Untangling the sustainability perspective in supply chain
The Procurement Confluence Meet
Jim Gowen is Sr. Vice President, Global Supply Chain and Chief Sustainability Officer for Verizon. Since taking on these complementary roles in 2009, his team has enlisted more than 58,000 Verizon employees in 53 countries around the globe in helping to reduce the company’s environmental footprint while increasing the efficiency of a growing enterprise. Gowen has been deeply involved in the advancement of innovative and sustainable technologies and spearheaded the launch of Verizon’s first ever green bond in the first quarter of 2019. This $1B bond highlights Verizon’s commitments to renewable energy, energy efficiency, water conservation and reforestation. He also launched Verizon’s flagship $137M green energy initiative which enabled Verizon to deploy more than 20MW of renewable energy at key company locations.
Often when you begin adopting sustainable practices, organizations focus only on building a team of members with experience in sustainable projects. But the truth is that instating a team with a sustainable bent of mind is less than half of the work done. To be truly sustainable, sustainability as an idea must become a part of the culture across the organization. While the guidance may come from a focused team of sustainability practitioners, the responsibility of sustainability is organization-wide. Embedding sustainability entails changing the culture, and the mindset, such as rethinking negotiation techniques, logistics, transportation, and energy usage, apart from changing how we manage suppliers and encouraging them to undergo a similar transformation journey.
As part of the Procurement Confluence meet, Infosys BPM caught up with Jim Gowen, Senior Vice President, Global Supply Chain and Chief Sustainability Officer of Verizon, to sharply turn the focus on what sustainability truly is for the corporate world. It is about identifying the opportunities and leveraging those to incorporate sustainable practices, as Gowen says.
Remaining focused amidst challenges
Rome was not built in a day and would’ve had its fair share of challenges. Embedding sustainability in supply chain and procurement practices may have emerged as a necessity rather than a preference. Despite being essential, several challenges must be faced. Undoubtedly, incorporating sustainability involves investments and costs, leading to an objection from the finance team. Agreeing that “Sustainability is not free,” Gowen highlighted, “we operate responsible sourcing, we think about everything from human rights to ethical conduct, to make sure we protect the environment through our RFPs, negotiation processes, and supplier contracts.” while also managing the obstacles that come in the way of implementing sustainability.
An essential aspect while adopting sustainable practices is to create long-term goals. “We stayed on our mission and our long-term view of sustainability. We kept focusing on renewable energy and the implementation of renewable energy. We continue to focus on diversifying our supply chain, making our supply chain more resilient. Then we also had to get flexible in doing things we did in our supply chain. It is making sure you have the end vision in focus and having the gumption to stick to it,” Gowen said while sharing a few personal experiences of embedding sustainability into the process and system.
Another important factor is to consider technology and its evolution. “The speed of technology when we started, compared to how we do things now, is completely different. When you think about the product life cycle curve, it's still in an immature state with several great ideas that can be implemented. A lot of great things are being done, renewable energy, IoT devices, all those great things that are going to change our world in the long term,” Gowen continued. Therefore, the difference lies in identifying the massive opportunities that exist today, such as in fuel, electricity, or sculpting the entire value chain. To achieve the big goals, it is most important to start small. “We grow our opportunities and we do it through incremental steps to make sure we’ve got the end goal in mind, but that we're working towards it every day,” Gowen added.
The next step is to realize and acknowledge the risks involved from a supply chain perspective, a business perspective, end-to-end risk of the supply chain, resiliency, and product obsolescence, or “the risks of customer impact.” “So, you start to put all these things together, and then figure out the best way forward,” Gowen explained.
Managing the supplier base
Suppliers are important stakeholders in the business, irrespective of their size or region. Therefore, it becomes critical to pay attention to the methods they adopt. No rule book describes a set methodology to manage suppliers, instead “it's a process we put in place and it's a muscle we’re continuing to build,” Gowen said. At times, managing large suppliers comes in handy because they are governed by a board of directors who guide and direct them. It becomes a bit tricky when dealing with smaller suppliers because of the set of struggles niche to them. “Whether it is your packaging, your energy efficiency, or the materialism of your products, you must think about all those things and then start to ask simple questions – do you have a sustainability program? Do you hold yourself to metrics? Where do you do your manufacturing? Who are your key components? So, we have a whole process where we start to evaluate them,” Gowen highlighted while explaining how Verizon manages suppliers.
It is also important to identify the areas that are important to the organization, based on which the suppliers can be nurtured. Having a diverse supplier base means different suppliers would have different complications and struggles. A better way to instill sustainability through a diverse set of suppliers is to train and nurture them gradually, versus demanding compliance with company policy, Gowen said. “And that goes across everything, from human rights to material sourcing to recycling and environmental sensitivity. And we do create supplier report cards, we hold quarterly business reviews, and we go over them periodically, to create a responsible supplier. It is also part of our RFP criteria. We ask those questions before a supplier even comes on board,” Gowen added. Adopting such measures can ensure a transparent sustainable chain and can single out the shortcomings, that can be ironed out in due course.
Making it attractive by attaching metrics
Calculating the metrics can start with the basic processes of allocation and deployment. “Then you start looking at geographic regions, and the impact metrics we tie with renewable energy down to the carbon and mission,” Gowen said. Further, incentivizing employees for their efforts in enhancing the sustainability quotient in the organization can also be a huge contributor to achieving sustainability goals. “It's called our carbon intensity goal. The amount of terabyte traffic or petabyte coming through our networks versus the energy it costs to run those networks. We tie incentives to driving down this usage. Our sustainability metrics of carbon intensity is a culture, an environment, that we are building into the DNA of who we are,” Gowen said.
Additionally, focusing on supply diversity can also add value to the metrics. It is essential to ensure that a certain percentage of the spend is spent with diverse suppliers, thereby making sure that there is a diverse supplier base.
Sustainability in a gist
The first step towards the transformation is about realizing that sustainability is not a competition, but more of a collaborative effort that needs the complete support of all the stakeholders of the ecosystem, especially the supply chain. “We can't solve everything, but what we can do is lead by example. We can collaborate,” Gowen opined.
“Make sure if you're on the beginning of this journey, you find your internal advocates, find the people who have that passion, because they're the ones who are going to work hard when you run into challenges, to find a way to get you to a place that is better than where you are today,” Gowen concluded. We agree sustainability is not an obstacle or a mandate. It is rather an opportunity to better the climate and ensure the long-term continuity of businesses.