The Procter & Gamble Company (NYSE: PG) is moving into the second implementation stage of its Environmental Sustainability Supplier Scorecard.
The company shared the results and lessons learned from the company’s first year of implementation and outlined changes for 2011 designed to track and encourage improvement on key environmental sustainability measures in P&G’s supply chain.
The first year was focused on assessing whether P&G would receive clear data to measure future improvements and jump-start innovation related to sustainability. The Company found that most suppliers could track the requested key sustainability measures and that the process of innovation sharing had begun.
Deployed about a year ago to nearly 400 strategic suppliers, the P&G Supplier Scorecard was designed with three goals:
- enhancing supply chain collaboration
- improving key environmental indicators
- encouraging the sharing of ideas and capabilities to deliver more sustainable products and services to consumers.
The scorecard measures energy use, water use, waste disposal, and greenhouse gas emissions on a year-by-year basis. More than 20 supplier representatives globally, who form the P&G Supplier Sustainability Board, participated in the creation of the scorecard.
"This isn’t simply about collecting data," said Rick Hughes, P&G’s chief purchasing officer. "The scorecard is the right tool to give us that snapshot across our supply chain so we can identify where to focus our collective supply network sustainability efforts, develop ideas to work on together, and reward those who excel."
One unique feature of the scorecard is that it encourages P&G’s partners to share innovation ideas that can improve the sustainability footprint of the business. Of the scorecards received by P&G, about 40% offered at least one innovation idea, the company said. Some of these have moved forward to become actual projects, including a chemical supplier who has begun work with P&G on renewable energy, renewable materials development, and ways to reduce emissions.
"I believe that many of the opportunities we identified through this process will result not only in environmental sustainability improvements but also in improvements to our bottom line as well as growth for our business partners," said Larry Loftus, director of purchases capability and strategy and a leader in developing the program.
P&G’s Supplier Environmental Sustainability Scorecard initiative was led by the Purchases organization. Beginning this year, the results of the scorecard will affect supplier performance ratings, and will therefore impact a supplier’s opportunity for future business. Suppliers and agencies will be evaluated and given a score from 1-5, and those that show exceptional performance (5/5) in the area of sustainability will be publicly rewarded, P&G said. For those partners that do not score well, the scorecard results will form the basis for joint sustainability improvement plans and then be used to measure progress over time.
For 2011, P&G will expand the list of participating suppliers and agencies to about 600, and has made a few changes based on partner input. These include: a clearer process to allow partners to exclude measures that don’t apply; a more transparent and consistent rating methodology; the ability to compare year-on-year improvement using either absolute or intensity data, or both; and the ability to reward year-on-year improvement regardless of data format or scope preference.
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