Page 259 - Materials Chemistry, Second Edition

A CASE STUDY OF THE PRACTICE OF SUSTAINABLE SUPPLY 247

business awards to specific, measureable results is expected to be a major
driver for sustained improvements in the supply chain. Further, as multiple
industries look for ways to encourage the development of more sustainable
supply chains, and experts from many organizations work together to har-
monize a common system, all can benefit from standardized metrics, reduced
time/resources to comply, and ultimate business building results.
Sustainability is part of P&G's total best value sourcing equation (along
with cost, quality, innovation, etc.) and integrated into its sourcing strategies. If
a supplier does not improve in its sustainability metrics, support our sustain-
ability initiatives and provide sustainability ideas, it risks losing business to a
competitor who does. Just as quality and cost have driven change in the past,
we also expect sustainability to drive innovation in the future.

10.6 What is involved with Social Sustainability
in Supply Chain Management?

While the environmental sustainability scorecard is a relatively recent devel-
opment, P&G has been focused on social sustainability for many years. P&G
supports universal human rights, with a particular focus on employees, the
communities within which it operates, and the parties with whom it does busi-
ness. In business award decisions, P&G places substantial value upon incum-
bent and potential suppliers who consistently respect basic human rights. Like
P&G, its suppliers are expected to comply with all applicable laws of their
country, including laws related to employment, discrimination, environment
and health and safety. Suppliers who knowingly violate laws or have repeated
problems conforming to them will not receive P&G business.
Like other multinationals, P&G has a robust process to ensure all suppliers
adhere to appropriate standards of social sustainability conduct. As part of
its internal governance systems, P&G publishes Sustainability Guidelines for
Supplier Relations.
P&G relies on an external-auditing process and data system run by a non-
profit organization which includes third party auditors. Audits can examine
a wide range of quality and reliability metrics, and include social responsibil-
ity investigations for forced and child labor, non-discrimination, health and
safety, wage and working hours practices. P&G owns four of seven steps in the
auditing process, starting with communicating its expectations to suppliers,
developing a list of high risk suppliers for focused attention, and defining the
audits calendar. The auditors (third party) visit the supplier facilities, prod-
uct the audit reports, and post reports in a legal archive. P&G is responsible
for ensuring any necessary remediation steps are understood and executed by
the supplier. The benefits of the external auditing system include inspections
by professional auditors, more thorough assessments in areas such as Child-
Labor, Forced-Labor and Minimum Wages, and productivity through suppli-
ers sharing a common audit for P&G and all other companies who request it.