Created in cooperation with 20 leading supplier representatives globally, and deployed about a year ago to nearly 400 strategic suppliers, P&G’s Suppliers Scorecard was designed to track and encourage improvement on key environmental sustainability measures in the company’s supply chain.
The first year was focused on assessing whether the company would receive clear data on the environmental footprint from its suppliers, including energy use, water use, waste disposal, and greenhouse gas emissions. Other goals were to evaluate the possibility to measure future improvements, and to share ideas to jump-start innovation related to sustainability.
According to Procter & Gamble this initial phase was a success since most suppliers demonstrated their ability to track the requested key sustainability measures and that the process of innovation sharing had begun. Indeed, one great satisfaction for P&G is that the scorecard encourages its partners to share innovation ideas to improve the sustainability footprint of the business. According to the company, about 40% of the scorecards received during the year offered at least one innovation idea with some of these having moved forward to become actual projects.
"It was the scorecard that jumpstarted those projects," said Larry Loftus, Director of purchases capability and strategy. "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."
Supplier performance rating
Indeed, collecting data was not the only purpose of this initiative, which was led by P&G’s purchases department. "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," said Rick Hughes, P&G’s Chief purchasing officer.
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 will be evaluated and given a score from 1-5. Those showing exceptional sustainability performance will be publicly rewarded, while those that do not score well will have to implement sustainability improvement plans based on the scorecard results before being reassessed to measure progress over time.
For 2011, P&G will expand the list of suppliers participating in the program to about 600. Furthermore, the company has made a few changes based on partner input. These modifications include in particular a clearer process to allow partners to exclude measures that don’t apply; a more transparent and consistent rating methodology.
The updated scorecard is available at www.pgsupplier.com