UNIT 6. RESPONSIBLE TOURISM SUPPLY CHAINS
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Unit outline
ObjectivesBy the end of the unit participants will be able to:• Understand the mechanics of supply chains and the
importance of building sustainability in the supply chain
• Develop a sustainable supply chain policy and action plan
• Implement a supply chain sustainability assessment• Identify strategies to support suppliers to meet
supply chain sustainability goals• Understand how to monitor the sustainability
performance of the supply chain and support continuous improvement
Topics1. Introduction to
responsible tourism supply chains
2. Sustainable supply chain policy development and action planning
3. Raising awareness and supporting suppliers to meet sustainability targets
4. Monitoring and evaluate sustainability performance
TOPIC 1. INTRODUCTION TO RESPONSIBLE TOURISM SUPPLY CHAINS
UNIT 6. RESPONSIBLE TOURISM SUPPLY CHAINS
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What is a supply chain?
• The system of moving of a product or service from supplier to customer
• Results in natural resources, raw materials, and components being transformed into a finished product
• Tourism supply chains involve core and ancillary tourism goods and services
• The final product purchased in a general tourism supply chain is the holiday
Picture sources:vov.vn/Uploaded/VietHoa/2012_11_21/Bieu%20dien%20van%20nghe.jpg
http://sinhcafe.com/photo_north/Maichau/maichau_hoabinh_trekking_adventuretoursdotvn.jpghttp:// www.schoolanduniversity.com/images/page_uploads/Food-and-beverage-Management.jpg
http://upload.wikimedia.org/wikipedia/commons/9/97/Premier_Executive_Transport_Services_Boeing_737-700_KvW.jpghttp://www.relaxitsdone.co.nz/_media/images/257-luxury-accommodation-in-queenstown-at-45-south-luxurious-master-bedroom.jpg
© 2003 Richard Tapper, Environment Business & Development Group
The key actors in tourism supply chains
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The tourism sector supply chain
Two compelling reasons why we need sustainable supply chains in tourism
Consumers expect it You are eroding
your core product
Some other good reasons to develop a sustainable supply chain
• Improved profile / brand• Improved market access• Increased operational effectiveness • Increased sustainability
Some common sustainability issues in tourism supply chains
ECONOMIC PERFORMANCE ISSUESEmployee wages and benefitsLocal purchasingRevenue leakageLinkages with local suppliers and subcontractorsCorporate responsibility-related payments
SOCIO-CULTURAL PERFORMANCE ISSUESGeneralEqual opportunities and non-discriminationHuman rights (including combatting sexual exploitation of children)
WorkplaceWorkplace conditionsLabour relations (fair wages, job security, working hours etc)Health and safetyTraining and educationChildren in the workplace
Suppliers and subcontractorsLabour relations and human rights practicesContracting with small and micro-enterprisesRespect for rights of ethnic and minorities and of local communities
CommunityTraditional rights and freedomsLocal consultation and participatory decision-makingContribution to community developmentEconomic linkages with local communities
ENVIRONMENTAL PERFORMANCE ISSUESEnergy useWater useWaste managementWastewater managementContributions to biodiversity and nature conservationChemical useEmissions (CO2, ozone depleting substances)Land conversionAir, water and land pollutionToxicity of materials and products usedPurchasing guidelinesBuilt environment (including protection of architectural, historical and archaeological heritage)Environmental management system
Source: Tour Operators’ Initiative for Sustainable Development (TOI) 2004, Supply Chain Engagement for Tour Operators: Three Steps Toward Sustainability, TOI, France
93% of your supply chain is invisible –and why this matters to you!
• Most supply chains today are so complex that companies don’t know exactly what’s happening in them
• Poor practices in the supply chain can result in serious risk and reputation issues, legislation and litigation issues and lawsuits for false claims relating to human and environmental issues
• The impacts of poor practices by others can and will eventually affect you
Source: Rowe A. 2013, ‘93% of Your Supply Chain Is “Invisible”’, Network for Business Sustainability, Available [online]: http://nbs.net/knowledge/93-of-your-supply-chain-is-invisible/, Accessed: 09/02/2014
The function of making tourism supply chains more sustainable
• Recognises sustainability goes beyond the company
• Uses the power of policies and contracts combined with b2b support to create positive change
• Requires working with suppliers to achieve positive financial and sustainability performance
• Is grounded in the principles of responsible tourism
Healthy communities
Natural environment
Economic vitality
SUSTAINABLETOURISM
Example: Putting responsibility into a component of a tour operator’s supply chain
TOUR OPERATORHotel
RestaurantDairy suppliers
Fruit & vegetable suppliers
Canned goods suppliers
Others
Attractions
Others
Tour operator• Uses local destination guides• Employs local staff• Recycles• Informs guests of sustainability
issues• …
Restaurant• Employs local staff• Sources sustainable food• Implements Fair Trade• Supports local sustainability
projects• Pays fair salaries• …
Suppliers• Grow food organically• Do not sell endangered
animals• Have good working
conditions• …
Example of simple restaurant supply chain
Picture sources:http://www.hoianworldheritage.org.vn/uploads/news/rautraque.gif; http://
www.vinacorp.vn/Content/ckfinder/userfiles/images/bia(1).jpg; http://images.vietpress.vn/Images/Uploaded/Share/2013/09/23/93.jpg; http://www.vinachem.com.vn/TCTYHC/GifAdv/Ninh_binh/san_pham.gif; http://newworldvn.vn/hinh-anh/images/the gioi-moi/ao-ghe-nha-hang-khach-san.jpg;
http://www.stevina.vn/uploadfiles/product/C%C3%A2y%20gi%E1%BB%91ng%202.JPG; http://dantri4.vcmedia.vn/2togCcWP25hx4bn5VbuB/Image/2013/11/anh-minh-hoa-cdac7.jpg; http://www.dunghangviet.vn/uploads/content/2012/04/05/thanh-loc-rau-qua-truoc-khi-xuat-khau-0386.jpg; http://eventsnpromotions.com/wp-content/uploads/2012/12/photodune-1735309-waiter-with-champagne-xs.jpg; http://dantri21.vcmedia.vn/Ic3EyFHpPWFvMJOJFocc/Image/2013/03/Rau-cu-qua-luoc634814061593253822-6bfaf.jpg;
http://www.vanderree-transport.nl/Afbeeldingen/Wallpapers/ Van%20der%20Ree%20Transport%20(1).jpg; http://images.theage.com.au/2012/10/22/3733553/aw-Machi-20Japanese-20Resturant_20121022110825341796-360x0.jpg
Fruit & vegetables ingredients
Meat ingredients
Table linen
Beverages
Restaurant
Dairy farm
Market Freight Fruit & veg farm
Seeds
Fertiliser, pesticides, etc
Freight ButcherDeli or market
Seeds
Fertiliser, pesticides, etc
Freight Cottonfarm
Linenstore
Processingfactory
Processingfactory
Fertiliser,feed, etc
Retailers, Distributors, Manufacturers, Producers
RESTAURANT / CONSUMER RETAILER DISTRIBUTOR, MANUFACTURER, PRODUCER
Direct suppliers Indirect suppliers
TOPIC 2. SUSTAINABLE SUPPLY CHAIN POLICY DEVELOPMENT AND ACTION PLANNING
UNIT 6. RESPONSIBLE TOURISM SUPPLY CHAINS
The importance of having a sustainable supply chain policy in tourism
SUSTAINABLE SUPPLY CHAIN
POLICY
Defines company sustainability position• Establishes the goals /
targets for supply chain and supplier sustainability
Prioritises issues• Identifies the specific
areas of sustainability action that are most important
Ensures correct action• Combined with procedures
policies make sure sustainability actions are effective and do not erode sustainability goals
Defines training requirements• They help identify skill and
technology gaps and areas in which capacity building in sustainability topics can be implemented
The benefits of having sustainable supply chain policy in tourism
•Helps defend a company from legal disputes•Demonstrates company commitment to sustainability•Promotes support of suppliers to achieve sustainability objectives
•Create greater stability and consistency in supplier sustainability actions resulting in the faster achievement of sustainability objectives
TOPIC 2 TOPIC 3 TOPIC 4
The key steps to developing a sustainable supply chain
Understand where you areConduct a baseline study to understand the sustainability of your
existing supply chain
Conducting a sustainable supply chain baseline study
What is it?The process of researching the current level of sustainability of suppliers with the goal of identifying sustainability gaps and developing sustainability targets for improved performance
Benefits Helps find sustainability gaps Determines the extent and type of
current behaviour/practices in sustainability
Determines attitudes towards sustainability
Determines current indicator levels (before intervention)
Assists establish and prioritise sustainability policy areas/ objectives
Provides a means to set realistic sustainability targets and measure progress
The key steps in implementing a baseline study
A. Build a management
team
B. Develop baseline
assessment methodology and
approach
C. Develop assessment
criteria
D. Implement baseline study,
review and evaluate results
A. Building an effective management team
• Representation: Involve representatives from different internal departments and suppliers
• Knowledge and experience: Ensure participants have good knowledge of key operational areas and experience or understanding of sustainable tourism
• Organisation: Appoint a “policy sponsor” or “leader” for overall responsibility / ownership in developing and managing the policy
Source: Tour Operators’ Initiative for Sustainable Development (TOI) 2004, Supply Chain Engagement for Tour Operators: Three Steps Toward Sustainability, TOI, France
• Provide resources and top-level support for the program
Company Board
• Use sustainability performance as a factor in selecting suppliers
• Incorporate sustainability clauses into contracts with suppliers
Contracting director & Managers
• Discuss sustainability issues and the company program as part of regular contacts with suppliers
• Provide feedback and continuous follow-up with suppliers
• Facilitate dissemination of policy and training and awareness materials
• Identify new local suppliers entering the tourism sector Destination
Managers & Representatives
• Incorporate sustainable action plans into job description and staff appraisals
Human Resources Director & Department
• Provide legal advice on wording, inclusion and enforcement of sustainability clauses in suppliers’ contracts
Legal Advisers
• Develop marketing plan to reflect company’s sustainable supply chain strategy
• Provide incentives to sustainable suppliers with additional promotions
Marketing Director & Department
• Examine the cost implications of the sustainability- induced changes required in the supply chain and their impact on prices
Production Department
• Monitor quality and health and safety standard of suppliers
• Incorporate sustainability performance issues into monitoring of suppliers
Quality & Safety Department
• Provide day-to-day management and coordination of the program
• Offer advice on sustainability issues, technical supports, etc…
Sustainability Unit
• Provide assistance in development of training programs for staff and suppliers on sustainability issues
Communications/ Training Unit
Role of key departments in sustainable supply chain policy development
B. Developing a baseline assessment methodology and approach
• What information is required?
• Who will collect it?• How will we collect it?• When will be collected?• Are there any issues will
affect progress?In-depth interviews
Written questionnaire
Supplier documents & data
Picture source:http://sisnwinc.com/wp-content/uploads/2013/05/documents12001.jpg
C. Establishing sustainability criteria
• Define conditions or measures forevaluating sustainability
• Cover environmental, social, and economic aspects
• Gauge suppliers’ level of awareness of sustainable tourism
• Determine supplier desire and capabilities to implement sustainable tourism principles and practices
• Identify potential barriers to the implementation of good practices
Examples of economic sustainability assessment criteria for suppliers
Supplier pays above minimum wages
Supplier implements strategies to avoid revenue leakages from local economy
Supplier has policies on the purchase of local products and services
Supplier pays / charges fair prices to producers
Supplier economic sustainability assessment criteria
Others?
Examples of environmental sustainability assessment criteria for suppliers
Supplier implements strategies to reduce waste
Supplier implements strategies to recycle products
Supplier implements strategies implements strategies to educate visitors and staff on importance of natural environment and sustainability issues
Supplier environmentalsustainability assessment criteria
Others?
Examples of social sustainability assessment criteria for suppliers
Supplier has contracts for all workers
Supplier adheres to health and safety guidelines
Supplier implements ongoing workplace training programme
Supplier provides visitor codes of conduct to guests
Supplier socialsustainability assessment criteria
Others?
Using Green Lotus criteria to create a supplier sustainability checklist
SUSTAINABILITY CRITERIA EXISTS IMPLEMENTATION LEVEL (1 low -10 high)
A Sustainable
A1.4 Availability of annual plan on implementation of social and cultural activities (both inside and outside of the tourist accommodation establishment) 10
A2.2 The staff are trained on cultural and social issues (once a year) 6
B Maximise socio-economic benefits for local society
B2.1 Availability of policies on recruiting local people, people from remote regions and less developed economic regions 0
B3.1 Priority in usage of locally made products or local raw materials without exhausting natural resources 0
B5.2 Availability of policies to support female employees (maternity, training, consultation on reproductive health, etc.) 3
C Minimization of adverse impacts on cultural and natural heritage
C2.1 Expression of local culture and traditions in the tourist accommodation establishment’s architecture, activities and services it provides 4
D. Implementing baseline study, reviewing and evaluating results
1. Implement the baseline study according to plan and evaluation criteria
2. Analyse results to understand:– Areas where suppliers are performing sustainably– Areas where improvements can be made– Which companies show most interest in improving sustainable– Level of companies’ capacity to improve sustainability– Opportunities to improve sustainability performance in companies
3. Prioritise suppliers to work with on achieving greater sustainability
Developing a responsible supply chain policy and procedures
• Sustainability standards / criteria for selecting new suppliers
• Sustainability performance standards for existing suppliers to improve sustainability
• Promotional opportunities and incentives• Instructions for the monitoring, reviewing
and reporting on progress made on improving sustainability in the supply chain
Effective policies and procedures…
• Set the vision
• Reflect current performance
• Meet government requirements
• Identify performance areas
• Offer flexibility
• Are mutually agreed upon
Example of responsible supply chain policy statement
A1 Tours recognises that our social, economic and environmental impacts reside as much in our supply chain as in our own activities. In our supply chain A1 Tours will ensure that our suppliers are:
• Aware of the specific environmental, social and economic issues, risks and opportunities relevant to their operations and products
• Ensure they operate to internationally recognised standards of practice• Ensure systems implemented deliver effective performance
management and improvement
A1 Tours Responsible Supply Chain Policy Statement
Example of responsible supply chain procedures
In order to develop a sustainable supply chain, A1 Tours will:
1. Take a leadership role in sustainable supply chain management2. Screen suppliers for their performance in social, economic and
environmental issues management3. Support suppliers to improve sustainability performance4. Set minimum performance standards5. Consult with stakeholders6. Monitor compliance to agreements7. Terminate business relationships if performance remains below
standard or suppliers are unable or unwilling to work towards performance targets
A1 Tours Responsible Supply Chain Procedures
Other provisions that can support a sustainable supply chain policy
COMPANY PROCUREMENT POLICY• Internal policy specific to how company staff
contract suppliers (“services”)• Can also include purchase of “goods”• Can include sustainability selection criteria for
procurement of goods and services as a part of other broader requirements
SUPPLIER (“VENDOR”) CODE OF CONDUCT• Specific for contracted suppliers• Should set out social, economic and
environmental expectations of suppliers• Typically voluntary
COMPANY SUSTAINABLE SUPPLY CHAIN POLICY
INTERNAL EXTERNAL
supported by
For ensuringsustainable suppliers
are selected
For ensuringsuppliers act sustainably
supported by
The InterContinental Hotel Group’svendor code of conduct
Source: http://www.ihgplc.com/index.asp?pageid=920
Setting sustainability standards and targetsfor the supply chain
• Standards provide specific requirements for the achievement of a desired action
• Targets are based on the standards and enable benchmarking and the measurement of success
• Standards and targets help identify where improvements need to be made
• In a sustainable supply chain standards and targets should be set based upon the 3 pillars of sustainable tourism (economic, environmental and social sustainability) and address the key sustainability issues (identified in Topic 1)
General principles of good sustainability standards and targets
• Standards may be either performance-based, process-based, or both
• Targets should be high but achievable
• Standards should be flexible
• Targets should be SMART (Specific, Measurable, Achievable, Realistic and Time-specific)
Broader supply chain targets vs. Individual supplier targets
Individual supplier standards & targetsThe level of improvement for individual suppliers in key areas
Broader supply chain standards & targetsThe overall number or percentage of suppliers that are to meet the given standards in a period of time
Supplier A Supplier D
Supplier FSupplier E
Supplier B Supplier C
HOTEL, TOUR OPERATOR, RESTAURANT ETC
SUPPLYCHAIN
Individual supplier standards & targetsThe level of improvement for individual suppliers in key areas
Example of supplier target compared to a supply chain target
YEAR 1
50% of all suppliers have a formal employment contracts and position
descriptions for all their staff
YEAR 2
100% of suppliers have formal employment contracts and position
descriptions for all their staff
SUPPLY CHAIN TARGETS
SUPPLIER TARGET
All employees within the organisation have a formal employment contract and position descriptions within 2 years
Influences on the setting and achievement of sustainability targets
INFLUENCES AFFECTING SETTING & ACHIEVEMENT
OF TARGETS
SUPPLY CHAIN SUSTAINABILITY
TARGET
Type, severity and source of sustainability
impact
Available sustainability standards for each
impactSupplier’s capacity
Organisation’s ability to influence the supplier
Examples of broad supply chain sustainability standards and targets
SUSTAINABILITY STANDARD (CRITERIA)SHORT TERM
(1 YEAR)
MEDIUM TERM
(3 YEARS)
LONG TERM (5 YEARS)
ECONO
MIC
Suppliers pay above minimum wages 10% 50% 100%
Suppliers have policies on the purchase of local products and services 30% 100%
Suppliers implement ongoing staff development training programme 5% 15% 70%
… … … …
ENVIRONMENTAL
Suppliers implement strategies for responsible use of electricity 10% 30% 80%
Suppliers implement strategies for responsible use of water 10% 30% 80%
Suppliers implement strategies to reduce waste 30% 50% 100%
Suppliers implement strategies to recycle products
Suppliers promote visitor codes of conduct for interacting in the destination 25% 50% 100%
… … … …
SOCIA
L
Suppliers have policy on equal opportunity and gender equality 20% 60% 100%
Suppliers have formal employment contracts covering all staff 30% 50% 80%
Suppliers implement health and safety guidelines 25% 50% 100%
… … … …
WHOLE SUPPLY CHAIN TARGET
Sustainable supply chain action planning
• Sets out the activities and resources required to support suppliers to meet sustainability standards and targets
• Requirements:– Participation and agreement– Understanding of standards– Adequate resources including
knowledge and skills
The TOI’s tips for effective sustainable supply chain action planning
Involve suppliers incrementally
Plan for different rates of supplier progress
Focus on continuous improvements
Work with other partners in the same destination
Source: Tour Operators’ Initiative for Sustainable Development (TOI) 2004, Supply Chain Engagement for Tour Operators: Three Steps Toward Sustainability, TOI, France
Example of responsible supply chain action plan
Environmental Action / Initiative Responsibility Start date Finish date Status/ Date achieved
Conduct sustainability audits of suppliers giving priority to more accessible suppliers
John Smith Oct 2013 Jan 2014 Underway
Assist hotel suppliers conduct waste quick scans Mary Munroe Feb 2014 Aug 2014 Not started
Develop a supplier code of conduct and procurement policy to support the sustainable supply chain policy
Peter Pan Jan 2013 Feb 2013 Completed
Implement a sustainable supply chain training programme for key suppliers
Greg Matthews Apr 2013 Aug 2013 Completed
…
In progress/achieved In progress / risk of not being achieved Not achieved
Contracting or amending supplier contracts
• Cannot fully achieve a sustainable supply chain without including sustainability issues into contracts and altering procurement practices
• Good sustainable supplier contracts:– Are gradually introduced after a period of voluntary
improvement– Clearly highlight the importance of sustainability to the
supplier– Establish minimum performance standards and optional
criteria– Are supported by performance checks
Key steps in developing a sustainable contracting system
•Develop approach and procedures for implementation of sustainability performance as a contracting criteria•Draft contractual clauses for minimum performance requirements•Establish procedures for supplier non-compliance•Appoint a staff member to manage sustainable supply chain activities
TOPIC 3. RAISING AWARENESS AND SUPPORTING SUPPLIERS TO MEET SUSTAINABILITY TARGETS
UNIT 6. RESPONSIBLE TOURISM SUPPLY CHAINS
The importance of awareness and support in developing sustainable supply chains
• Develop sustainability messages• Communicate sustainability
messages to suppliers
Raising awareness creates understanding, participation
and commitment
• Provide training, information, networks, assistance
• Offer incentives and rewards
Providing support promotes action
Developing awareness raising messages on sustainability
SUSTAINABILITY MESSAGES
Reflect baseline study results
Select appropriate
dissemination channels
Establish partnerships
Keep messages simple
Inform about overall
programme
Communicating messages about broad sustainability issues
Match communication methods to
characteristics of suppliers
Prioritise personal communication
Keep communication constant with regular
updates
Encourage feedback
Monitor responses and support continuous
improvement
Awareness raising channels relevant to developing a sustainable tourism supply chain
Meetings and workshopsGather relevant suppliers together to communicate about the sustainability supply chain programme and new or amended policies.
Newsletters, brochures & flyersInform suppliers and others about the new or amended policy through your organisation’s print promotional material such as newsletters, flyers and brochures. It’s also good for your customers to read.
WebsiteCreate a section on sustainability in the company website to communicate responsible tourism policies and actions. Great for suppliers and customers.
EmailDeliver information about the sustainability program directly to the mailbox of the supplier. Coming from senior management can add a level of authority. Quick and direct.
Picture sources:Pixabay, http://pixabay.com/
Principles of effective awareness messages
grab
atte
ntio
n!
HEART
HEAD
CALL TOACTION!
Be consistent
communicateBENEFITS
Communicating the new sustainable supply chain policy: Key information to deliver
Sustainability policy / Code of Conduct etc
•The original policy / procedures / code etc in full
Background
•Explanation of comprehensive development process adopted
Purpose•Importance about why the sustainability programme is needed
Affectedstakeholders
•Indication about who the Policy, Code etc affects
Benefits & incentives
•What the direct and indirect benefits of adoption will be
Implementationplan
•What the company will do next to instigate the sustainability programme
Furtherinformation
•Where to obtain further information (or from who) and how
Providing support to meet sustainable supply chain goals
• The process of businesses helping businesses is often referred to as b2b (“business to business”) exchange
• b2b exchange refers to the dialogue and actions that take place between companies to create mutual benefits and gains
• b2b exchange is a good way to foster sustainability improvements in tourism supply chains because:– You have an intimate understanding of
your consumers– You have access to technology and
information– By helping your suppliers you are helping
yourself
ORGANISATION SUPPLIER
Awareness raisingCapacity building
Incentives
Improved & more sustainable goods & services
B2BEXCHANGE
Picture sources:Pixabay, http://pixabay.com/
Supporting tourism suppliers through capacity building
Mentoring
Fam trips
Networks
Training
Information resources
The TOI’s recommendations on incentives for suppliers to meet sustainability goals
• Suppliers need to be convinced of the advantages of taking sustainability measures
• Recognition and rewards help foster positive action
• Develop a “preferred supplier” scheme for suppliers that meet sustainability goals which offers benefits such as:
Higher rates Longer-term contracts Committed guarantees Joint marketing
agreements More brochure space Joint promotional
activities Favoured status in system
sales searches
Source: Tour Operators’ Initiative for Sustainable Development (TOI) 2004, Supply Chain Engagement for Tour Operators: Three Steps Toward Sustainability, TOI, France
TOPIC 4. MONITOR AND EVALUATE SUSTAINABILITY PERFORMANCE
UNIT 6. RESPONSIBLE TOURISM SUPPLY CHAINS
Picture sources:Pixabay, http://pixabay.com/
The steps involved in a supply chain sustainability evaluation
Decide what you are monitoring
Let your suppliers know about the monitoring programme
Evaluate and assess your suppliers’ performance
Tell your suppliers how they are performing
Foster continuous improvement
1 2 34 5
Picture sources:Pixabay, http://pixabay.com/
1. Establishing sustainability criteria for the evaluation
• Review results of baseline study• Use the sustainability standards and targets that
have been established ensuring the targets are:– SMART– Prioritised– Applied incrementally– Written as short statements that require either an
absolute figure, a relative figure, or a simple “yes/no”
The 3 main types of indicators
Performance
•Reflect changes in outcomes
•E.g. The number of employees with formal employment contractsProc
ess
•Reflect changes in commitment
•E.g. The presence / absence of a minimum wage policy
Perception
•Reflect changes in attitude
•E.g. The percentage of suppliers that believe their sustainability activities have improved community livelihoods
Source: UNWTO & SNV Netherlands Development Organisation 2010, Manual on Tourism and Poverty Alleviation – Practical Steps for Destinations, UNWTO & SNV Netherlands Development Organisation, Madrid, Spain
INDICATOR
2. Communicating the sustainability monitoring programme and criteria
• Use standard communication approaches• Ensure the message content includes:
Benefits and consequences
Evaluation criteria
Definitions
Criteria calculation
methodology
Example of letter communicating a sustainability supply chain programme
Dear supplier,
Thank you for agreeing to work with us to improve your sustainability performance. Consumers and governments alike are demanding greater sustainability and we believe that by starting now you and us will be ahead of the competition and also prepared for potential increased government regulations in the future. At a more direct level, we also believe our sustainability standards will provide immediate benefits to you in the form of improved worker performance, enhanced reputation and cost savings through greater efficiency….In order to measure the success of the programme we need to ensure our suppliers are meeting our supply chain sustainability standards. The key sustainability criteria we shall be monitoring of our suppliers include:
Our supply chain manger will contact you to review the progress quarterly, and kindly request your participation in providing evidence of performance to meet criteria such as power and water bills, action plans, policy documents……
SUSTAINABILITY CRITERIA UNIT OF MEASURE TARGET
SOC
Supplier has policies on the purchase of local goods and services
Formally approved company policy document
1 local procurement policy developed and approved within 6 months
Supplier provides employment contracts for all staff
Formally approved worker contract documents
50% of workforce have employment contracts in 6 months, 100% in 1 year
ENV
Supplier implements strategies to reduce waste
Formally approved action planEvidence of waste management activities
At least 3 activities are undertaken in 6 months; 10 activities completed in 1 year
… … …
Criteria
Benefits
Calculations
Implementation,responsibilities
3. Conducting the sustainability evaluation
• Evaluate suppliers based on the size of the organisation and its supply chain and available resources, can be:1. Organisation led2. Contracted 3rd party3. Supplier self-evaluation
• Collect information from suppliers and compile into a spreadsheet table for easy analysis
• Examine results to review performance for:– Individual suppliers to meet supplier
targets– Combined results to meet supply chain
targets
ORGANISATION
SUPPLIER
3RD PARTY EVALUATIONMETHODS
Example results of a supply chain sustainability assessment
SUSTAINABILITY CRITERIA UNIT OF MEASURE TARGET
SUPPLIER
A B C D E F G H I
Supplier has policies on the purchase of local goods and services
Formally approved company policy document
1 local procurement policy developed and approved within 6 months
Yes YesDrafted but
waiting approval
Not started Not started YesDrafted but
waiting approval
Yes Not started
Supplier provides employment contracts for all staff
Formally approved worker contract documents
100% of workforce have employment contracts in 1 year
20% 50% 90% 0% 10% 0% 30% 100% 50%
Supplier implements strategies to reduce waste
Evidence of waste management activities
10 initiatives completed in 1 year 4 6 6 2 4 0 6 6 4
… … … .. .. .. .. .. .. .. .. ..
Individual supplier performance assessment Poor Average Good Poor Poor Poor Poor Excellent Average
PROCUREMENT POLICIESNO.SUPPLIERS
Approved local procurement policies 4Draft local procurement policies 2No local procurement policy 3TOTAL 9
EMPLOYMENT CONTRACTSNO. SUPPLIERS
75%-100% of staff in employment contracts 250%-74% of staff in employment contracts 225%-49% of staff in employment contracts 10%-24% of staff in employment contracts 4TOTAL 9
WASTE MANAGEMENTNO.SUPPLIERS
>5 waste management activities 4<5 waste management activities 40 waste management activities 1TOTAL 9
Individual supplier assessment
Supply chain assessment
4. Providing feedback to suppliers on performance
• Write a performance report for each supplier• Use a simple and easy to understand format• Highlight the positives• Provide encouragement for progress
(even if target has not been achieved)• Provide a conclusion and implications for action
Example of presenting sustainability assessment results of a supply chain
44%
22%
33%
Suppliers with local procurement policies
Approved local pro-curement policiesDraft local procurement policiesNo local procurement pol-icy
22%
22%
11%
44%
Suppliers with staff in formal employment contracts
75%-100% of staff in employment contracts50%-74% of staff in employment contracts25%-49% of staff in employment contracts0%-24% of staff in employment contracts
44%
44%
11%
Waste management initiatives in 2013
>5 waste management ac-tivities<5 waste management ac-tivities0 waste management activ-ities
5. Ensuring continuous improvement in sustainable and responsible purchasing
Keep support targeted
Look forward to each assessment
period
Finally, provide ongoing support to
suppliers to help them meet
sustainability goals
Finally, provide ongoing support to suppliers to help
them meet sustainability goals
Xin trân trọng cảm ơn!Thank you!