Building a Sustainable Supply Chain
Whilst many companies are investing in recycling and sustainability, upcoming legislation will make it mandatory to do so.
Wavin, part of Mexichem, is a leading supplier of plastic pipe systems and solutions, a market leader in recycled PVC and continuously innovating in their work to realise a sustainable supply chain. We spoke to Group Procurement Director at Wavin, Peter Verkaaik, to understand the challenges of working towards a sustainable portfolio, and how companies can begin this process.
Creating a supplier program is a recommended procedure to increase visibility in the supply chain. What steps can a procurement leader take to ensure they are building a thorough and effective program?
"To build an effective sustainability program, you first need to embed the process into the everyday. It may start out as a project, as you need to set up the program, but as soon as possible you must ensure it becomes routine. Sustainability is something that we all want to live and breathe therefore we must reach a point where it is considered the standard procedure.
A good supplier program is not only about having a contract in place; you need a code of conduct, and if possible a supplier questionnaire. When it comes to sustainability, many of the bigger suppliers will already have procedures and guidelines in place, but for the smaller companies, you will need to clearly explain your reasons for implementation. When you introduce something new, its necessity will always be questioned, particularly when it requires extra time and resource, therefore you will need to be able to communicate the benefits.
Let's consider the way in which we approach this. Setting up a supplier's code of conduct is different to an internal code which outlines behaviour within the company. A supplier code of conduct addresses labour within the supply chain, covering factors such as child labour, anti-discrimination, harassment and abuse, and fair working hours. It ensures the supplier is fair to their workers and it doesn't stop with the first tier; it works to see that our philosophy is accepted throughout the supply chain.
Sustainability is a big word and it should cover more than just labour: we must take into account health and safety, environments, ethics, security, and the systems that suppliers use. At Wavin, we used the United Nations' code of conduct as a template and tailored it to our own situation.
When we work with large suppliers they tend to have their own code of conduct that they will refer to. In these circumstances we would assess their code, to establish whether it is in line with ours. You will encounter some challenges along the way, and there have been occasions when we have brought in legal help or required suppliers to elaborate on certain details. If you are prepared to put the time in and work with closely the supplier at this stage, you can be confident that your interests are aligned moving forward.
We then have the supplier sustainability questionnaire, which goes into more detail. The code of conduct concerns behaviour, whereas the supplier questionnaire covers what kind of systems you have in place, for example for emissions. This is something we have drawn up ourselves, specific to our industry. I would advise not to copy and paste a document for the sake of having something. If you put a program together it should be highly personalised, benefiting your business and being in-line with your sustainability targets.
It can take a certain amount of convincing and auditing to ensure you receive the necessary input, and we have experienced cases where certain questions have not been answered due to confidentiality. To encourage suppliers to comply and complete the questionnaire, we have introduced a level of flexibility by having certain questions that are absolutely mandatory, and other questions that are simply desirable.
Don't forget to listen to your customers when compiling your questionnaire. The end market is also working on sustainability and customers are becoming more demanding. They want to know what kind of materials are in the products they are buying, when they were produced, by who, and what kind of energy footprint and CO2 emissions are related to it. Don't assume you know what sustainability means to them; you may draw up a set of questions for suppliers and discover later that it's not what your customers want.
At Wavin we organised sessions with our commercial team to understand what kind of questions our customers were asking. By listening to our end market, we could combine this with our own requirements and build this into a personalised document.
It's rewarding when you see suppliers and customers start to work with your program, and slowly the whole supply chain changes its behaviour. There is still a lot of work to do, but the awareness is growing."
According to objectives being set in European legislation, it will soon be mandatory for companies to use recycled material within their production. How can procurement work together with the business as a whole, to increase the level of recycled materials in their supply chain?
"When making the move to be sustainable, the initiative needs to be backed by your whole company. At Wavin it is clear that recycling is the end-game. Plastic after use should not be incinerated or considered as waste.
We knew that if we wanted to recycle it would be a challenge. This is not solely a procurement approach, it is cross-functional; the message needs to be understood within the entire company.
Fortunately, we had a strong buy-in that went beyond supply chain. People within the company approached us from a commercial standpoint, having identified that if we positioned ourselves as a green company we would have a competitive advantage. From an operations side, there was the argument that if we used more recycled materials, provided it was done correctly, it would be cost-effective. Viewpoints from different sectors of the company combined to persuade management that this was the right direction to take.
We started with PVC. It's a very sustainable material; if you make a pipe it can be in the ground for 50-100 years, and you can easily recycle it six or seven times. But when it comes to processing the material, complications arise. Recycled PVC comes from roofs, pipes, flooring… you can't just grind it and melt it, there are all kinds of contaminations. We needed to find a way to clean it, and being the first company to do this, we would have to set up the supply chain ourselves. At this point engineers, suppliers, commercial colleagues and procurement all had to work together to develop a way of cleaning the plastic. This resulted in us building the machinery to do so, and by speaking to suppliers who were in waste collection, we were able to develop a monostream of recycled PVC material.
Setting up a process like this can be a huge effort and cost for the organisation. It has taken us years to find the right recipe, to produce pipes that are exactly the same quality as virgin material. We are now producing more than 30,000 tonnes, and we are market leaders in recycled PVC. Slowly but gradually the whole supply chain is pushing towards recycled material because it is understood that the waste pile must not continue to grow.
Some companies are pushing forward at great speed. Coca-Cola, for example, has established that in five to 10 years they aim to be a 100% recyclable company, with all bottles and packaging made from recycled material. Whilst large organisations are already doing this, authorities, starting with the European Committee, are putting legislation in place to make it mandatory to use a certain percentage of recycled material in your total product portfolio. It is not a matter of if your company is going to take these steps, it's a matter of when."
How can the desire to create a more sustainable future be nurtured within a company?
"To embed a green methodology, you have to understand that it's not about doing a one-off project, but about changing ongoing behaviour. Sustainability doesn't only concern our end products, it is what we do every day within the company. One example of this is to take a simple thing such as your printing behaviour. Don't print colours, and if possible, stop printing altogether. We began to measure the number of prints being made by each department, so we could see who improved the quickest. It became something of a competition internally and someone won a prize.
Change your lighting to LED, reduce car emissions by ensuring company car emissions are below 120 g/km. Champion electric vehicles. These are examples of simple changes that can start to alter the behaviour of the people. It should be in the DNA of the company.
Sustainability is not only about being green, it's a safe work environment and doing the ethical thing so everyone knows what is and isn't acceptable. When it comes to travel, do you provide staff with the cheapest option, that may result in injury if there is an accident? Or do you choose a safer option, even though it may be more expensive? Are your team being made to travel long distance by car, risking fatigue whilst driving? Sometimes a company may not allow people to fly business class because they are lower in the organisation. If you are longer than four or five hours in a plane, the risk of thrombosis goes up exponentially, therefore higher quality seating with more space is important over longer distances. It's a broad range of factors which add up to this concept of being a sustainable, ethical company.
It is of course business, and everyone needs to make a profit, so aim to position yourself in a way that supports company goals but also meets the demands from customers who want to work with a green company.
This sustainable approach then branches out to be reflected in the supply chain questionnaire, because we ask the same things of our suppliers. It's a constant process of changing behaviour."
What are your hopes for the future of sustainability?
"We need to ensure that our children and future generations have a planet they can live on. Right now, we're wasting a lot of resources and we're polluting our environment.
Take the ocean for example. Most people are aware that there is plastic in the ocean, but the problem is more extreme. Plastic slowly micronizes to tiny particles that you cannot see. Fish are eating it and we are eating the fish, therefore polluting ourselves. When you consider this, it's no longer simply reducing the plastic because it feels good to do so, it's about protecting ourselves.
There are many innovative people out there who are actively making a difference, and we need to ensure people like this are supported. Take for example Boyan Slat; he's a 23-year-old student who, when diving in Greece, was struck by the amount of waste floating in the water. His dream is to clean the ocean, and he's created a project to make this a reality. He has mobilised people and is sourcing ships and equipment; it's incredible to see one person make such a difference.
But to make real change we need to all be considering our behaviour. We ourselves are part of the problem in so many ways; we jump into planes because we need to be here and there. We may need to re-think how often we fly and where we fly to. What kind of cars do we drive; whether it's diesel, petrol, electric or a new technology. We need to be open to adopting alternatives, and not thinking that we have to maintain the status quo.
The government in Norway has taken the initiative to say that by 2025 there will be no fossil fuel cars sold. These are the kind of targets we need; governments mustn't be afraid of setting aggressive goals. If you really force industry and technicians to change, they will come up with alternative solutions. We now have the electric car and, in the future, there will be fuel cell cars; by banning the existing solutions we force industries to invest in alternatives and be innovative in the process.
People and industries have the potential to be so innovative, but if you don't challenge them they will continue with familiar conventions. By putting legislation in place, we will be forced to look in different directions, to develop a future that is sustainable. Waste is simply no longer an option."