Where To Start With Responsible Sourcing & Supply Chain Sustainability
Here are the simple and low-cost steps we advise our clients to take when they start building a responsible sourcing program.
If your customers aren’t asking you where/how/who is making your products already - they probably will be soon.
Ongoing issues in the food, fashion, beauty, and clean energy industries all show why it’s past time to elevate your supplier due diligence.
Here’s how you can put some basic safeguards in place to mitigate risk and start to build brand equity around a more sustainable and ethical supply chain.
Step 1. Identify higher-risk products
For companies with multiple product categories, not all of them are going to feature the same ingredients, materials, manufacturing processes, etc. Those differences allow for you to prioritize which ones may represent increased levels of risk related to who/how/where they’re made - they represent a logical starting point for your supply chain due diligence. You can also layer in a look at your spend to further prioritize.
The complexity of many modern products and their opaque global supply chains means that it can feel like you’re trying to boil the ocean when it comes to responsible sourcing. Usually there are a subset of products that represent a disproportionate amount of risk to your brand.
Those risks could include social impacts related to human rights or labor practices for example, or a disproportionate amount of embedded greenhouse gas emissions if you’re focusing on environmental impacts.
You should prioritize these for action so you can focus your limited time and resources on the ones that matter most.
How can you identify them?
This is where a product inventory comes in handy. Once you know what ingredients or raw materials go into a product, where it’s made, and who is making it, you can prioritize them against your criteria.
For example, a client I worked with in the beauty industry uses mica in their color cosmetics. Mica can be mined using child labor. We identified products containing mica as higher-risk due to this human rights issue.
A good place to start is looking at your major raw materials, their countries of origin, and the place of manufacture for your products.
For greenhouse gas emissions, it will help to have a bottoms up greenhouse gas inventory that includes emissions across the product lifecycle. Many of the traditional enterprise level inventories do not provide enough information to be able to effective prioritize emissions at the product level.
We’ve helped several clients build and launch their responsible sourcing programs - please get in touch if you’d like to explore it with us.
Step 2. Align with internal partners
An effective responsible sourcing program is going to require strong alignment across multiple functions in your business. Even if you manage sourcing and supply chain for your company, you’ll need support from other teams to be successful.
Once you’ve identified products and raw materials or ingredients that are higher risk you can start to build a business case for why action is necessary. You’ll find natural allies in the legal and regulatory functions as well as in the marketing team.
How can you align with your partners?
When you decide to convene a cross-functional group on this topic, we’ve found the following formula to be effective:
Define the problem: What’s the issue and why does it need to be addressed by the business as a priority?
Propose a solution: Describe your approach and why it is the best path forward for the business.
Identify resources needed: What and who is needed to make your solution successful?
(And don’t forget to socialize this info and solicit feedback from a few key stakeholders before you share with a broader group for a decision!)
Step 3. Engage with your supply chain
Once you’ve got buy-in from your internal team, it’s time to start the conversation with your external supply chain partners.
Engaging your contract manufacturers and suppliers on responsible sourcing topics can feel intimidating. You may not feel like you have the technical expertise or any leverage. In some cases, you may be afraid that you’ll lose access to a key partner simply for asking questions.
For most brands we work with we help them start small - building or updating your Supplier Code of Conduct is a great starting point. Don’t try to tackle every product, every ingredient, or every supplier.
Without their honesty and transparency you won’t be able to address risks and capitalize on opportunities related to responsible sourcing. For small and medium sized business in particular, you won’t have the ability to leverage scale or demand.
How can you successfully engage them?
Begin by building trust. These people and firms will be your partners in this journey. In some cases you’ll be able to learn from your suppliers because other companies have paved the way.
Start with a dialogue about what you’re trying to accomplish and why. Give them advance notice before you start asking questions, requesting documentation, or requiring data. Involve them in tool development and train them on use. Set clear expectations in the context of being a resource and responsive to their needs.