5 essential questions for effective supplier engagement
What are the secrets to increasing your supplier engagement? Here are the 5 questions you need to ask.
An explosion of regulations is making the legal landscape surrounding harmful chemicals increasingly harder to navigate. Potentially harmful chemicals can remain hidden deep within supply chains, putting businesses at risk of non-compliance as regulatory authorities worldwide continue to evolve and introduce chemical restrictions and requirements.
Per- and polyfluoroalkyl substances (PFAS) in particular are triggering mass media attention, propelling regulatory action as consumers and companies alike become more aware of the dangers. In our recent webinar, SVP for Enhesa Sustainable Chemistry, Jillian Stacy, highlighted three key regulatory areas for PFAS:
- Restrictions or bans on PFAS in products above certain amounts for specific uses
- Reporting requirements on the amount of PFAS in products or being emitted during manufacturing
- Identifying the presence of PFAS in the supply chain and taking necessary actions to report, source alternatives, and reformulate
Identifying the potential risk of chemicals in your supply chain begins with supplier engagement. However, effectively engaging with your suppliers to enhance transparency and obtain helpful chemical data can be a major challenge. A recent report by Enhesa Sustainable Chemistry found that 71% of chemicals management professionals struggle with inconsistent responses from suppliers, and 64% receive only a portion of the requested information.
Without complete chemical information from the supply chain, businesses are at risk of non-compliance with emerging restrictions or prohibitions of substances found in their products and processes.
To uncover hidden risks in your supply chain, consider these five essential questions as you embark on your supplier engagement program.
Question 1: Why do you need to engage with your suppliers?
The first step to supplier engagement — so your business can obtain all the necessary information to meet regional and local regulatory requirements and mitigate risk — is to define your ‘why’.
Is your business engaging with suppliers to:
- Meet specific company sustainability goals?
- Protect workers from chemical exposure and related harm?
- Protect consumers and buyers from potentially toxic chemicals in products?
- Maintain a competitive advantage in the market by providing transparent information on ingredients?
- Develop safer products from the start, through investing in innovation?
- Identify the presence of specific chemicals to assess and mitigate risks?
Knowing why your business is approaching suppliers is the first crucial step to unpacking how to approach the supply chain for the right information.
Question 2: What’s your starting point?
Once you know your reason why, you can identify the best approach. Business may implement different initiatives to make safer choices for the chemicals they use and uncover potential supply chain risks, such as focusing efforts on:
- New product innovation so that any new product lines use safer chemicals
- Reviewing existing bestseller products to identify opportunities for safer alternatives
- Taking a supplier-based approach to identify opportunities and most-affected products.
So where do you begin?
“Let your ‘why’ inform that decision”, says Stacy. “Every company will begin from a different starting point.”
Question 3: What information do you need?
Once you know why you’re approaching your suppliers, you need to determine the best way to obtain the necessary chemical data. Suppliers can be hesitant to offer clear and transparent information if your request is unclear, or if they don’t know how you intend to use the collected information, or if you’re unsure about timelines.
Suppliers often look to brands for clear guidance on expectations, timelines, benefits of supplying information, and confirmation that their data will be safe. To overcome hesitation, businesses need to clearly communicate their needs to suppliers.
Before requesting information, businesses should know their answers to the following questions:
- What level of disclosure do you require? Do you need to know about the ingredients and impurities, for example?
- How do you intend to use the information collected from suppliers? What effect or consequence might this have on suppliers?
- Who will have access to the information supplied?
- What is your deadline for receiving the requested information?
- Are there any rewards for suppliers who respond?
- Are there any penalties for suppliers who provide incomplete data, or who fail to respond at all?
- Are your expectations reasonable?
Stacy noted that it can be tempting to ask for “everything but the kitchen sink” to ensure coverage, but encourages businesses to ask whether they really “need all of that information for the questions [they’re] trying to answer?”
Suppliers are much more likely to respond if requests for information are clear.
Question 4: How will you implement your process?
The next step is to implement a clear process, which will increase the likelihood of gathering the data you need.
There are three approaches you could consider:
- A top-down approach: For example, Beautycounter created its own Restricted Substances List (RSL) to stay ahead of upcoming chemical regulations and make expectations with their suppliers clear. Suppliers could compare their chemicals against the RSL to identify any substances that might pose a legal or ethical threat — and consequently avoid them.
- Review prior to approving: For example, Nike required suppliers to provide full disclosure of their chemical products. These were then assessed using list screenings and chemical hazard assessments (CHAs). Nike works with suppliers to understand any flagged chemicals, allowing only approved chemicals to move forward.
- Certification program: Levi’s recognized the need to create a program that focused on more than RSL compliance, testing, or site audits. It developed a certification standard that addressed chemical transparency and CHAs, to increase its supply chain transparency.
Identifying the process you’d like to use is crucial for achieving chemical transparency, through clear and ordered data requests.
Question 5: How will you test for success?
Once you’ve identified your reason to approach suppliers, navigated your starting point, figured out the exact information you need, and devised and implemented your process, you’ll want to test the success of your approach.
One secret to fostering successful supplier engagement is to start with first-tier suppliers only before expanding your program to other suppliers. This allows you to test the effectiveness of your method. Leverage a few of your first-tier suppliers to develop the process and ensure the plan you intend to roll out allows you to obtain the information you need.
“At the end of the day, supplier engagement all boils down to communication,” says Stacy. Establishing expectations, holding your team and suppliers accountable, and incentivizing and empowering your suppliers is critical for chemical transparency.
Learn the secrets to supplier engagement
Find out how to find and replace potentially harmful chemicals, like PFAS, in your supply chain through supplier engagement.
Watch the webinar recording for:
- Insights into PFAS regulations
- Strategies for engaging suppliers
- Case studies on PFAS risk mitigation
- Effective methods of sourcing supplier substance information