Getting my Suppliers on Board – 5 Steps for Successful Supplier Collaboration
Achieving climate targets is a challenge that we can only meet together. This is especially true for companies, as up to 90% of their emissions typically originate in the supply chain. So now, more than anything, it’s a matter of establishing a successful supplier collaboration to achieve common climate targets.
By including suppliers in their sustainability strategy, companies can reduce emissions on a much larger scale across the value chain, rather than just internally. It also means they can make their supply chain more resilient by overcoming climate-related risks and building trusted relationships. Accordingly, more and more companies are asking themselves: How can we get all our suppliers on board and build a successful collaboration on decarbonization measures with them?
In the following section, we present 5 key steps for building strong business partnerships and an effective supplier collaboration network.
5 Steps for Supplier Collaboration:
1. Be Transparent and Measure Data
Which of your suppliers have already set climate targets? Which are already at an advanced stage of implementation? And which still need support? For successful supplier collaboration, a company must first answer all these questions and build a fundamental understanding of the climate maturity of its suppliers. Only then can it know where exactly its emissions come from along the supply chain.
In order to achieve this understanding, companies must first set up a consistent and scalable process for collecting comparable data on suppliers’ holistic climate maturity. To ensure comparability and quality standards, the data collected should be aligned with international climate reporting frameworks and cover the areas: governance, strategy, risk, metrics & KPIs. Data-driven tools like the Climate Performance Assessment help to obtain and manage these primary data points.
2. Ensure Supplier Commitment
In order to engage all suppliers in your climate transformation journey, they need to be able to trust the data collection process and understand how they benefit from the joint climate efforts. It is the company’s responsibility to communicate the importance of the collaboration and the associated opportunities for suppliers.
Working with suppliers means creating a “shared value” that will drive and motivate the supplier to align with climate targets. Establish a two-way communication flow, where expectations as well as concerns can be communicated on both sides. Make sure to explain how you will use their data, emphasizing that the participation will be the foundation for an enhanced collaboration in the future.
Important to note: Do not miss to transparently communicate where you stand yourself and only set appropriate expectations from your suppliers accordingly.
3. Set Up Climate Data Management
After collecting the required data, a decisive factor is how to process and manage it. Firstly, make sure that the data is accessible to all participating suppliers – because collaboration for decarbonization is not a one-way street, but a joint collaborative journey with mutual benefits and learnings.
Secondly, the data must be analyzed accordingly in order to uncover risk areas as well as opportunities for climate action. The insights will only support a successful climate transformation if they lead to appropriate conclusions and subsequent actions.
4. Invest in Supplier Relationships
With this essential data-foundation, engagement and collaboration for decarbonization can begin. However, this cooperation can only work if it is built on a long-term relationship based on trust. Simply dictating guidelines does not work. Instead, there must be a mutually beneficial exchange that helps both the company and the supplier achieve their climate targets.
This is why now it’s time to: invest! To improve the supply chain’s climate performance, the company must seek to understand what suppliers need for this end. Investing in supplier relationships therefore means to collaborate on solutions that fit the interest of all stakeholders. By collaborating in forecasting, planning and capacity management, businesses can enable their key suppliers to redesign their processes and work more efficiently, which will immediately benefit the company and optimize its value chain.
5. Monitor and Optimize Continuously
Joint work on climate actions along the supply chain is never complete. Once you have successfully launched the supplier collaboration, it is now a matter of continuously monitoring the ongoing actions. In this way, successes can be made visible and measurable. Furthermore, this enables you to adapt processes and further develop measures if necessary.
It is helpful to use supply chain goals as a starting point and regularly measure upstream and downstream environmental impacts along the supply chain to see how effective various measures are. Also make sure that you constantly increase the goals in order to further challenge and motivate yourself and the suppliers
Challenges of Supplier Collaboration
Nevertheless, there are several factors that make supplier collaboration a challenge for many businesses. Working together with suppliers and investing in long-term and strong partnerships requires time and effort for businesses and a fundamentally different mindset on buying processes. In addition, many companies still lack the resources and tools to collect and manage climate-related data from their suppliers. They struggle to identify the carbon hotspots along their supply chains.
In order to make supplier collaboration easier for companies, we have established the Climate Data Platform. It enables businesses to streamline and manage climate-focused data from their suppliers and to improve collaboration along the supply chain for efficient decarbonization.
You want to know more about our data-based software tool for supplier collaboration? Book a demo today and learn how to empower your suppliers to set up a structured climate management approach and to successfully support suppliers in their climate transformation efforts.