Strategy

Driving a Sustainable Supply Chain

by Thomas Holenia, Corporate Vice President of Global Purchasing, President, Henkel Singapore

As the world’s population continues to grow, the accompanying increase in global economic activity has led to rising consumption, as well as escalating depletion of resources and damage to the environment. Today, sustainability is an important task, and there is increasing pressure especially on governments and companies to address them.

In particular, large international companies create economic, environmental and social impact both in their home countries and abroad, and there is growing interest in how they conduct their businesses. And supply chain, with its far-reaching influence across purchasing, production and logistics, is an area that comes under scrutiny from customers, shareholders, regulators, non-governmental organisations (NGOs) and the public.

In Singapore, for example, listed companies are required to disclose their implementation and compliance of anti-corruption policies and procedures locally and overseas in relation to their supply chain — as part of the mandatory sustainability reporting to the Singapore Exchange that will come into effect in 2018. This move towards greater accountability will create a shift to more sustainable business models. For some, it could require changes in corporate culture and business practices. For others, it could mean additional investment in research and development. Almost certainly, the new rule will pave the way for companies to take a holistic approach that results in a strong integration throughout the value chain.

Global supply chain model

The global supply chain model has been a positive initiative within Henkel to simplify and, therefore, optimise supply chain management. The objectives of the global supply chain organisation are to align the company’s purchasing, production and logistics processes across all business units and functions. This harmonisation across the entire company will lead to higher process standardisation, improved customer service levels, enhanced efficiency as well as greater sustainability.

Responsible supply chain process

Suppliers are important partners that help companies improve the efficiency of the processes and the sustainability profile of the products. It is important to emphasise the same exacting demands on suppliers and business partners worldwide, regardless of whether they are based in developed or emerging markets. This means applying the same comprehensive evaluation process that covers sustainability performance and risks, as well as their performance in regards to safety, health, environment, social standards and fair business practices.

To do so, Henkel applies a five-step Responsible Supply Chain Process that focuses on two main challenges. The first is ensuring that all suppliers comply with the company’s defined sustainability standards. The second is working with their strategic suppliers to continuously improve sustainability standards along the value chain, through knowledge transfer and continued education about process optimisation, resource efficiency, and environmental and social standards.

Additionally, Henkel strives for close collaboration with its partners and suppliers. This includes partnering with peer companies to set industry benchmarks and collaborating with strategic suppliers to continuously improve sustainability standards throughout the supply chain.

Together for sustainability

To enhance sustainability within the supply chain, in 2012, Henkel and other leading companies in the chemical industry established an initiative entitled “Together for Sustainability – The Chemical Initiative for Sustainable Supply Chains” (TfS). As of today, the number of members has more than tripled from the original six to 19. The initiative is being expanded to involve suppliers from the emerging markets, such as China and Brazil.

Based on the concept of “An audit for one is an audit for all”, suppliers only have to undergo one assessment or one audit. These are conducted by independent experts. An internet platform is then used to make the results available to all members of the initiative. Therefore, TfS aims at harmonising the increasingly complex supply management processes of industry players and their shared suppliers with regards to sustainability, resulting in more efficient use of resources.

Since 2014, through partnering with the Brussels-based European Chemical Industry Council, the TfS initiative now has the status of an independent, nonprofit organisation. This collaboration will generate even more synergies across the chemical industry. In addition, the TfS initiative was “highly commended” in the category “Best Supplier Engagement” by the Ethical Corporation. In May 2016, the initiative was also awarded the Sustainable Purchasing Leadership Council (SPLC) Public Market Transformation Award. Sustainability is a common challenge and, therefore, a shared task for stakeholders to address together. This requires a new spirit of collaboration that involves working intensively with suppliers to improve sustainability standards and initiating changes through joint projects, for example.

Ultimately, if the industry can develop a common understanding of sustainability challenges and a shared vision for the future with suppliers, business partners and other stakeholders, the industry can create more value along the value chain together and, at the same time, make a positive sustainability impact.

About the Author

Thomas Holenia has been the President of Henkel Singapore since February 2016 and oversees the company’s businesses and operations locally. Concurrently, Thomas is the Managing Director of Henkel’s global supply chain hub in Singapore. Before moving to Singapore, Thomas was based at Henkel’s Asia Pacific headquarters in Shanghai as the Corporate Vice President of Global Purchasing Raw Materials and Head of Purchasing for Asia Pacific. Today, he continues to hold both positions. Since joining Henkel in 1996 in his native Vienna, Thomas has been instrumental in directing Henkel’s global sourcing and purchasing business. With a Business Administration background, he brings with him 20 years of international experience, having lived and worked in Western and Eastern Europe, as well as in Asia.

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