By Heather Rodgers, head of group procurement and supplier management, Centrica

To extend Centrica’s business principles into the supply chain, the corporate responsibility committee supported the creation of a new group-wide policy, the responsible procurement and supplier management policy, to explain the conduct that Centrica expects of itself and its business partners. The Centrica procurement team has been at the heart of driving the policy in the last 18 months and is now working closely with its supplier partnership community to roll this out.

The policy outlines commitments to reduce environmental impact, respect human rights, ensure business integrity and focus on health and safety. It places procurement at the centre of executing the policy.

After the board endorsed the policy in December 2007, key milestones were created to implement the policy across 2008 and 2009. We undertook a number of steps to introduce and embed the policy into our procurement processes:

• Across Centrica, a group project team was initiated in 2008 to lead and roll out the corporate responsibility and responsible procurement strategy across Centrica’s businesses. Participants include group and business unit procurement teams, legal representatives and members of the corporate responsibility team. The two people who are driving this across the company are Trevor Boyce and Hulya Akal.
• We began by speaking with other CPO’s to capture the lessons learned during their experience in rolling out responsible procurement policies for their companies. This saved a huge amount of time because it ensured we did not tread the same path and meant that we had feedback for areas that weren’t successful in other companies. In April 2008, we then held a meeting with our strategic suppliers to share ideas and begin the journey of communicating Centrica’s messages of corporate responsibility. The attendance was excellent and the next session is planned for April 2009. The team have received very positive feedback from suppliers who indicated that they have similar policies for themselves. DHL’s UK Procurement representative for CR policies and initiatives, said, “I welcomed the opportunity of getting together with like-minded individuals, representing a broad range of organisations, sharing common themes and sets of goals. The workshop proved to be an excellent and productive day, brainstorming ideas, scenarios and sharing current working practices, I certainly took away with me some ideas and ways forwards”.
• One of the exciting initiatives during 2008 was when we worked with one of our key suppliers, Worcester Bosch, to map out the supply chain from its beginning to it arriving at our customers’ doorstep. This exercise benefited both of us as we gained a greater understanding of how transparent supply chains can be. We will continue to address this with our suppliers going forward.
• Our research did not stop there, because in talking with other CPOs at roundtable events we were pointed in the direction of companies like SEDEX (the Supplier Ethical Data Exchange) and First Point Assessment Limited, which is a division of Achilles Information, and other external bodies to capture best practice for supplier audits and to understand how this is being tracked and audited by other blue-chip organisations. The supplier audit is being utilised with some of our outsourced partners to ensure we get the balance of capturing the evidence with the practicalities of making the request for information relevant to the policy. They have provided some useful feedback which we have built in as part of the experience. This demonstrates the team’s desire to ensure that any supplier audits that are undertaken encompass an internationally-recognised corporate code of good practice.
• We worked with the legal and corporate responsibility teams to create new contractual clauses that would embed the policy’s principles into supplier contracts.  The procurement team ensures that these clauses are included in contracts in upstream and downstream businesses for those suppliers who supply goods and services, including supply chains across the world and our outsourced operations. This is initiated when new categories are opened up, new suppliers are signed on and with renewal of contracts.
• To measure and report performance at board level, we developed key performance indicators to track the number of suppliers signing up to the policy. These KPI’s are incorporated across the procurement teams’ annual targets. These measures demonstrate confidence that the policy roll out is on course and reportable to the Centrica executive committee. 
• The website is our window to the suppliers and we are talking with other companies on how we can lever this portal to exchange information. Just recently, Centrica has been voted one of the best companies in Europe for communicating its corporate responsibility programme, according to communications consultancy Hallvarsson & Halvarsson (H&H). We want to carry on evolving our communications with our suppliers and will be talking with them at our supplier forum next April on ways in which we can take it to the next stage. 

Good progress has been made and strong foundations have been laid for carrying forward and further embedding responsible procurement into Centrica’s procurement and supplier management processes. November last year saw a successful re-certification audit from the Chartered Institute of Purchasing and Supply, where the team highlighted how impressed they were with the environment and sustainability section for policies and procedures and it was regarded as being in the upper quartile of all companies audited.

What is great is that companies are coming to talk to us and we are happy to share our experiences – like the people who helped us at the beginning of our journey. Nevertheless it remains a journey and there will be plenty more lessons to learn as we carry on going forward.

Centrica is a top 30 FTSE100 company with growing energy businesses in the UK, North America and Europe. It secures and supplies gas and electricity for millions of homes and businesses and offers a distinctive range of home energy solutions and low-carbon products and services.

David Rae

Buyers should plan for slower and better-optimised transport systems if they are to successfully reduce the carbon footprint of their supply chains according to a comprehensive report published yesterday by the World Economic Forum.

The lengthy study, which was carried out with the aid of Accenture, recommends a series of measures that key stakeholders in the supply chain can take in order to improve the overall environmental impact of product sourcing and delivery.

According to the WEF, buyers are in an excellent position to, “take decisions which actively drive positive change up and down the supply chain”.

The areas in which buyers can make a substantial impact include:

Product and packaging design
By agreeing standards and targets around packaging and agreeing modularisation of transit, goods can be shipped far more efficiently.

Low-carbon sourcing
By developing sustainable sourcing policies that consider the carbon impact of primary production, manufacturing and rework activities (to browse company sustainable policies, see our Policy Bank).

Tactical nearshoring opportunities
Buyers should take the carbon emission impact into account when considering nearshoring options.

Mode switches
Buyers should consider mode switches across supply chains and despeed the supply chain so that larger quantities are delivered less frequently.

Carrier incentivisation
Build environmental performance indicators into the contracting process.

Consumer incentivisation
Support better understanding of carbon footprints and labelling where appropriate, work with consumers to make recycling easier and more resource efficient.

Technologies and techniques to help synchronise supply chains
Encourage collaboration among shippers and carriers and invest in data exchanges to increase the visibility of co-loading and other collaboration opportunities.

You can find a full version of the report on the WEF website.

Richard Edwards

Closer collaboration between procurement, human resources and fleet management is acting as the driving force behind a major change at one of Europe’s largest companies.

As part of a wider initiative which aims to cut emissions across the company by 30% by 2020, Deutsche Post has introduced a carbon budget for its vehicle fleet – a move that Stefan Zeisel, senior vice president of global sourcing at Deutsche Post World Net, admits has turned the company’s car policy “upside down”. 

“It’s a fascinating idea,” Ziesel told SustainableSourcing. “It’s a mixed project, with procurement working alongside HR and fleet, and we see it as a very strong symbol for the environmental direction of the corporation.” 

Carbon quotas

Under the new plans, employees are given a CO2 budget for various available car groups and although the vehicles that the company offers remain largely unchanged, the choices that drivers now make have changed massively. If a driver’s choice of car takes him or her above their CO2 budget they must pay more out of their salary to subsidise it, and vice versa.

“It has been positively acknowledged by everyone involved,” Ziesel said. “The new system is much more flexible in terms of upgrading and downgrading. If someone does decide to downgrade then they can even get paid a certain bonus amount.”

The changes are being felt throughout the business, with even board members finding themselves far more conscious of the company car they are driving. “Five years ago, if a major figure within the business turned up for work in a Smart Car then eyebrows would have been raised,” he said. “Now that isn’t socially accepted – it’s no longer trendy.” Another innovation overseen by Ziesel includes the use of free railway travel, or ‘Bahn cards’, for those who choose to travel by public transport. 

Of course, while the environmental benefits of Deutsche Post’s plans are clear, the cost implications of the scheme also make it particularly attractive.

“The total cost of ownership of employees using more economical cars has the potential to save the company millions in the future,” Ziesel said. “We estimate that new fuel-efficient cars could save the company up to €1,200 per person over the lifetime of the car. Multiply that by 5,000 and that figure is soon running into the millions.”