As a global food company, we have the responsibility to ensure that the way in which we source our ingredients is both sustainable and ethical. We understand that our supply chain is key to delivering uncompromising value to our customers and consumers. We continuously seek to enhance the quality of our products and brands, not only by the ingredients we use, but also by working with suppliers who meet our responsible sourcing standards.
Understanding and mitigating the environmental, economic and social risks within our supply chain is necessary to ensure our products are produced in a responsible manner. By incorporating responsible sourcing practices, we are able to mitigate negative impacts to the environment, realize economic savings, improve supplier relationships, reduce social, reputational, environmental and financial risks, and ensure long-term resiliency.
Last year, we developed a strategic approach to address our evolving supply chains and focus on more ethical and sustainable sourcing. Our Procurement Sustainability strategy focuses on the following key areas:
- Understanding and Managing Risks;
- Engaging our Suppliers;
- Setting Expectations; and
- Managing Performance.
This past year, as a result of the findings from our materiality process, we have identified the need to further enhance this strategy and put additional resources in place to address the increased expectations of both our internal and external stakeholders. We are currently building out this strategy and intend to provide additional details about the strategy in FY2016.
Understanding and Managing Risk
Our supply chain risk management process consists of three parts: risk identification, risk analysis and risk mitigation. We’ve identified “hot spots” within our supply chain related to sustainability issues and are proactive with our suppliers to address these key issues. Our risk analysis model includes sustainability, financial and supply risks associated with our product categories. Currently, our most important risks are associated with the rising cost of raw materials, impacts to climate and deforestation, brand and reputational damage, business disruption, regulatory challenges and supply chain interruption.
In 2015, we embedded value chain risk mapping as part of the overall purchasing manager’s category strategy. When a Campbell buyer develops their strategy for an ingredient or raw material, we develop tools to consider sustainability as part of the value-added opportunity. Our formal supply chain mapping system gives us a holistic view of our entire supply chain and shows areas of opportunity to collaborate with suppliers to improve functionality and sustainability, while driving cost savings.
Engaging Our Suppliers
One of the key elements of our strategy is to partner and collaborate with our suppliers to better understand sustainability issues in each category. Campbell collaborates with strategic suppliers on sustainability issues through our Supplier Relationship Management (SRM) program. Our SRM program enhances and expands our regular communications and idea exchanges with select suppliers, engaging them on topics such as sustainability projects, best practices and benchmarking, while addressing emerging trends in ethical and responsible sourcing. Our ultimate goal is to leverage these critical relationships for a mutual gain. Our SRM program once again proved to be successful in 2015 by establishing best practices in sustainability, cost savings and responsible sourcing.
Because responsible sourcing is integral to delivering the company’s Purpose, we require our suppliers to follow environmental and social standards that are aligned with our expectations. Our Supply Base Requirements and Expectations Manual identifies the expectations and requirements for current and potential brokers, co-packers, re-packers, special packers, suppliers, warehouses and licensees to meet our CR and sustainability objectives.
These standards cover a variety of critical subjects, including legal compliance, health and safety, human rights, quality, governance, animal welfare, environmental issues and employment standards. If a supplier is found to be out of compliance with the requirements, they are required to develop a formal corrective action plan — allowing Campbell to directly engage with the supply chain on responsible sourcing performance. In FY2016, we plan to revise the manual to reflect more rigorous expectations related to sustainability and ethical sourcing.
Our Supplier Sustainability Scorecard captures environmental performance metrics, as well as social responsibility efforts, to better understand the policies and practices of our supply base. The Scorecard allows Campbell to benchmark and identify supply chain opportunities, especially where Campbell can directly engage suppliers on sustainability. We expect that the Scorecard will become a competitive differentiator when reviewing future supplier relationships. Our Campbell-certified auditors also conduct onsite audits of our suppliers, based on the standards laid out in our supplier base manual, and we perform third-party audits to maintain high accountability and performance. Follow-up audits and assessments are conducted based on the risk potential of supply interruption.
Commitments and Progress
Supply chain issues in the food industry have grown increasingly complex in today’s global economy, making visibility a constant challenge for major food brands such as ours. We hear increasingly from our external stakeholders — including NGOs, suppliers, industry and professional associations, consumers, academic institutions and other outside experts — that supply chain issues are a top corporate responsibility concern.