When it comes to supply management, it’s important to have both carrots and sticks. Sometimes sticks are more effective, especially in emerging markets where naming, shaming and firing specific suppliers for labor, environmental and various other infractions can change the behavior of the rest of the supply chain. The carrot approach is consolidating spend and providing additional business to those who are compliant. And of course there’s significant middle ground.
Avery Dennison’s “Guiding Principles” for global pulp/paper/wood sustainability definitely err more on the side of preference and spend consolidation than termination as a way to set an example. It’s important to note that this could be in part due to the constraints of the supply market rather than a mild-mannered program design (i.e., not enough choice, ability to switch suppliers, etc.).
Specifically, the company notes in its policy that they “give preference to suppliers that demonstrate a commitment to environmental innovation and continuous improvement, have certified their environmental management systems, and use pulping and papermaking technologies that minimize effluent and emissions … We will ask suppliers of paper products to periodically report the environmental performance of their mills or the mills from which they purchase paper. Suppliers will report using a standardized format that allows us to make fair performance comparisons among mills.”
From a traceability and chain of custody perspective, language such as “request[ing] information about mill-specific operations and practices” is useful, but unless factory floor specific practice requirements are mandated in a standard format and audited, the actual value of this information, especially after a one-time effort, is questionable.
Ultimately, Avery Dennison means well in its supply chain sustainability efforts but is not willing to go to the limits – at least in the public guidance around its efforts. This has to do with one particular statement in its guiding principles, which we’ll explore in the next installment in this series.