3 steps to ensure greater supply-chain transparency
This article is sponsored by BASF.
As demands on business for stronger transparency increase, global supply chains are reaching levels of unprecedented complexity. This creates an undeniable interdependency between value-chain players and a unique opportunity to partner with industry peers and stakeholders to have an impact far beyond what any one company can accomplish alone.
This is one reason why BASF partook in the Supply Chain Transparency Challenge at GreenBiz18. The global chemical company, for example, has more than 70,000 tier-1 suppliers, and in turn serves as a tier-1 supplier to its 300,000 customers around the globe, providing chemistries into more than 60,000 applications on market, from cosmetics, to construction materials, to paint coatings. That presents its own share of challenges in the chemical industry, such as how to effectively incentivize responsible production, sourcing and certification challenges for commodities, using technology to better understand supply-chain risk and promotion of supply-chain integration, according to Alexa Beaver, Digital Innovation, BASF and one of the session panelists during the Enabling Technologies discussion.
"The chemical industry is in a unique position, because our operations physically sit very close to the base of the supply chain where most of the sourcing challenges exist," said Beaver. "We have an opportunity to develop solutions — our physical products with complementary digital products and services — to address some of these challenges related to sustainable sourcing and, in turn, offer them to our customers."
As an upstream supplier to almost every industry sector, BASF highlights three key takeaways from the Supply Chain Transparency Challenge for companies striving to offer responsibly sourced products in a sustainable way.
Procurement colleagues are critical allies in advancing a company’s commitment to sustainability along the entire supply chain. They manage the relationships with suppliers and play an important role in strengthening awareness of procurement standards and expectations. By empowering your procurement team to help shape your suppliers’ contribution to sustainability in a transparent manner, you further embed sustainability into your core business operations.
"The focus on procurement was extremely smart, and the overriding quest for ‘pre-competitive’ solutions was very exciting," said GreenBiz session attendee Rick Velleu, marketing director of Environmental Defense Fund, who works closely with his organization’s supply chain team.
Collaborative procurement efforts have a unique power to drive greater transparency and improve sustainability practices. For example, the Together for Sustainability initiative was founded by the chief procurement officers of six multinational chemical companies in 2011. (Incidentally, BASF is also the founding member of this initiative.) Today, it has 20 members that collaborate around a global audit program where "an audit for one is an audit for all." This increases harmonization and advances progress towards best in class ESG practices.
Understand your customer's customer
As the adage goes, customers do not buy products, they buy solutions. These solutions help your customer meet the demands of their own downstream customers. By understanding the demands of your customers’ customer, you gain insight to the greater market landscape, making it easier to partner with your client and provide solutions that meet the demands along their own value chain.
From an upstream point of view, this means maximizing understanding of brand owner and retailer needs. For instance, section four of Walmart’s Sustainable Chemistry Policy at the session begins with "What we’re asking of our suppliers: Transparency." As an upstream supplier of ingredients for consumer products, understanding the content and drivers behind policies on supply chain transparency helps BASF work with its customers to help them meet their customer’s demands in the most efficient and practical way.
A great example of that is when BASF partnered with SynaTek Solutions, an ice-melt manufacturer, to develop a liquid-based deicer made from potassium formate, the salt derived from BASF’s formic acid. SynaTek then provided a solution for property managers, such as its customer, the Denver Broncos football team, which was desperately seeking an alternative to the corrosive chloride-based deicers for its headquarters.
Embrace new enabling technologies
Digitalization is shaping smarter, more sustainable supply chains for the future, delivering more transparency and ensuring greater reliability. In a recent Gartner survey of supply chain professionals, 65 percent of respondents saw emerging technologies as a way to gain a competitive edge. Gartner predicts that technology innovation — from artificial intelligence to the blockchain — will cause supply chain management strategy and operations to shift from being enabled by technology to becoming more technology-centric.
According to Beaver, new technologies such as blockchain are a way to bring together disparate data sources from complex supply chains. They have enormous potential to offer real-time information, more-precise forecasts, better planning and faster decision making — all of which can be used to increase transparency and ensure responsible procurement.
In our increasingly connected and informed world, demands for greater supply chain transparency will continue to grow. From an upstream point of view, by looking beyond immediate boundaries to other parts of your organization, working with partners across the entire value chain, and using new enabling technologies — we can create chemistry for a sustainable future.