Vodafone Tackles Supplier Performance and Sustainability (Part 3)

In this final post looking at how Vodafone tackles supplier performance and sustainability initiatives, we'll focus on a few key lessons we can all takeaway from the telecom giant's experience. But first, as promised, here's a bit of background on the technology environment driving Vodafone's performance management efforts. First, Vodafone is using a niche European vendor, Xcitec, to automate various aspects of the supplier data and information management process. But Vodafone is also leveraging tools from Emptoris and IBX (in addition to its back-end SAP systems) as part of the initiative. And as important as these automation platforms and supplier development tools, it's also worth pointing out that since a number of Vodafone's efforts are design driven, there's no doubt PLM and CAD/CAM technology are also key technology elements in how the telecom/wireless giant is leveraging systems to reduce its C02 footprint and drive savings throughout its supply chain.

Given this, as well as everything else discussed in this series so far (Part 1 and Part 2), what are the most important lessons we can take with us about Vodafone's supply chain CSR plans and successes to date? First and foremost in my mind is the notion that CSR and supply chain initiatives in manufacturing -- and end-use applications such as telecom/wireless - environments require far more than just an automation and supplier information management platform such as Aravo, Roll Stream, Hiperos, Supplierforce, CVM Solutions, D&B or Ariba. Rather, these initiatives also require tight process and/or functional integration with both supplier performance management systems, and most important, engineering systems. Many of the largest benefits -- especially the hard-dollar ones -- that Vodafone is realizing from these initiatives are coming from R&D-led programs that engage strategic suppliers in product innovation. Key takeaway: don't ignore the need to prioritize the engineering and design aspects of CSR programs in the supply chain.

Second, I'd argue the next major takeaway is that when it comes to CSR, companies will realize the most quantifiable benefits by leveraging the 80/20 rule that we all learned in strategic sourcing 101. In other words, even though some CSR initiatives such as RoHS compliance require managing and analyzing the entire direct materials supply chain, many of the largest benefits from a C02 reduction and cost savings standpoint will come from working with and developing your most strategic suppliers.

The third most important takeaway I gleaned from listening to Vodafone's story was the importance of tying CSR programs into a broader supplier performance and supply chain development initiative. By incorporating and rolling-up these programs under a broader performance management umbrella, CSR becomes an issue that the entire procurement, operations and engineering organizations must consider at all times, versus just when they're assigned to look at a particular initiative or situation.

The fourth takeaway I'll make is the criticality of looking at supplier sustainability across a lifecycle continuum versus simply a one-time measurement or development initiative. Vodafone has much to teach many organizations that jump into CSR fire drills based on regulations or customer or shareholder expectations. I'd wager that defining a methodical process for managing supplier sustainability programs that starts with supplier qualification and sourcing and progresses to supplier development will become the ante for organizations as they get more serious about tackling CSR within their supply chain.

My fifth and final takeaway is the importance of tying sustainability initiatives to cost savings. By doing so, we not only encourage new product innovation within our supply base, tapping creativity and input from key supply chain partners, but we also deliver bottom line results to shareholders. Just as I've argued for some time on Spend Matters, cost savings should always be a primary driver of CSR programs. After all, it's much easier to win both the hearts and minds of procurement teams when it comes to supplier sustainability programs if such initiatives focus on both shades of green.

Jason Busch

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