A perspective by Vipon Kumar
Sustainability is critical for sourcing to continue to deliver perpetual benefit to consumers. By 2020, more than 50% of the global population will be in the middle class (defined as people who have enough money left over after paying basics necessities to spend on indulgences), according to Brookings Institute Scholar Homi Kharas in an article by The Washington Post on August 20, 2018. This is an amazing culmination of thousands of years of efforts, considering there was no middle class before the Industrial Revolution in the 1830s.
According to Kharas, there are 140-170 million people joining the middle class every year, with both India and China driving the boom. This makes the watershed mark in 2020 both a matter of accomplishment and a call to action. That’s because both China and India are among the top 5 producers globally of every food crop as well as the largest consumers of all food crops and all other products combined. One can imagine the burden on our planet if we continue to source materials following our old ways and outdated models. To ensure the health of our planet and its people, we as a collective force of the sourcing community need to coalesce behind a one point agenda: alignment of sourcing and sustainability for creating a triple bottom line ecosystem.
Triple bottom line (TBL) is an accounting framework, proposed by John Elkington in 1994, which has three parts: social, environmental and financial. The move to creating a TBL sourcing ecosystem is already being driven in the U.S. by the 85 million Millennials who are pushing businesses for transparency, as well as by the global Millennial population raising the collective consciousness about the true cost or true benefit of a business enterprise. Consider this scenario by way of example: What good does a copper mining company do to a society if its mining operation devastates the whole ecosystem and completely decimates the lives of communities, thereby making tax payers indirectly pay for the damages? As world’s largest buyer of copper, China can demand TBL accounting from these copper mines and then share the TBL matrices with the buyers of its copper products. Or we the Sourcing Managers can demand from China the true cost of sourcing its copper and lead the way for TBL.
While TBL is not yet the worldwide standard, during my global travels, I have seen some bright spots. I have seen some businesses taking the lead in using the TBL approach, even without being fully aware of it. In 2004-2005, I was sourcing canned mushrooms from world’s largest and 24-hour-a-day mushroom canning facility. I found that the company employed many people who were speech and hearing impaired. They would normally not find any employment other than to be cared for by a charitable organization in a developing country. The owner told me that he was finding it hard to keep his workers singularly focused on slicing mushrooms without chit-chatting with one another on the production line. His solution was commercially astute; he found 30-40 hearing and speech impaired people and provided them dignified jobs. This was a true case of TBL.
In 2012-13, I was trying to source an important chemical molecule. My search led me to a factory in the middle of the sugarcane growing region of a country. The company had pioneered a process to produce ethylene oxide from the sugarcane bagasse (the leftovers after extracting cane juice for producing sugar). The manufacturer of ethylene oxide fine-tuned its internal processes to align with the sugarcane crop cycle, cane crushing and collection of bagasse, taking a byproduct that was previously burnt by sugar mills (causing massive pollution) and turning it into a useable and desirable chemical. In fact, it is the same plant-based ethylene oxide that is now used as a building block to manufacture Coke’s Plant Bottle, which afterward is recycled and used in making seat cushions for some Ford car models. What an impact this is making!
Of course, any discussion about sourcing and sustainability must also mention IKEA and its planet rejuvenation efforts. IKEA helps plant more trees than its furniture suppliers cut for supplying the furniture for its loyal customers globally.
Sourcing and sustainability are the two most important wheels of commerce, along with retailers and their shoppers. These four wheels all need to be balanced to support each other, which is the essence of TBL.
If you are a supplier, the examples above should be food for thought. I have seen many such companies in my global sourcing trips around the world. If you are a retailer, triple bottom line will certainly help to attract more shoppers. Are you holding back thinking it might be cost prohibitive? Call me at 203-570-3562 for a chat.
Vipon Kumar was most recently Chief Sourcing and Trading Officer of Daymon Worldwide, where he built and led a global organization to serve the sourcing needs of retailers in USA, Europe, Japan and China. He is a seasoned sourcing professional with +30 years of experience in sourcing, Quality Assurance and Supply Chain Management of food, non-food, general merchandise and chemical categories from over 50 countries. Connect with Vipon at www.linkedin.com/in/vipon/,firstname.lastname@example.org or on Twitter @NextgenSourcing.#