Measure & Calculate:

The measure and calculate phase is focused on data collection. Understanding how to collect data, measure, or audit your performance can be just as challenging as knowing what to measure. The purpose of measuring is to track performance against the company's objectives and targets.  For sustainable supply chain, data must be transparent and reportable.

Internal Measurements

The objective of sustainability metrics and indicators is to inform corporate decision makers, and potentially shareholders and the general public, on the environmental, social, and economic performance of the company. What to measure and report can originate from the "voice of the customer", which includes requirements from customers, non-government organizations, purchasing agents, employees, legislation and the community.

Impacts and priorities – Determine the scope of what to measure based on business priorities and impacts.  Measure the company’s environmental performance in one or several areas of impact.  First, a baseline needs to be established, then performance is measured at defined periods of time.

Measure Baseline of Environmental Impacts – Understand inputs and outputs and establish a baseline. Assess recent and current performance and conduct self-assessments. Areas of impact may include:

 

External Measurements

Map & Prioritize Suppliers

Determine and prioritize which suppliers to focus on initially and in tiers. Priorities may be set by:

  • Top 20% by dollars purchased
  • Location of supplier in a high risk community, region, or country
  • Opportunity for company growth [1]
    • Strategic suppliers – trust based relationship and share in gains and cost efficiencies; creating value beyond the contract; may have sustainability leadership and could influence customer
    • Operational suppliers – achieve aligned interests and measure joint performance; may have sustainability transparency with 2 goals publically available and may have innovation and cost improvement program
    • Tactical supplier – react only to opportunities. Focus is on managing the contract; may have a sustainability program with EHS staff and possibly ISO certification
    • Transactional supplier – focus only on delivery and fulfilling POs ; may only have sustainability awareness with baseline data and focus on compliance

Code of Conduct

Manage supply chain risk by communicating expectations through a Code of Conduct and engage with suppliers to improve performance.  The goal of having a supplier program is to improve environmental and societal performance of all suppliers producing products or services to make the supply chain more sustainable.

  • Create goodwill – Communicate with your suppliers, make your expectations clear, be flexible and always have a back-up supplier in case relations turn sour. [2]
  • Encourage transparency with suppliers – Share your plans and expectations and learn from their ideas and knowledge. [3] In addition to the Supplier Code of Conduct, communicate via
    • Legal agreements (contracts, agreements, bid requests, purchase orders)
    • External means (website, social media, etc.)
    • Internal practices (purchasing and procurement policies, employee training, etc.)
    • Listening to and gathering feedback from suppliers
    • Involving suppliers in strategic discussions through dedicated forums

​Supplier Scorecard & Baseline

Supply chains can have the biggest influence on reducing environmental impacts, reducing risk, saving cost, and eliminating waste.  That is why scorecards can determine which suppliers a buyer may want to do business with and therefore improve the sustainability of the company and the supply chain as a whole.  Suppliers who comply with scorecard requests and are transparent with their data are more likely to remain suppliers to their customers and potentially gain additional new business.

Scorecards today incorporate energy and climate change, water scarcity, energy risk, and raw materials and natural resource management, waste, governance, along with the traditional fair labor practices and community engagement. [4]  Scorecards may assist organizations with their purchasing decisions and use scorecard responses to determine a product’s impact through its lifecycle.

Scorecards typically request baseline information and progress towards a set goal and reduction targets. Some things to consider include:

  • Suppliers completing the scorecard appreciate:
    • clarity of customer expectations,
    • ease of use,
    • consistent scoring process and objectivity through data-driven scoring with flexibility for differences in reporting sustainability projects.
  • The company’s procurement team issuing the scorecards to suppliers is looking for:
    • clarity of company's expectations and reasoning,
    • how the score is derived,
    • data driven metrics and rigor so that scoring is not too easy,
    • simplicity of scoring methodology.
  • Scorecard should have stability over the long term and ease of comparison from year to year
  • Emphasis should be on the goal of continuous improvement