(This article is an excerpt from the report Geospatial Intelligence: Powering the Next Wave of Supply Chain Performance.)
In Part Seven of this series, we looked at the role of geospatial intelligence in the service supply chain. Here in part eight, we examine how geospatial intelligence is used to enable sustainable and socially responsible supply chains.
Sustainable/Socially Responsible Supply Chain
The Growing Importance of Sustainability and Corporate Social Responsibility
Sustainability, Corporate Social Responsibility (CSR), Fair Trade, carbon footprint, and related areas have identity, and mission; creating an ethical corporate culture; attracting top employees;1 strengthening the brand; appealing to increasingly conscientious consumers; complying with regulations and standards; and increasing profitability.2 Issues such as labor abuses in the supply chain can be devastating to a brand. There are also legislative requirements impacting products such as WEEE, RoHS, REACH, JEDEC, and Conflict Minerals regulations. Many of the same tools used for supply chain risk and traceability can also be applied in the socially responsible supply chain.
Geospatial Data Sets to Support Sustainability Goals
There are extensive sets of geospatial data and maps available to help organizations develop and meet sustainability goals. Government agencies and NGOs use tools such as the Living Atlas of the World for compiling and publishing data that can be used, often at no cost, by manufacturers, retailers, logistics providers, and others. For example, NGOs continue to map out various types of protected areas, including those set up by the IUCN and others, such as wildlife reserves and refuges, national parks, protected fisheries, and the habitats of endangered species. There are maps of relative water stress in different regions that can be used when businesses are deciding where to locate water-intensive operations.
Figure 13 – WRI Map of 20 Countries with Largest Shale Reserves
Another good source is the World Resources Initiative (WRI) which provides over 200 maps showing things like poverty rates, climate change impacts, ocean impacts (coral reef loss, areas of eutrophication and hypoxia, etc.), water resources and stresses, forest atlases, protected areas, and deforestation maps, land use maps, sustainable palm oil maps, drinking water safety and quality, solar and wind resources, and much more. Geological surveys providing data such as soil and erosion maps can help farmers to select the right crops and methods for sustainable farming and figure out what mix of crops can thrive while replenishing and sustaining the soil and ecosystem over the long run.
Using GIS Platforms’ Mobile Data Collection Capabilities to Support Sustainability
The mobile data collection capability of geospatial platforms can be very useful in building out these sustainability-related datasets. As well, they can be used in certifying individual operations, such as certifying that a farm’s operations meet organic criteria or that a poultry operation meets Free Range criteria.3
These certifications typically require onsite inspections and audits, recording such details as locations of plots, size of spaces, and number of birds. Other examples are the three major sustainable cocoa certification programs — Fairtrade, Rainforest Alliance Certified, and UTZ — all of which require regular 3 Humane Farm Animal Care (HFAC) has published standards for “Free Range” or “Pasture Raised” certification. By their standards, Free Range hens must be outdoors at least 6 hours per day and provided at least 2 square feet per bird. third-party audits to certify whether a cocoa farm meets specific economic, environmental, and social standards. RSPO4 has created a certification scheme for sustainable palm oil production. Geospatial systems with mobile data collection are a good fit for these kinds of onsite inspections. The inspector can record GPS coordinates to unambiguously and accurately identify the farm and plot being audited while on site and take geocoded pictures and notes. Site-specific information can be embedded into the GIS map.
Enabling and Enriching Direct Relationships Between Brand Owners and N-Tier Suppliers
A GIS platform can also help manufacturers to have a richer direct relationship with their suppliers. Some food and beverage companies are doing this with the farmers growing their products, by using the platform to provide training, certification, and location-specific information, knowledge, and advice/best practices (see case studies of Natura, next page, and Nespresso, page 50). Increasingly farmers and other small suppliers have a cell phone5 (and in some cases the manufacturers are providing them with low-cost phones) to receive weather reports, advice on optimizing yields for their local soil and predicted weather conditions, disease diagnostics and treatment advice, and more. These devices can also be used to teach and monitor sustainable practices.
Natura’s Commitment to Sustainability Produces Accolades and Results
Established in 1969, Natura is Brazil’s largest brand of cosmetics and personal care products. It sells through multiple channels: online, catalog, retail stores (its own and others’), and notably via over 1.8 million personal resellers across Latin American. Their commitment to the environment and social responsibility is central to the company’s ethos and a strong component of brand loyalty. Three percent of profits are contributed to community development and public education. Over half of the managers are women. Natura includes social and environmental goals in their employees’ performance reviews. They have developed strategies for sourcing, agroforestry farming, and employment that preserve biodiversity, protect the environment, and ensure that benefits are equitably shared all along the supply chain.
Natura owns manufacturing plants in SÃ£o Paulo and ParÃ¡ and has a network of contract manufacturers and suppliers, largely in Latin America, including small community suppliers in the Amazon region. They work closely with their supply chain, providing training and social and technical assistance on sustainable operations. Natura implemented an ArcGIS-based platform to monitor, collect, and distribute sustainability and other data throughout the company and from/to their supply chain. They track and report on environmental aspects of their own and significant suppliers’ operations, such as energy use, water use, and waste. They have collected and analyzed GHG emissions data for their entire supply chain and are implementing strategies to reach a carbon neutral goal.
Natura uses mobile devices in the field, running Collector for ArcGIS, to collect and compile production and harvest data, in thousands of participating farms. This information is combined with business data from SAP, analyzed, and published in maps and applications to help Natura meet its social responsibility goals. The platform provides traceability, so they have confidence in the source of the materials for their products. It helps provide transparency into their operations that is key to measuring, achieving, and demonstrating to the world how they are meeting their commitments.
The approach works. In 2014 Natura became the world’s first publicly traded company to become certified as a B-corporation,6 inspiring other major corporations to follow suit. In 2015, they were awarded the UN’s highest environmental award, the Champions of the Earth prize. And they have done this while growing revenue at an average of over 5% per year over the past five years, and more than doubling their net income last year to over 11% of revenue. Natura has shown that you can be a model global corporate citizen and use that to be more competitive and financially healthy.
Auditing the Supply Chain for Social and Environmental Responsibility
Understanding Regional Risks
The World Bank, NGOs, and others provide data on the prevalence of child labor, slave labor, and substandard working conditions to help identify hotspots of illegal activities and assess the risk of sourcing from various regions. A geospatial platform with this data can help identify areas of risk as companies look to source materials or find responsible contract manufacturers. This does not mean risky areas should be avoided altogether. In fact, socially responsible firms will often make investments to support and strengthen responsible suppliers who are making an effort in regions that are struggling to improve, with the understanding that extra diligence, attention, and possibly special measures will be required in those regions.
Mapping Out Precise Locations and Sources of Supply
A number of apparel and electronics brands are trying to work more directly with their contract manufacturers on programs to ensure the welfare of the workers and the communities around those plants. To do this properly, a manufacturer first needs to understand exactly who their suppliers are and where those factories are. In the case of a multitier supply chain, they need to map out their supply chain back to the actual plants or farms producing their goods. (For more on this, see the section above on Maintaining a Live Global Supply Chain Operating Picture, page 14.) Traceability is important to ensure materials actually come from where they are claimed to originate, whether the concern is responsible factories or farms, organically grown products, sustainably produced cocoa or palm oil, conflict minerals, or blood diamonds.
Conducting Audits, Tracking Progress
Once the suppliers and actual locations of production within the supply chain are accurately identified (an ongoing, perpetual process), programs can be set up with regular field audits, a hotline for anonymous tips, and other elements. Onsite inspections are a critical piece. These can leverage a GIS platform’s mobile data collection capabilities for use by the inspectors to provide precise location information, record observations and measurements, submit pictures, and so forth. The same GIS platform can be used to define the expected standards and KPIs, communicate them to each supplier, show them the current scorecard of where they stand, and be used as a platform to discuss how to progress forward. It becomes the foundation for sustainability improvement programs and projects, tracking progress towards goals.
Getting the Big Picture — and Sharing It with Constituents
These per-location data can be rolled up to look at progress towards sustainability goals across the entire corporation; such as reductions to CO 2 emissions, eradicating the use of conflict minerals, promoting sustainable water use, ensuring that labor standards are upheld, and so forth. With a GIS platform, the aggregate data can be easily visualized on a map and spatially-enabled dashboards. Queries can be made, reports generated, and analysis done (slice, dice, drill down).
Ultimately this same data can be shared with various stakeholders, including investors and end consumers. A GIS system can help here as well. Story Maps can be used to great effect to walk someone through a complex set of data in a very intuitive manner. For example, a lumber company could use a GIS system to manage their forests, tracking which areas have been logged, where replanting has been done, and so forth. That same data could then be used to help consumers and other stakeholders visualize and understand the company’s approach to sustainable logging: e.g. see on a map the areas of trees being planted, provide drill-down data and pictures and details for each area, and articulate all the mechanisms implemented to ensure that no illegal lumber enters their supply chain.
Some manufacturers are using these platforms not just to show sustainability data, but as a means to create a more meaningful and personal connection between their individual suppliers (e.g. artisans or small farmers) and each individual end consumer. Providing that personal connection and using visual means of demonstrating clear evidence that a company really cares and is meeting its social responsibility commitments can be powerful approaches, creating long-lasting brand loyalty and growing market share.
Nespresso was founded in 1986 as a division of the NestlÃ© Group when a NestlÃ© employee invented and patented a machine for brewing coffee contained in a capsule, a radical innovation at that time. With over 12,000 employees and an estimated revenue of about $5B, Nespresso has about 20% of the global retail coffee market. 7
Sustainability has been important for Nespresso for a long time, such as: introducing a capsule recycling 7 Analysts predict overall global coffee pod sales to grow at nearly 10%/year for the next 5 years, as they continue to grow in popularity. It is a highly competitive space with other firms in the fray, such as Keurig and Tassimo. 8 According to Justmeans program over 25 years ago; They collaborated with The Rainforest Alliance to establish the Nespresso AAA Sustainable Quality Program in 2003; and launched its Ecolaboration program in 2009. Nespresso reached over 75% capsule recycling capacity in 2012. In 2013, Nespresso created the Nespresso Sustainability Advisory Board and in 2014 created their 2020 sustainability vision and goals, committing CHF 500M (about $500M) to achieve specific ambitious targets in coffee sourcing & social welfare; aluminum sourcing, use and disposal; and resilience to climate change. In 2016, publicly made 42 specific commitmentsin nutrition and health, rural development, water use, environment, sustainability, and the welfare of their own employees.
Nespresso sources most of their beans directly from about 70,000 small farms around the world. Over 80% of these are certified under Nespresso’s AAA Sustainable Quality program and are paid 30%-40% above the standard market price for coffee. The goal is to get to 100% AAA farms by 2020. One independent study found that AAA-certified farms had 22.6% better social conditions, 52% better environmental conditions, and 41% better economic conditions than non-AAA farms. 8
A key tool used by Nespresso to manage the AAA program and meet sustainability goals is their Farm Advanced Relationship Management (FARM) system. Based on esri’s GIS platform, the system is used to train, provide information, and monitor the farmers’ practices and results. With this system, Nespresso can see which farmers need specific training — like which ones need help on good pruning practices or ideal harvesting methods. They can also track weather patterns to warn farmers of impending events and provide specific advice. In addition, longer term climate change effects on their location are measured and predicted, along with advice on how to prepare for and cope with those changes.
Farmers are not highly technical users and some of them may have attachment to doing things the way they have always done in the past. Therefore, the system has been designed and incrementally improved to be simple, unambiguous in its advice, and intuitive to use.
The same system is used to continually collect data from the farms. The long-term goal is to gather more individualized information from each farmer into the tool and help them make more human-to-human connections with the consumers of the coffee. This may include videos of different farmers and eventually mechanisms for farmers to talk directly with consumers.
The platform also supports Nespresso’s agroforestry plan, where they are reintroducing trees into the coffee producing regions to help protect natural ecosystems, strengthening coffee farms’ resilience to climate change, and create future sustainable coffee production. Nespresso has already planted over a million trees under that program. The FARM platform has proven to be a key element of Nespresso’s commitment to sustainability and social responsibility.
In the Ninth and Final installment of this series, we look at the characteristics to look for in a modern GIS system for supply chain applications.
1 Millennials especially have shown a tendency to want to work for companies that are ethical, have a purpose, and are serving the greater good. — Return to article text above
2 Many sustainable practices, such as increasing efficiency, reducing packaging, and shrinking the carbon footprint are also good for the bottom line. — Return to article text above
3 Humane Farm Animal Care (HFAC) has published standards for “Free Range” or “Pasture Raised” certification. By their standards, Free Range hens must be outdoors at least 6 hours per day and provided at least 2 square feet per bird. — Return to article text above
4 RSPO = the Roundtable on Sustainable Palm Oil. Here are details about their certification standards. — Return to article text above
5 Mobile phones have been a boon for third-world farmers and fishermen. In the past, they travelled to remote markets with their goods and were at the mercy of whoever happened to show up and the prices offered. Now they can check market prices, get buyers lined up before making the trip, and get paid electronically (or deposit the cash they are paid) into mobile wallets. They no longer have to carry around and store all the cash they earned, greatly reducing the danger of getting robbed and providing a more feasible way of accumulating capital. Since mobile phones are out of the reach of poorer farmers, Grameen Foundation’s Community Knowledge Worker initiative. (CKW) leases phones to a few local farmers who act as intermediaries for the rest of their community, and get paid for providing that service. — Return to article text above
6 B-corporations have been certified by B Lab as meeting specific social, sustainability, and environmental performance standards, while also adhering to specific accountability and transparency standards. The certification is for the entire company. As of this writing, Natura’s overall B is 120, compared with the Median Score of 55 for all business that have completed the B Impact Assessment. — Return to article text above
7 Analysts predict overall global coffee pod sales to grow at nearly 10%/year for the next 5 years, as they continue to grow in popularity. It is a highly competitive space with other firms in the fray, such as Keurig and Tassimo. — Return to article text above
8 According to Justmeans — Return to article text above
To view other articles from this issue of the brief, click here.