Procter & Gamble Sustainability Strategies Research Paper

P&G is looking to make the Supplier Environmental Sustainability Scorecard methodology a global standard (P&G, 2010). To support this effort to make the scorecard a global baseline of sustainability measurement, P&G freely distributes Microsoft Excel models of the methodology and baseline analysis tools from their website. The foundations of the methodology can be seen in Figure 2: Procter & Gamble's Supplier Environmental Sustainability Scorecard Methodology. The key metrics measured include energy, emissions, waste, water and an environmental management system performance ranking that can be used for evaluating supplier performance within and across product categories.

P&G has also differentiated this model by rewarding excellent business performance as measured by the key performance indicators (KPIs) first, while also using the methodology to evaluate areas where performance can be improved. The use of incentives and rewards for the top 400 suppliers at P&G have been announced and are actively being applied to supplier accounts and programs, showing that P&G is fully committed to the results this methodology can deliver. The methodology was vetted across several international standards organizations and was also provided to each for feedback and evaluation. The World Resources Institute (WRI), several non-governmental organizations (NGOs) and nearly a dozen standards organizations participate din the vetting, editing and approval process for this methodology. The foundations of the methodology are shown in Figure 2.

Figure 2: Procter & Gamble's Supplier Environmental Sustainability Scorecard Methodology

Trending and patterns in the data from the top 400 suppliers are providing insights into how supply chain processes can be optimized, in addition to defining how the Sustainable Products Initiative can be better managed as well (P&G, 2010a). P&G has defined the scorecard so that measures of renewable energy use, recycling, logistics efficiency and potential compliance violations can be caught quickly and acted upon. These factors allow for actual production at P&G, supplier production, and aggregate corporate performance form all activities to be measured and evaluated over time. Only the P&G methodology is capable of this level of data analysis as Wal-Mart concentrates only on logistics.

Figure 3: Procter & Gamble's Supplier Environmental Sustainability Time Series Analysis

Source: (P&G, 2010)

The net effect of having time series data for the Supplier Environmental Sustainability Scorecard are greater insights into managing the supply chain and more insights into how best to create performance incentives reflected in shared profits gains from better supplier performance. This has also led to the development of a time series database that is growing exponentially given full participation by over 400 suppliers at P&G as of today (P&G, 2010).

What P&G has also been able to accomplish with their methodology is to concentrate on creating a more effective approach to quantifying environmental and business performance compared with any other competitors. The consensus of industry experts is that this approach will eventually lead to the Supplier Environmental Sustainability Scorecard becoming a market standard given its open source availability (P&G, 2010). The defining of Business Intelligence (BI) scorecards using these metrics is already underway at leading enterprise software firms including SAS and SPSS a division of IBM. As P&G continues to show the value of this methodology for measuring sustainability initiatives that are highly dependent on supply chain performance, its chance of being a global standard increase exponentially.P&G has been able to successfully integrate line-of-business process performance gains with sustainability objectives to attain a higher level of accountability and measurable performance than any of its competitors. Even HP, known for their exceptional handle of sustainability initiatives, has yet to actually generate the amount of data from a sustainability methodology at the level of P&G. As more companies realize that there is a strong correlation between business performance and sustainability, methodologies like and including this will be adopted and used.

Conclusions and Recommendations

P&G has excelled with their Supplier Environmental Sustainability Scorecard by starting with a very straightforward series of key performance indicators (KPIs) and metrics aimed at measuring business flexibility and sustainability performance. As the initial pilot of this program included 400 of the top suppliers, P&G was able to quickly gain insights into how the metrics and data captured could assist in better managing supply chains and the Sustainable Product Initiative (Jacobs, Jordan, 2011). Where P&G was truly excelled however is in creating a methodology that can be quickly used by practitioners and those needing the data to do their jobs more effectively.

Recommendations for future development include measuring overall second- and third-degree effects of performance across distributed supply chains, evaluating the network effect of the models' decisions on total industry performance. This is achievable given the advanced in supply chain simulation software and sustainability initiatives in industries (Jacobs, Jordan, 2011). Second, the data sets need to be managed as industry assets and made available in aggregate, privacy-ensured mode so that other industries can benefit from this analysis. Possibly masking the data asset and allowing it to be used open source would be a powerful factor in driving greater adoption of the model. Third, P*&G needs to define a corporate evangelist for the Supplier Environmental Sustainability Scorecard and promote it into a global standard.

References

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Please see this link for additional information: http://www.pg.com/en_US/downloads/sustainability/reports/PG_2011_Sustainability_Overview.pdf

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