(Part 2 of our interview with Unilever procurement leaders, Dave Ingram, CPO, and Stephanie Schmid. Part 1 is here).
Ingram is a believer in being stretched ”beyond your existing knowledge base”. The challenging targets drove that, but sustainability isn’t always under your control. Governments, NGOs, financial markets can all impact on even well-made plans – “if you’re looking at agronomy in developing markets, it is a complex picture”.
One way procurement handles such complexity is by ensuring that the business owns various aspects of those key supplier partnerships that drive innovation and procurement with purpose. “We manage the overall programme, the common platform and technology, but the business leaders own the relationships”. It is key that this isn’t seen as a land grab by procurement, Ingram emphasises.
What are the key factors that have enabled Unilever to become such an admired business in terms of these issues? We would suggest that the way sustainability is embedded in goals, deliverables and success measures must be part of that. “For senior managers, 30% of the long-term bonus is linked to sustainability metrics. And everyone in procurement will have some aspects of sustainability – relevant to their work – in their personal objectives”. How many organisations can say that, we wonder?
Another impressive aspect is the three-way working between procurement, the business and suppliers. Procurement resources sit in each of the business pillars - whether that is a customer facing division such as Homecare or internal services such as IT. And while cost is of course still important, “the focus has moved increasingly into working to drive innovation, growth and sustainable business”.
For example, working with the American Cleaning Institute, the firm got 150 Homecare suppliers together to talk about the “clean future” strategy. As Ingram explains, “we were open with suppliers, we talked about how we want to move away from using virgin petrochemicals, and the long-term journey we’ve started. We were overt about the expectations we have of our suppliers, and our need to work with innovative firms who can directly impact our brands”.
In Chile, a fully bio-degradable handwashing product has been launched – “working with a partner, it took many years to design and launch this”. So, there is great potential for suppliers but “we will want suppliers to make commitments to match ours – for instance, when it comes to providing a fair wage for staff”.
Almost everyone coming on board now mentions the purpose agenda as one of the key reasons they want to join Unilever. Schmid reveals that they have surveyed this across countries to see where “purpose” seems to matter most to applicants. And the answer? Perhaps surprisingly, it is China! Young people in China are very concerned about these issues apparently, which seems very good news given that country’s size and likely future impact on environmental matters.
The Unilever sustainability story in procurement and more widely is undoubtedly impressive, so it is well worth drawing some key learning points from it. Here are six important insights we took from our session.
· Having a clear and challenging goal or set of goals, even if they look scary to begin with, encourages innovation, focus and attention.
· Top-level support is vital, because there will be times when things don’t go so well, and having both clarity of purpose and senior management backing is important.
· You will never keep everyone happy – you may feel good about helping small suppliers in the developing world to improve on certain issues, but someone somewhere will feel you should move away from them if they don’t have the right “certification”.
· Many key procurement with purpose initiatives require long-term and close collaborative working with key suppliers, and indeed with stakeholder colleagues. That needs considerable effort, and can be even more challenging if the same suppliers are also in the more “tactical supply” box in other supply areas. So, share your ambition with your suppliers to build common understanding and look for areas of mutual collaboration and growth.
· If you are serious about these issues, then they need to be embedded in functional and individuals’ goals, objectives, and personal bonus plans. What gets incentivised, gets done.
· For the vast majority of procurement staff, the purpose agenda can be a positive motivator. What’s important is to then tailor the right initiatives to the right people to unleash their energy and potential for greater impact.