2.2 Decisions

Moving from acknowledging the need for sustainable sourcing towards implementation requires a number of interrelated strategic choices. In this chapter, we offer a model for the main decisions that you need to take when building a sustainable sourcing strategy. The following chapters will then each look at one of these decisions in detail. Note that these decisions, though connected, may present themselves in a different order than the one in which we discuss them here. You are also likely to revisit and modify some of the choices you make: Building a sustainable sourcing strategy is typically an iterative process.

The main decisions your company has to take are:

Diagram 6: Main Questions

  • What is the business case for sustainable sourcing. Senior management, shareholders and colleagues will want to know why engage in sustainable sourcing. Having a clear and compelling business case is therefore essential. Although there are generic elements and common themes in the business case that will be similar to other companies’, your business case will be very specific and needs to fit your company’s business model, strategy and culture. Chapter 1 will look at building the business case for sustainable sourcing.
  • Which agricultural raw materials are in scopeThis includes whether you will concentrate on certain raw materials or groups of raw material only or include all of your agricultural raw materials. You may also prioritise certain raw materials over others or expand the scope of your sustainable sourcing strategy in a step-wise (phased) manner.  Chapter 3 will help you with this identification and prioritization process.
  • Sustainability Requirements to be applied. You need to decide how you define ‘sustainable raw materials’. In other words, it is necessary to formulate (minimum) requirements for a particular raw materials, covering relevant ecological, social and economic issues. These requirements may be based on an internal company standard (e.g. if included in supplier contracts), or they may refer to a standard set by an external organisation. They may be fixed from the beginning or linked to continuous improvement. They may be set by the company or developed in cooperation with farmers, suppliers and other stakeholders. You may choose the have the requirements externally verified or certified, but not necessarily. In this guide, the word ‘standard’ is meant to indicate the collection of criteria by which a firm wishes to set the sustainability level for its agricultural raw materials. Chapter deals with the question how to set this level and how to use internal or external standards.
  • Implementation in the company’s supply chain. Raw materials that meet the sustainability requirements set by you may not be readily on the market. Your buyers will have to determine whether they can simply purchase from existing suppliers or other established sources. If not, the need to determine whether they are in a position to impose new requirements on suppliers or need to find ways to encourage or incentivize sustainable production. In other words, you need to install appropriate mechanisms in your firm’s supply chain which encourage farmers and suppliers to meet your sustainability requirements. We will look at this in detail in Chapter 5.
  • The internal organisation required to support this implementation. Sustainable sourcing will generally require changes in your company’s processes and procedures and will likely affect organisational behaviours, corporate culture and values or even business model. You will need to build the incentive systems to ensure sustainable sourcing is implemented effectively and make available the required resources. You will also be likely to need new skill which you need to acquire or contract in. Chapter 6 will explore this in detail. 
  • Communication about the company's sustainable sourcing efforts. Finally, decisions are needed on how to communicate a company’s sustainable sourcing efforts internally and externally, which we will briefly look at in Chapter 7.

Diagram 6 above summarises these above decisions. Obviously real decision making processes in companies are complex and the elements of the above diagram may be repeated several times or steps may be taken in a different order. They all interact and depend on your company’s business case for sustainable sourcing (Chapter 1, the balloon in the centre).

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