Will Consumers Pay More for Products With a Lower Carbon Footprint, Despite the Economy? (Part 2)

Even if we end up dismissing the findings of this consumer study that shoppers will pay more attention to -- and simply pay more -- for supply chain traceability/carbon footprint information on items as regional UK/European greenie marketing mumbo jumbo, the issues it presents are some that every procurement and supply chain professional in the retail, CPG and food sector should care about. Spend Matters believes that few companies are building active traceability into their supply chains today. Rather, when organizations attempt to investigate full traceability -- for CSR or other reasons -- they must work backwards, following an investigative path, rather than simply accessing information they've already collected as part of a supplier on-boarding or management program. To address these challenges, we've got a few sets of recommendations:

  1. Don't wait any longer when it comes to implementing a supplier information management or supply base management platform. Create a shortlist of supplier management vendors (e.g., Aravo, CVM Solutions, Hiperos, AECSoft (SAP), Emptoris, GXS (Rollstream), SAP, Oracle, Zycus) and put a plan in place to create and manage both initial (on-boarding) and continuous information gathering requirements for suppliers in an automated, self-service manner. Even though what you might need may need to change in the future (e.g., new environmental certifications, new tiers of visibility into suppliers) nearly all these systems are quite malleable and can grow with your vendor management needs.
  2. Teach procurement team members to think on a multi-tier level by showing how lower tier decisions and activities they might have not considered previously can impact tier one suppliers (e.g., a lower-tier supplier shifting production or spend either on-shore or off based on arbitrage opportunities in the market based on raw material costs, energy costs, labor inputs).
  3. Longer-term, look to form partnerships with other players in your industry to figure out what information should be standard to collect from suppliers -- and then collect this information once (ideally) in a single location via a networked approach. Such a model may include the sharing of information (e.g., supplier performance data) over time, just as SAP Supplier InfoNet is already doing in the A&D market today.

Jason Busch

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