A red telephone was once standard in the offices of nuclear world leaders, to be used to prevent accidental global destruction. Rather less glamorous procurement departments of large companies had the same, especially those dealing with foodstuffs from faraway places.
Keeping 24/7 factories fed with essential supplies determines the efficiency and profitability of the enterprise. There is zero tolerance of interruption brought about by a break in the supply line, either through bad planning or, as is increasingly the case, when sustainability skeletons come rattling down the supply chain.
Reasons for the (now virtual) red telephone to ring continue to increase as procurement departments find themselves dealing with issues that are as complex as they are unusual. And this is causing a great deal of anxiety among managers who are trained on price and logistics but are understandably ignorant of issues such as slavery, conflict minerals and esoteric environmental certifications.
And why should they know about such things? Take palm oil. In the old days you were expected to ensure there was enough oil in the tanks to keep the factory supplied. Yes, you had to check it was the right grade and quality and you relied on your trusted suppliers and verifiers.
You never had to worry about the effect of oil production on orangutans, or the impact on peat bogs, or the amount of carbon released through deforestation. Even if you read about these issues in National Geographic, they were not part of the supply business.
Not until now.
So, you can imagine the consternation in fish procurement departments when it was revealed that slaves were being used to catch the Thai shrimp that ended up on Californian plates and in the premium morsels Kitty goes crazy for. Slaves? Heavens almighty, how does anyone deal with something so biblical? Slaves in fish? C’mon!
But that’s the new reality and the women and men from procurement are having to deal with it. Those who are managing well have realised that training and communications are essential: not only within the procurement function itself but all the way up their supply chains where real or professed ignorance of sustainability issues is rife.
Where do you start putting things right? We find that a combination of old-style training combined with engaging storytelling is the best way to improve understanding and help procurement people manage the risks.
There is nothing better than a story to get the point across, and supply chains provide many good tales. I remember the time when palm oil was far more expensive than diesel. Some diesel tanker drivers would stop along the way and siphon off a few hundred litres to a waiting accomplice, replacing the precious liquid with diesel that mixed readily with the oil. This went undetected until the errant drivers got greedy and put so too much diesel in the oil. This was finally noticed when the tank inspector in Hamburg opened the inspection hatch and was nearly blown over by the diesel fumes.
Telling the story of children working in the mica mines of India, or the forced labourers scratching minerals in the DRC, or the plight of orangutans in Malaysia, or the poverty of struggling cocoa farmers in Cote d’Ivoire provides a good starting point. See our top tips on story telling in our latest InContext Bulletin.
But there is a need too for solid old fashioned training. This is because everyone in a position of power in the supply chain needs to know not only about the issues but the emerging tools that are available to manage the increased risks. Training includes high-level briefings to senior managers and specific modules for procurement and/or sales people within the value chain.
Such training needs to be continuous because of the rapid changes in the way sustainability issues are managed. There are different levels of transparency and the tools used contrast in their impact and effectiveness. For example, the difference between “traceable” and “certified” can be quite considerable and causes much confusion among the uninitiated.
The primary aim of all communications in the supply chain is to ensure that those charged with compliance know WHY they are being asked to deal with sustainability issues. Such understanding is essential if they are to do their jobs well. And it always helps to start with a story. I remember the time when….