Beyond Tier 1: Impacting Supply Chain Sustainability at the source
Supply chain networks and sourcing/procurement projects are becoming increasingly global, and complex in their overall number of stakeholder involvement.
Some global supply chains (especially in the verticals of Food & Beverage and Textiles) can have as many as 5 to 6 tiers tracing back to the raw material at the farmer level. It was reported not too long ago by the Deloitte CPO Survey from 2018 that 66% of procurement leaders have limited, or no visibility beyond their tier one suppliers (Deloitte 2018).
A large majority of the human rights, health & safety, worker rights, and environmental rights risks exist beyond the first-tier of the supply chain. For this reason, it’s important that procurement and sourcing teams begin to take multiple tiers into account when they build their supply chain sustainability, responsible sourcing, and quality management initiatives. If not for the sake of their own value chains, for the sake of society at large.
Drink giant, Diageo has released the plans for a new sustainability strategy that will have a strong focus on “boosting farm yields and supply chain resilience in Africa, as it closes in on its target to source 80 percent of its raw materials locally across the continent by 2020”, as reported BusinessGreen.
This kind of engagement on the farmer level will help the organization implement sustainable development at the source. It supports the notion that when it comes to supply chain sustainability, all stakeholders need to be engaged!
“To meet the goal, Diageo said it would increase its spending on key raw materials such as sorghum, barley, and maize in Africa, bolstered by a new collaborative framework to increase yields through sustainable practices and ensure secure long-term markets for smallholder farmers” (BusinessGreen 2018).
It’s all too often that organizations choose to turn a blind eye to the corruption/environmental harm encompassed beyond the 1st tier of suppliers, considering there is a lower chance of impact on brand and top-line value. In a day of concerned consumers and information, this is no longer the case.
Word to the wise, look beyond tier one. This is where real supply chain sustainability is created.