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Sustainable Supply Chain

Sustainable Supply Chain

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04/03/2013

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*
 Tour operating
includes advertising, purchasing,package development, marketing and sales andpurchasing. *
Ground operations
include groundtransport and excursions.Tour operators contract suppliers to providesome of these components directly;others are obtained by suppliers andtheir suppliers. All suppliers providingcomponent goods and services that gointo delivery of a tourism product arepart of the supply chain for that product.
© Richard Tapper, Environment Business& Development Group, 2003
Source: Tourism Supply Chains – Report of a Desk ResearchProject for The Travel Foundation by Leeds Tourism Group atLeeds Metropolitan University, UK
a destination with more local colour and more to do –creating a
market advantage
for new and repeat businessthe potential for
lower operating costs
throughmore efficient use of energy and water resources andreduced waste
risk reduction
by avoiding suppliers with a doubtful trackrecord on environmental and social issues
better relationships
with suppliers giving improvedloyalty and servicea better relationship with the
community
whoseeconomy you are supportingincreased
security of supply
of the goods or servicethrough long-term contracts and a better negotiatingposition (i.e. increased
purchasing power
)the ability to demonstrate to
all your stakeholders
theimportance you place on sustainability issues.Your suppliers may be concerned that a SSCM programmemay impact negatively on their
bottom line
. However, this isnot necessarily the case. A report conducted in 2001 onsuppliers’ views on effective supply chain environmentalmanagement strategies
1
, concluded that for the majority of participants (14 companies) environmental initiatives drivenby customers had a positive effect on their bottom line. Ninecompanies said the initiatives had not impacted their bottomline and only two said they faced a negative impact.
Where to startEngage your business
Supply chain management should be
fundamental to thecompany’s overall philosophy and policy regardingsustainability
and should
underpin
its responsible businessobjectives. You will need to:a) have a
clear sense
of what you want to achieve throughthe programme and
motivate
everyone so they arebehind itb)
evaluate
your suppliers against your policy on a
continuous basis
c)
set priorities and act
on the policy by integrating it intoyour procurement activities.
Assemble a team
of people from all relevant departments,particularly staff responsible for purchasing and restocking.
1.
What are supply chains? 
Hotels, airlines, cruise ship and tour operators all rely onsuppliers of goods and services in order to provide their ownguests, passengers and clients with the services theyrequire. The process involves millions of individuals andbusinesses all acting as links in a ‘chain’ to provide theircustomers with what they need, the ultimate customerbeing the end-user (see chart one). Supply chains in thetourism industry (particularly for tour operators) are oftenmore complex than in other sectors. These pages bringtogether recent industry work, most notably by
Richard Tapper
of 
Environment Business Development Group
and
 Xavier Font
at
Leeds Tourism Group
on how to managetourism supply chains effectively.
Why are they important? 
Products and services can have negative environmentaland/or social impacts depending on the business practicesof the companies producing and supplying them. At thesame time, purchasers of goods and services can haveconsiderable influence through their spending power, byusing the procurement process to make their supply chainmore sustainable. This process is known as sustainablesupply chain management (SSCM), supply chain‘engagement’ or ‘greening’ your supply chain. It canaddress socio-economic issues such as local poverty andexclusion as well as environmental impacts and mightinclude for example:
sourcing
more products and services
locally
toencourage local business, provide ‘authenticity’ and cutdown on transport energysourcing products with
less environmental impact
intheir manufacture, use and disposalbuying products
in bulk
and
reusing packaging
importing only
‘fair trade’ products
ensuring that suppliers adhere to
safe and ethical
working practices.Choosing on the basis of the lowest cost provider is notnecessarily in the best long-term interest of your enterprise.The benefits to be gained from more sustainable supplychain management include:green
hotelier
 january 2006
the
know-how
section
1
THE
KNOW-HOW
SECTION
Hotel generalmanagersStaff responsiblefor procurement andcontractsQuality/EHS andsustainable businesspersonnelHR or departmentalmanagers responsiblefor training
WHO SHOULDREAD THIS? 
 This section canbe pulled out andkept separately andwill build upinto a practicaland comprehensivereference guideon how to manageenvironmentalimpacts at your hotel.
Sustainable supply chains
number
eleven
chart 1:Components of tourism supply chains
1
Suppliers’ Perspectives on Greening the Supply Chain, produced by Business for SocialResponsibility Education Fund, June 2001
 
Adopt a farmer
In Tobago
 The Travel Foundation
has been working withthe
Hilton Tobago
and the
Mt. St. George
FarmersAssociation to pilot their ‘Adopt a Farmer’s Group Project.’Forging greater links between the agricultural andtourism sectors will decrease dependency on importedproduce. So far, seven farmers have been involved insupplying the hotel with over TT$80,000 (overUS$12,700) worth of local produce. Consistent demandhas enabled the farmers’ association to increaseproduction. The plan is to involve more farmers andhotels in making this an island-wide initiative.
CASE
STUDY
the
know-how
sectiongreen
hotelier
 january 2006
2
You might
invite key suppliers
to participate in the policyand planning stages.
Communicate
your aims and objectives in order to achieve‘buy in’ from all staff and management.Appoint a member of staff who will act as the
centralco-ordinator
for the programme.Determine whether
external stakeholders
should beinvolved – for example local authorities for waste collectionand disposal.
Create a supply chain policy
Develop a
policy statement
that explains your visionand can be understood by suppliers and staff.
Prioritise
itinto the issues that are most important for your company.
Discuss
the policy with staff and invite their input forhow best to implement it throughout the business.
List
all the goods and services that you buy in.Identify
opportunities to improve
the sustainability of thesegoods and services. If you are unsure about how to do this,consult with suppliers and similar companies who may havebeen through the same process.
Establish a management system
Develop
strategic goals
to aim for so you can integrate theprogramme into your business.Agree on the
targets
you wish to achieve, linking these toyour policy. These should be SMART
2
(specific, measurable,achievable, realistic and time-specific).Select a
sample of suppliers
for assessment (based ontype/spend/scope for improvement/risk etc).
Prioritise the list
into areas and timeframes so that theexercise is split up into
manageable sections
.
Establish standards
against which you can evaluatesuppliers. You should identify a minimum level of acceptable performance and the level you wish suppliers
3.2.
RESOURCES
Practical Guides to Good Practice:Managing Environmental and SocialIssues in the Accommodations Sector
and
Managing Environmental Impactsin the Marine Recreation Sectorand Self Assessment Check-list
web:www.toinitiative.org/supply_chain/supply.htm
Boosting procurement fromlocal businesses
web:www.odi.org.uk/rpeg/research/propoor_ tourism/publications/tools&tips/procurement.pdf
Business Guide to aSustainable Supply Chain
web:www.nzbcsd.org.nz/supplychain/content.asp?id=237
Greening Your Business:A Primer for Smaller Companies
web:www.greenbiz.com/greenbizchecklist.pdf
Green Travel Market
web:www.greentravelmarket.info
Making Tourism Count for the LocalEconomy in Dominican Republic:Ideas for Good Practice
web:www.propoortourism.org.uk/DomRepguidelines.pdf
Supply Chain Engagement for TourOperators – Three Steps TowardSustainability
web:www.toinitiative.org/supply_chain/SupplyChainEngagement.pdf
Suppliers’ Perspectives on Greeningthe Supply Chain
web:www.getf.org/file/toolmanager/O16F15429.pdf
The Business of Enterprise –Meeting the Challenge of EconomicDevelopment Through Business andCommunity Partnerships
web:www.iblf.org/docs/BusinessOfEnterprise.pdf
Tour Link Project Sustainable SupplyChain Management Guide
web:www.leedstourismgroup.com
Tour Operators Performance Indicators
web:www.toinitiative.org/reporting/documents/TourOperatorsSupplementNovember2002.pdf
Tourism Supply Chains –Report of a Desk Research Projectfor The Travel Foundation
web:www.thetravelfoundation.org.uk/documents/Tourism_Supply_Chains.pdf
Working with Suppliers for SustainableDevelopment – Tour operatorpractices and recommendations
web:www.leedsmet.ac.uk/lsif/the/WORKING_WITH_SUPPLIERS.pdf
2
As defined in ‘Supply Chain Engagement for Tour Operators – Three Steps Towards Sustainability.’See www.toinitiative.org/supply_chain/SupplyChainEngagement.pdf 
3
See Tour LinkProject, Sustainable Supply Chain Management Guide. www.leedstourismgroup.com
number
eleven
 TOI Performance Indicators
In 2002 the
 Tour Operators' Initiative for Sustainable Tourism Development (TOI)
, in co-operation with the
Global Reporting Initiative (GRI)
, launched a ‘sectorsupplement’ to the GRI 2002 Sustainability ReportingGuidelines to provide indicators for assessing touroperators' performance. The supplement applies only tobusinesses dedicated to organising holiday packages.Forty-seven performance indicators measure success inaddressing the environmental, economic and socialimpacts of their business operations. The indicators aregrouped into five categories that reflect the life cycle of the holiday product – from the planning stage to thedevelopment and delivery of the product – and include16 indicators for supply chain management. These coverpolicy, screening criteria, consultation, implementation,support, progress monitoring, statistics on percentages of suppliers subject to the policy and participating in theprogramme, actions taken, contracting policy, incentives, joint initiatives for improvement and benefits for thecontracting organisation.
CASE
STUDY
Helena Reytel:+ 33 1 44 377 638email:hrey@unep.fr web:www.toinitiative.org/supply_chain/supply.htm
more
information
Tess Forgantel:+ 44 (0) 117 927 3049email:admin@thetravelfoundation.org.uk
more
information
to attain. Bear in mind the different kinds of suppliersinvolved and your local conditions.Set up a
database
so that information can be
accessedinternally
and
used easily
by all team members. Thisshould be integrated with
existing databases
such asenvironmental, health and safety (EHS) or purchasing.
Consult with and assess your suppliers
Explain
the policy and what you are aiming to achieve toyour suppliers. Visit them and let them visit you. Use
face-to-face
meetings, briefing sessions and workshopsrather than sending impersonal letters or emails. Yourcommitment to the programme will be judged by theeffort you put into it.
Establish levels of awareness
among suppliers of theenvironmental and socio-economic issues relating to theirproducts and services, challenges, threats andopportunities for success.
Be clear
about the
information you are gathering
fromthem and how you intend to use it.Conduct a
baseline assessment
3
of your suppliers, takinginto account:a)
qualitative
performance aspects (either in the form of yes/no responses or on a sliding scale of values(say -3 for poor and +3 for good)b)
quantitive
data such as performance data forenergy/water consumption, waste etc.
Evaluate
the information you have collected and establishwhich of the suppliers are most significant in terms of having above or below average performance in relation toyour standards.If a supplier
does not meet your criteria
, ask whether theycan supply a suitable
alternative product
or
modify theirservice
at a similar cost.Find out how your suppliers
select their suppliers
so thatyou can examine further along the supply chain and developa fully sustainable supply chain in the future.
4.
 
SuppliertypeCompany nameMeets criteria? 
(Excellent/very good/ fair/poor/unsatisfactory)
Action requiredBywhen? PersonresponsibleDateachievedFollow uprequiredTargetdateCost
Cleaning chemicalsEcofriendlyCleaning Chemical CorpGood Work with supplier toreduce quantities required.Install automatic dosing equipment3/4/06John Doe
6/4/06
Further staff training in twomonths’ time6/6/06£250.00Cleaning ChemicalSolutionsPoorInvestigate whether theycan supply alternativefloor cleaner or modifyformulation16/2/06Pedro rez16/02/06Cannot modifyformulation.Investigatealternativesuppliers3/4/06nil
green
hotelier
 january 2006
the
know-how
section
3
THE
KNOW-HOW
SECTION
Define your work programme
You will need to draw up a programme of work based onthe results of the supplier assessments (see chart 2).This should include:a) a
timetable
b) a
budget
c) an estimate of the
influence
on the companyd) details of who is
responsible
for what.
Prioritise
the action plan to focus on groups of suppliers,such as those that have the greatest impacts.You might want to concentrate first on the things that are
easiest to change
and/or are
without cost
.
Monitor and report on progress
Define
indicators
for monitoring the performance of yoursuppliers against the standards you have set.
Meet regularly
with suppliers to
assess progress
and
anticipate problems
.
Communicate results
internally, recognising everyone’sinput to
maintain awareness
and
commitment
.If you are
reporting publicly
through a sustainabilityreport or within your annual report, communicate theresults to suppliers first.Create a system whereby you are able to
assess andverify
suppliers’ stated sustainability performance. Thismight be through special visits by members of the teamto audit progress.
Support suppliers in achievingyour goals
Maintain awareness
by
encouraging
and
communicatingfeedback
to and from suppliers.Provide information so that suppliers can develop
their owninternal communications
.Partner with
external organisations
such as local orregional business associations and training institutes whocan
reinforce your efforts
through their own programmes.Assess whether any suppliers require
technical support
oradvice on
relevant legislation
and set targets forimprovement.Identify with them appropriate
actions and solutions
. Thismight include running in-house workshops or identifyingexternal specialists who can provide further training.In encouraging small local businesses, make sure you
understand the issues
that stand in the way of theirsuccess. For example, small, start-up enterprises may nothave working capital and may need paying in cash ondelivery. They may need help to promote their services orshowcase their products to customers.
Recognise and reward
suppliers for their sustainabilityimprovements in order to maintain
momentum
and
support
for your programme. This can include the provisionof incentives such as:a)
special events
for suppliers where the better performersare showcased to inspire the others
7.6.5.
b) making the best performers your
preferred choice
whencontractingc) giving
additional promotion
to suppliers that have madesignificant improvementd)
longer-term
contracts offering them greater security.
Incorporate the policy within yoursuppliers’ contracts
The ultimate aim is to
integrate sustainability criteria
into your
purchasing and contracting procedures
tosupport your overall sustainability objectives.Agree on the internal approach and
procedures
requiredfor
drafting clauses
in contracts, ensuring that all legalconsiderations are properly covered. You may need totrain your staff on contracting procedures forsustainability issues.In
rewriting contracts
to address sustainability issues,set minimum
baseline requirements
that all suppliersmust comply with (such as having their own policy forsocio-economic and environmental issues).Set
additional milestones
that suppliers can aspire towhich are
realistic and achievable
. Link theirachievement into incentives (as outlined in section 7).Incorporate supplier sustainability progress reviews intoyour
existing supplier review process
.Agree on the mechanisms to be used when suppliers
failto meet requirements
. Depending on the seriousness of the issue, these may range from identifying additionaltechnical support to the suspension of their contract.If you do have to suspend a supplier,
revisit thesituation
in a few months’ time to see whether they havetaken corrective action.
Allocate responsibilities
for updating standards, supportmaterials and databases and co-ordinating training – both
8.
chart 2:Example of a simple supplier action plan
Hilton International
Scandic
introduced its
Suppliers Declaration
in early2003, following many years of non-formal dialogue withits suppliers. Since then the company has had extensivediscussions with its 30 largest suppliers in the Nordicregion on how to take sustainable production and sourcingto the next stage. Results achieved so far includeecolabelled beds, soap and TV sets (Type 1 Nordic Swanecolabel) and, in Sweden, organic coffee (where 70 millioncups have been served since 2001). The declaration is alsoused at hotel level in securing local suppliers. During2006 a global supply chain monitoring system will beintroduced within
Hilton International
taking the currentHilton and Scandic systems to the next level.
 Jan Peter Bergkvisttel:+ 46 709 73 59 63email: janpeter.bergkvist@hilton.com
more
information
CASE
STUDY

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