Sustainable supply chains
What are supply chains?
This section can be pulled out and kept separately and will build up into a practical and comprehensive reference guide on how to manage environmental impacts at your hotel. Hotels, airlines, cruise ship and tour operators all rely on suppliers of goods and services in order to provide their own guests, passengers and clients with the services they require. The process involves millions of individuals and businesses all acting as links in a ‘chain’ to provide their customers with what they need, the ultimate customer being the end-user (see chart one). Supply chains in the tourism industry (particularly for tour operators) are often more complex than in other sectors. These pages bring together recent industry work, most notably by Richard Tapper of Environment Business Development Group and Xavier Font at Leeds Tourism Group on how to manage tourism supply chains effectively. a destination with more local colour and more to do – creating a market advantage for new and repeat business the potential for lower operating costs through more efficient use of energy and water resources and reduced waste risk reduction by avoiding suppliers with a doubtful track record on environmental and social issues better relationships with suppliers giving improved loyalty and service a better relationship with the community whose economy you are supporting increased security of supply of the goods or service through long-term contracts and a better negotiating position (i.e. increased purchasing power) the ability to demonstrate to all your stakeholders the importance you place on sustainability issues. Your suppliers may be concerned that a SSCM programme may impact negatively on their bottom line. However, this is not necessarily the case. A report conducted in 2001 on suppliers’ views on effective supply chain environmental management strategies1, concluded that for the majority of participants (14 companies) environmental initiatives driven by customers had a positive effect on their bottom line. Nine companies said the initiatives had not impacted their bottom line and only two said they faced a negative impact.
Why are they important?
Products and services can have negative environmental and/or social impacts depending on the business practices of the companies producing and supplying them. At the same time, purchasers of goods and services can have considerable influence through their spending power, by using the procurement process to make their supply chain more sustainable. This process is known as sustainable supply chain management (SSCM), supply chain ‘engagement’ or ‘greening’ your supply chain. It can address socio-economic issues such as local poverty and exclusion as well as environmental impacts and might include for example: sourcing more products and services locally to encourage local business, provide ‘authenticity’ and cut down on transport energy sourcing products with less environmental impact in their manufacture, use and disposal buying 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 not necessarily in the best long-term interest of your enterprise. The benefits to be gained from more sustainable supply chain management include:
Where to start
Engage your business
Supply chain management should be fundamental to the company’s overall philosophy and policy regarding sustainability and should underpin its responsible business objectives. You will need to: a) have a clear sense of what you want to achieve through the programme and motivate everyone so they are behind it b) evaluate your suppliers against your policy on a continuous basis c) set priorities and act on the policy by integrating it into your procurement activities. Assemble a team of people from all relevant departments, particularly staff responsible for purchasing and restocking.
chart 1: Components of tourism supply chains
WHO SHOULD READ THIS?
*Tour operating includes advertising, purchasing, package development, marketing and sales and purchasing. *Ground operations include ground transport and excursions. Tour operators contract suppliers to provide some of these components directly; others are obtained by suppliers and their suppliers. All suppliers providing component goods and services that go into delivery of a tourism product are part of the supply chain for that product.
© Richard Tapper, Environment Business & Development Group, 2003 Source: Tourism Supply Chains – Report of a Desk Research Project for The Travel Foundation by Leeds Tourism Group at Leeds Metropolitan University, UK
✓ Hotel general ✓ Staff responsible ✓ Quality/EHS and
for procurement and contracts sustainable business personnel managers responsible for training managers
✓ HR or departmental
Suppliers’ Perspectives on Greening the Supply Chain, produced by Business for Social Responsibility Education Fund, June 2001
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Practical Guides to Good Practice: Managing Environmental and Social Issues in the Accommodations Sector and Managing Environmental Impacts in the Marine Recreation Sector and Self Assessment Check-list web: www.toinitiative.org/ supply_chain/supply.htm Boosting procurement from local businesses web: www.odi.org.uk/rpeg/research/ propoor_ tourism/publications/tools& tips/procurement.pdf Business Guide to a Sustainable 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 Local Economy in Dominican Republic: Ideas for Good Practice web: www.propoortourism.org.uk/ DomRepguidelines.pdf Supply Chain Engagement for Tour Operators – Three Steps Toward Sustainability web: www.toinitiative.org/supply_ chain/SupplyChainEngagement.pdf Suppliers’ Perspectives on Greening the Supply Chain web: www.getf.org/file/ toolmanager/O16F15429.pdf The Business of Enterprise – Meeting the Challenge of Economic Development Through Business and Community Partnerships web: www.iblf.org/docs/ BusinessOfEnterprise.pdf Tour Link Project Sustainable Supply Chain Management Guide web: www.leedstourismgroup.com Tour Operators Performance Indicators web: www.toinitiative.org/ reporting/documents/TourOperators SupplementNovember2002.pdf Tourism Supply Chains – Report of a Desk Research Project for The Travel Foundation web: www.thetravelfoundation. org.uk/documents/Tourism_Supply_ Chains.pdf Working with Suppliers for Sustainable Development – Tour operator practices and recommendations web: www.leedsmet.ac.uk/lsif/ the/WORKING_WITH_SUPPLIERS.pdf
You might invite key suppliers to participate in the policy and 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 central co-ordinator for the programme. Determine whether external stakeholders should be involved – for example local authorities for waste collection and disposal.
Create a supply chain policy
Adopt a farmer
In Tobago The Travel Foundation has been working with the Hilton Tobago and the Mt. St. George Farmers Association to pilot their ‘Adopt a Farmer’s Group Project.’ Forging greater links between the agricultural and tourism sectors will decrease dependency on imported produce. So far, seven farmers have been involved in supplying the hotel with over TT$80,000 (over US$12,700) worth of local produce. Consistent demand has enabled the farmers’ association to increase production. The plan is to involve more farmers and hotels in making this an island-wide initiative.
Develop a policy statement that explains your vision and can be understood by suppliers and staff. Prioritise it into the issues that are most important for your company. Discuss the policy with staff and invite their input for how best to implement it throughout the business. List all the goods and services that you buy in. Identify opportunities to improve the sustainability of these goods and services. If you are unsure about how to do this, consult with suppliers and similar companies who may have been through the same process.
Establish a management system
Tess Forgan tel: + 44 (0) 117 927 3049 email: firstname.lastname@example.org to attain. Bear in mind the different kinds of suppliers involved and your local conditions. Set up a database so that information can be accessed internally and used easily by all team members. This should be integrated with existing databases such as environmental, health and safety (EHS) or purchasing.
Develop strategic goals to aim for so you can integrate the programme into your business. Agree on the targets you wish to achieve, linking these to your policy. These should be SMART2 (specific, measurable, achievable, realistic and time-specific). Select a sample of suppliers for assessment (based on type/spend/scope for improvement/risk etc). Prioritise the list into areas and timeframes so that the exercise is split up into manageable sections. Establish standards against which you can evaluate suppliers. You should identify a minimum level of acceptable performance and the level you wish suppliers
Consult with and assess your suppliers
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 ‘sector supplement’ to the GRI 2002 Sustainability Reporting Guidelines to provide indicators for assessing tour operators' performance. The supplement applies only to businesses dedicated to organising holiday packages. Forty-seven performance indicators measure success in addressing the environmental, economic and social impacts of their business operations. The indicators are grouped into five categories that reflect the life cycle of the holiday product – from the planning stage to the development and delivery of the product – and include 16 indicators for supply chain management. These cover policy, screening criteria, consultation, implementation, support, progress monitoring, statistics on percentages of suppliers subject to the policy and participating in the programme, actions taken, contracting policy, incentives, joint initiatives for improvement and benefits for the contracting organisation.
Helena Rey tel: + 33 1 44 377 638 email: email@example.com web: www.toinitiative.org/supply_chain/supply.htm
Explain the policy and what you are aiming to achieve to your suppliers. Visit them and let them visit you. Use face-to-face meetings, briefing sessions and workshops rather than sending impersonal letters or emails. Your commitment to the programme will be judged by the effort you put into it. Establish levels of awareness among suppliers of the environmental and socio-economic issues relating to their products and services, challenges, threats and opportunities for success. Be clear about the information you are gathering from them and how you intend to use it. Conduct a baseline assessment3 of your suppliers, taking into 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 for energy/water consumption, waste etc. Evaluate the information you have collected and establish which of the suppliers are most significant in terms of having above or below average performance in relation to your standards. If a supplier does not meet your criteria, ask whether they can supply a suitable alternative product or modify their service at a similar cost. Find out how your suppliers select their suppliers so that you can examine further along the supply chain and develop a fully sustainable supply chain in the future.
As defined in ‘Supply Chain Engagement for Tour Operators – Three Steps Towards Sustainability.’ See www.toinitiative.org/supply_chain/SupplyChainEngagement.pdf See Tour LinkProject, Sustainable Supply Chain Management Guide. www.leedstourismgroup.com
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Ecofriendly Cleaning Chemical Corp
(Excellent/very good/ fair/ poor/unsatisfactory)
Follow up required
Further staff training in two months’ time Cannot modify formulation. Investigate alternative suppliers
Work with supplier to reduce quantities required. 3/4/06 Install automatic dosing equipment Investigate whether they can supply alternative floor cleaner or modify formulation
Cleaning Chemical Solutions
chart 2: Example of a simple supplier action plan
Define your work programme
You will need to draw up a programme of work based on the 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 company d) 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.
b) making the best performers your preferred choice when contracting c) giving additional promotion to suppliers that have made significant improvement d) longer-term contracts offering them greater security.
Incorporate the policy within your suppliers’ contracts
Monitor and report on progress
Define indicators for monitoring the performance of your suppliers against the standards you have set. Meet regularly with suppliers to assess progress and anticipate problems. Communicate results internally, recognising everyone’s input to maintain awareness and commitment. If you are reporting publicly through a sustainability report or within your annual report, communicate the results to suppliers first. Create a system whereby you are able to assess and verify suppliers’ stated sustainability performance. This might be through special visits by members of the team to audit progress.
Support suppliers in achieving your goals
Maintain awareness by encouraging and communicating feedback to and from suppliers. Provide information so that suppliers can develop their own internal communications. Partner with external organisations such as local or regional business associations and training institutes who can reinforce your efforts through their own programmes. Assess whether any suppliers require technical support or advice on relevant legislation and set targets for improvement. Identify with them appropriate actions and solutions. This might include running in-house workshops or identifying external specialists who can provide further training. In encouraging small local businesses, make sure you understand the issues that stand in the way of their success. For example, small, start-up enterprises may not have working capital and may need paying in cash on delivery. They may need help to promote their services or showcase their products to customers. Recognise and reward suppliers for their sustainability improvements in order to maintain momentum and support for your programme. This can include the provision of incentives such as: a) special events for suppliers where the better performers are showcased to inspire the others
The ultimate aim is to integrate sustainability criteria into your purchasing and contracting procedures to support your overall sustainability objectives. Agree on the internal approach and procedures required for drafting clauses in contracts, ensuring that all legal considerations are properly covered. You may need to train your staff on contracting procedures for sustainability issues. In rewriting contracts to address sustainability issues, set minimum baseline requirements that all suppliers must comply with (such as having their own policy for socio-economic and environmental issues). Set additional milestones that suppliers can aspire to which are realistic and achievable. Link their achievement into incentives (as outlined in section 7). Incorporate supplier sustainability progress reviews into your existing supplier review process. Agree on the mechanisms to be used when suppliers fail to meet requirements. Depending on the seriousness of the issue, these may range from identifying additional technical support to the suspension of their contract. If you do have to suspend a supplier, revisit the situation in a few months’ time to see whether they have taken corrective action. Allocate responsibilities for updating standards, support materials and databases and co-ordinating training – both
Scandic introduced its Suppliers Declaration in early 2003, following many years of non-formal dialogue with its suppliers. Since then the company has had extensive discussions with its 30 largest suppliers in the Nordic region on how to take sustainable production and sourcing to the next stage. Results achieved so far include ecolabelled beds, soap and TV sets (Type 1 Nordic Swan ecolabel) and, in Sweden, organic coffee (where 70 million cups have been served since 2001). The declaration is also used at hotel level in securing local suppliers. During 2006 a global supply chain monitoring system will be introduced within Hilton International taking the current Hilton and Scandic systems to the next level.
Jan Peter Bergkvist tel: + 46 709 73 59 63 email: firstname.lastname@example.org
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ANVR: Dutch Tour Operator Association email: email@example.com web: www.anvr.nl/anvr Environment Business Development Group email: firstname.lastname@example.org Global Reporting Initiative (GRI) web: www.globalreporting.org International Centre for Responsible Tourism web: www.theinternational centreforresponsibletourism.org Leeds Tourism Group web: www.leedstourismgroup.com Supply Chain Forum web: www.sscf.info Sustainable Travel International web: www.sustainabletravel.com Tour Operators Initiative for Sustainable Tourism Development (TOI) web: www.toinitiative.org for suppliers and staff. You will also need to identify individuals responsible for co-ordinating the monitoring, auditing and verification processes and providing progress reports.
Pro-Poor Tourism Partnership
Pro-Poor Tourism (PPT) is an approach to tourism development and management that enhances the linkages between tourism businesses and poor people, so that they are able to participate more effectively in tourism product development. All kinds of links with 'the poor' need to be considered: staff, neighbouring communities, land-holders, producers of food, fuel and other suppliers, operators of micro-tourism businesses, craft-makers, other users of tourism infrastructure (roads) and resources (water) etc. The Pro-Poor Tourism Partnership (PPTP) has successfully proved in The Gambia, South Africa and in the Caribbean that sustainable supply chain management can play a vital role in alleviating poverty in tourism destinations, particularly through mechanisms such as marketing and technical support for local businesses, changes in procurement strategy, or direct financial and training inputs. Agricultural linkages for example, have enabled local suppliers to provide fresher produce involving fewer ‘food-miles’ and distinctive food and recipes, helping to stimulate culinary, agro-herbal and farm-based tourism and provide more authentic and memorable experiences for visitors.
Tips for success
Communication is the key to success. Be regular, clear, straightforward and transparent in your communications both with suppliers and internally. Ensure that your policy is reflected in your purchasing decisions or it will undermine the credibility of your programme with suppliers. Aim for an inclusive rather than exclusive approach – i.e. do not ‘drop’ suppliers immediately if they do not meet your standards, but look to help them comply with your requirements and ultimately raise sustainability levels throughout the supply chain. Do not be over-ambitious. Work with a few suppliers at a time for continuous and measurable improvement rather than overnight transformation. Remember that you may be able to learn as much (if not more) from your suppliers about sustainability as you are able to tell them. Understand that suppliers may have different priorities and/or capacities for improvement and may not be able to improve at the same rate. When you are piloting new suppliers, ensure that your critical needs are not threatened. If using certification schemes as a means of identifying sustainable suppliers, check that their standards and criteria are in line with the objectives of your policy. Ensure that any sensitive or confidential material in your supplier database remains confidential. Where insufficient numbers of suppliers are able to meet your minimum requirements, consider working with competitors and local tourism associations to help raise overall standards within the destination and to create a greater pool of suppliers to draw upon. Monitor the response and enthusiasm of suppliers and identify successes and difficulties so that each year you can improve the process.
Harold Goodwin email: email@example.com web: www.pptpartnership.org/pptpar2005.pdf
Tour Link Project
The Tour Link Project established an EU-standard for a Sustainable Supply Chain Management System for tour operators, which includes various common tools such as a management guide, a multi-lingual training website and benchmarking and self-assessment tools. The system is currently being implemented by 250 European tour operators. Tour Link also established common tour operator suppliers’ (of, for example, accommodation) sustainability checklists and online assessment systems to be linked with sustainable tourism certification systems such as the EU Flower for accommodation and the VISIT ecolabels. The tools and the suppliers’ assessment system will be piloted in Austria, Catalonia and Costa Rica. The project, which began in 2004, is being funded by EU-LIFE and is due for completion in 2007. Partners include the Dutch tour operators’ association ANVR and the UK Federation of Tour Operators (FTO), Leeds Metropolitan and Lund Universities, the Austrian and Catalonian Ministries of the Environment, the Dutch Alps Platform, the Royal Awards for Sustainability and ECEAT-Projects.
European supply chain tool
Following completion of a pilot process, the UK Federation of Tour Operators (FTO) will launch their Supplier Sustainability Code in the first quarter of 2006. This is a practical guide for suppliers to the package travel industry on how to minimise negative impacts on the environment and maximise social and economic benefits to local people and communities. The code, which has taken two years to develop and involved broad international multi-stakeholder consultation, has been adopted by the European Unionfunded Tour Link Project as an important tool within the recently-adapted European Supply Chain Management System for tour operators.
We would like to thank the following for their help with this guide: Xavier Font, Leeds Tourism Group Naut Kusters, Tour Link Tom Selänniemi, Aurinkomatkat-Suntours Richard Tapper, Environment Development Group Every attempt has been made to ensure accuracy, however ITP cannot accept any responsibility for actions based on this information.
Chris Thompson tel: + 44 (0) 1444 457900 email: firstname.lastname@example.org
Naut Kusters tel: + 31 20 465 1318 email: email@example.com
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