Supply Chain Council of European Union | Scceu.org
Procurement

How procurement at Solvay doubled the yield of a vital ingredient

Better supply chain transparency and traceability doubled chemical company Solvay’s yield of a key ingredient while also making purchasing more equitable for suppliers.

Lynn De Proft, chief procurement officer at Solvay, said sourcing guar – grown in India and used in shampoos and conditioners – was challenging because it was grown by 9,000 “invisible” farmers.

Despite challenges, improving visibility down the supply chain improved ESG and crop yields, De Proft told the Sustainable Procurement Pledge’s first global Ambassador Meeting.

“We had a very concrete use case for Solvay – our guar supply chain,” De Proft said, discussing the importance of transparency in supply chains. “Back in 2015, we launched an initiative called the Sustainable Guar Initiative… We really had important results. We doubled our guar yield, we doubled revenues to farmers, but there were challenges.”

De Proft explained when she first joined Solvay they only had aggregate data, whereas she wanted to trace the product from guar fields to shampoo bottles.

De Proft wanted to know the person at the very first mile of the supply chain – the farmers and the miners – so buyers could see their situation and understand how important they were. This would allow them to understand gender equality and fair pay challenges.

She further explained the guar supply chain consisted of farmers whose crops were aggregated by cooperatives, whom Solvay then bought from. 

“We had 9,000 farmers on the forefront that were invisible, so the most difficult part was from farmers up to the cooperative. It’s really the first mile that is absolutely the most complex.”

De Proft advised procurement professionals looking to improve transparency in supply chains to “be bold”.

“There’s a bit of hesitance, and it’s going be a complex journey, but you have to deeply know your supply chain. It’s the first part, in those more vulnerable supply chains, up to the person. Expect to find stuff you’re not happy with. You’re going to discover a supply chain that disappoints you. You’re going to get data, and you’re going to have to turn that into strategic decisions. What’s next?

“It’s not about a tool – don’t care about the technology, let the smart people figure that out. The technology is an enabler, but having the right innovation and a partnership that is enabled by that technology is critical.”

Ashish Gadnis, founder and CEO of software solutions provider BanQu, added: “From the procurement perspective the problem is that even if upstream, even if the coffee a farmer is harvesting is selling for a premium, is fairtrade and sustainable, this mother whose children were labouring at a mine was refused a bank account because she could not prove her existence in the supply chain, because she could not be verified.

“The supply chain has a blindspot, which is that the first mile, where the farmer is procuring the coffee or the waste picker is procuring plastic for recycling. They do not have the ability to prove their existence in the supply chain. It is not equitable if the mother cannot say ‘I grow your coffee’.”

BanQu provided blockchain technology to Solvay and its suppliers, so when crops were purchased by cooperatives or Solvay the farmer selling it received a message verifying they were a supplier. “The mother is now building an economic passport as a supplier,” Gadnis said.

When getting started on the transparency journey, he urged purchasers not to get discouraged by what they found.

“You as procurement professionals have to have the courage to say, ‘I am willing to take on this fight because I want to get to my farmer in the Uyghur region, who is growing cotton and being held in slave labour’. A couple of times we had implementation fail because the level of transparency uncovered fraud and child labour to such an extent that the brand decided not to purchase from the farmers. In my opinion, that’s the wrong strategy.

“The best practice is helping the cooperative understand the value that they own their own data… what we find with the cooperatives of the mid tiers, this becomes their book of business which allows them better access to credit and financing. Same thing at the farmer level. The way to break barriers in those lower level tiers is to understand it is an access to credit problem. It’s an access to gender equality problem. 

“You’ve got to look at each tier and figure out if you’re going to use the carrot or the stick. Start really small. Pick one line, pick one ingredient, and test this theory out. Think profit and purpose. If you truly want to do this, you have to have a purpose element to your profitability. Otherwise, you’re going to greenwash.”

Separately, research by Ernst and Young has found despite supply chain visibility being a “top priority” for executives, just 37% have seen it increase in their operations over the past three years, according to a survey.

A third (33%) of companies lacked a business case for sustainable supply chains and nearly half said their companies were struggling to measure the return on sustainable supply chain activities.

This was despite cost savings ranking as the top motivator for improving supply chain sustainability, cited by 61%.

The survey involved executives at 525 large corporations across Argentina, Brazil, Canada, Mexico and the US.

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