberoftheSustainableProcurementTask Force and a firm supporter of Sir Neville’srecommendations. In the Flexible Framework,we have a clear picture of what goodsustainable procurement practice looks like.This was driven by good practice in business,including BAA who attained second place inthe Business in the Community Index in 2006.At the time, good practice in business wasbased on a clear process to manage risk andfor reputation risk driven by stakeholders toset the priorities. The Task Force published itsfindings a year ago and the substantial part ofthe work was finished 18 months ago. Leadingbusinesses have already moved the agendafurther. Marks & Spencer’s Plan A, for example,is primarily driven by opportunity, not risk. I had the privilege to share a conferenceplatform with a senior M&S manager recently.He was challenged by a member of theaudience to say if this was a marketing led
strategy or an altruistic initiative. The answerof course is both. This is not an ‘or’ thing, it is an ‘and’ thing. They see their corecustomer base becoming more concernedabout sustainability and see an opportunity to take the right moral course and to satisfytheir customers at the same time. Rather than sit and wait for the next Greenpeacecampaign, leading businesses are graspingthe opportunity rather than mitigating a risk. Further evidence of the commercialopportunities presented by sustainability isdemonstrated by the recent announcement of EDF as a ‘Sustainability Sponsor’ of theLondon Olympics.
Shaun McCarthyDirector of Action Sustainabilityand Chair of Commission for aSustainable London 2012
Businesses need to reconsider the way in which they manage theirsupply chain and ensure they are communicating with all who may hold them accountable. So why is the procurement professionnot realising this opportunity to raise its own profile?
Directions Monthly July 2007 Issue 14
Where does this leave the Public Sector? With £150bn to spend each year through the supply chain, this should be a major force for good. There are some greatexamples; the EnvironmentAgency is best practice, albeita bit bureaucratic; DEFRAare running hard to catchup; the Prison Service is showing vision with a call for a ‘Zero WasteMattress’, a product that does not exist today but with huge potential(hospitals, hotels, homes?).Sadly this is the exception ratherthan the rule. I was recently bemoaning alarge section of government to a trustedpublic sector colleague by saying “theyhaven’t done anything, they have just writtena position paper”. I was reminded by mycolleague that, in the public sector, theyconsider they have done something if theyhave written a position paper. The complexitybetween policy and managing a massivesupply chain sometimes stifles creativity andaction. The central government response tothe Task Force was progress of a sort but weakin many areas. The draft Local Governmentand Health responses are much better. Butwhy does it take a year?
I chair the Commission for a SustainableLondon 2012. The Olympics represent a majoropportunity to break new ground and set newstandards. The Commission will publish itsfirst report in the autumn but it is interestingto note the Green Party Chair of the Greater London Assembly, Darren Johnson,congratulating the Olympic Delivery Authorityfor their progress on sustainability, six monthsafter calling their efforts ‘Pathetic’ . Highpraise indeed from a traditionally critical area.
When we talk about sustainable procurement,we are talking about the environment, wages,working hours and the health and safetyconditions of businesses. The economicmuscle of the consumer purse is able to fuelchange. Firms must ask how fit is our supply
The economic muscle of the consumer purse is able to fuel change. Firms must ask how fit is our supplychain and how are we communicating this externallyand internally. But this is all obvious isn’t it? So whyare businesses so slow to take it on board?
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chain and how are we communicating thisexternally and internally. But this is all obviousisn’t it? So why are businesses so slow to takeit on board?
Unfortunately the answer to the problem isquite complex, and requires organisations
to assess their individual impact beforethey are able to tackle it and it takestime and effort to change.
Do you remember the old ‘threeenvelopes’ story? It is about a manager
handing over his role to a successor. He tells him he has left three numbered
envelopes to open in sequence if things gettough. Sure enough, things get tough. Thefirst envelope contains the message ‘blameme’ and the new manager pulls through. Thenext says ‘blame the staff I recruited’ and thisdoes the trick. The third says ‘prepare threeenvelopes’. The point of telling this story is toemphasise that change on this scale requiresvision, intellect and, above all, courage.
We all know the managers who go for theeasy things to achieve, make a name forthemselves, get promoted and leave the hardthings to their successor. But it is never us isit? It is always somebody else. Look in themirror, what do you see…?
If procurement fails to address the issue, theprofession will miss an opportunity to raise itsown profile. It seems everybody is looking forlow hanging fruit, however the sweetest fruitis often at the top of the tree. Believe me, it’sworth the climb. Business needs to thinkabout a more fruitful strategy. The ice capsare melting now – we can’t wait for successivegenerations of envelope preparers!
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The culture of ‘low hangingfruit’ and ‘quick wins’ is toocommonplace.
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