This article originally appeared in the September issue of Procurement Pro.
“It’s like a flywheel, once it gets going it just gains momentum,” says Andrea Barrett, Vice President of Social Responsibility and Sustainability at RS Group, and she is describing the company’s impressive progress towards its environmental, social, and governance (ESG) goals.
The company embarked on its journey four years ago.
Barrett observes: “Sustainability is often the most important category for our customers because it really helps them to improve the efficiency and cost of their operations. They want products that are going to help them save energy, automate and control their operations, and reduce foreshore waste.
“The RS management team recognised that a strong ESG strategy was part of being a business leader, and it was an opportunity as a global products and services supplier to really lead the way versus our peers. We don’t see many distributors doing this so we can be a strategic leader to our customers and suppliers.
“We were clear from the beginning that this is a long-term strategy, not a one and done. It takes years of commitment and delivery to really make a change on sustainability.”
RS’s initiatives are backed by a recent CIPS (Chartered Institute of Procurement and Supply) survey, which reported 71% of respondents consider ESG criteria important when selecting suppliers, products, and services, with over 80% willing to pay a premium for products that are more sustainable.
Be better
Sitting against the backdrop of a panel displaying exhortations such as “We make every day better” and “We are one team”, Barrett observes: “For our employees, RS has a strong sense within the company of doing the right thing. It’s a core value.
“Year one was about setting out the strategy, setting the goals, planning initiatives, and winning stakeholder engagement, and campaigning within the company to get people to understand the business benefits, amongst other priorities.”
Barrett believes that companies are looking for opportunities to be better businesses, and not just focus on profit in the short-term, and customers have growing sustainability priorities.
RS Group recently staged an EMEA supplier event where the focus was on RS’s Better World sustainable product range and ESG goals.
“Every year we see interest and engagement building and that results in the growth of the Better World products which now stands at 30,000 products from over 100 suppliers, and over a 1,000 of those help with energy efficiency or renewable energy,” says Barrett.
Siemens and Schneider are key partners for RS Group, and contributors to the Better World Product range. They contribute 83% of the total Better World products to date.
Comments Glynn Hobbs, Logistics Territory Director UK&I, Schneider Electric: “It’s not just about what we’re doing to the existing ranges, but it’s the new products that we’re bringing into the market, and how we position those with the right green credentials, and the right profile.”
Katharina Raimann, Sustainability Manager, Siemens concurs: “Sustainable sourcing is an investment for the future. If we really want to have a long-lasting business, and have our companies be there for 10, 20, 30 years, then this is an investment that we need to focus on.”
Planning a better world
There is a clear process RS pursues when talking to prospective suppliers to the Better World product range.
An initial communication leads to individual meetings, and collaborating on plans for the products. “It takes time,” says Barrett. “We are trialling the product to begin with, building up the awareness to customers, and then you see the customers recognise the impact these products can have on their business through energy saving and their carbon footprint. We are the mouthpiece for the customer, some of our suppliers are not necessarily in touch with customers. It’s for us to clearly articulate the opportunity and business benefits.”
To ensure suppliers recognise the requirements for a Better World product, RS created a standardised framework on what suppliers need to do to move forward. It covers the 17 different areas related to the lifecycles of the products and the elements they need to embed in their product development. RS provides lots of guidance to meet these criteria, and information on how they evidence that and communicate it to the end customer.
Barrett acknowledges that some changes may require a higher research and development budget: “But again, the flywheel effect takes over, and there is a tipping point in the market when the customer expects sustainable products as the norm.”
Moreover, she points out that changes to business operations, and cost savings on logistics and packaging can make their business leaner and more attractive to customers.
Adds Barrett: “At the end of day it is their choice to participate, but it is resonant with customers, and like any megatrend, if they choose to ignore it, their business may not be as relevant in the future.”
Better World-branded suppliers participate in the Eco Vadis supply chain rating assessment.
“We use it because it is very comprehensive across all ESG topics,” explains Barrett. “It asks questions relevant to the supplier’s business and has tools to help with any improvements that may be needed. Companies have to upload all their evidence on products and practices so it is a robust system.”
Suppliers to RS, the company’s own brand of products, are more rigorously assessed.
“We have a greater responsibility around this supply chain. We need to understand all the different tiers right down to the factory floor,” Barrett asserts. “Industry labour practices, environmental standards, health and safety, and ethics are assessed along with the products.”
RS’s audit of the suppliers is available to everyone, so suppliers can share it with other partners.
“You can see if they have passed, or whether there are areas for improvement,” says Barrett.
An RS responsible sourcing team regularly reviews higher risk sourcing regions or product types to ensure improvements are undertaken in a timely manner.
RS has a group in China to monitor suppliers.
Smaller footprint
To reduce its carbon footprint, RS has massively reduced its use of air freight over the past four years, notes Barrett.
Servicing a global distribution network, the company has 40 distribution fulfilment centres worldwide. “It means we put products closer to our customers, and that’s the key to reducing air freight. We don’t want to be delivering product out of China to a UK distribution centre, and then ship them out again.”
RS intelligence data enables an optimisation of its global network so it understands which products need to sit where – enabling it to be delivered by sea or road.
Hobbs gives some perspective: “I think what utopia looks like is almost local manufacturing in a local market. But in an industry where you have global product ranges, that’s not practical. So instead, we need to think about, are we stocking the right things in the right places for the right markets? Are they all commercially active products? Are they good for you? Are they going to get closer? Are they the right product for the market? And we have to make uncomfortable decisions; can we stock everything that the market wants us to stock?”
A recent expansion of RS Group’s Bad Hersfeld distribution centre in Germany is helping to get product to European customers more sustainably.
It has been transformed into a European distribution hub to serve customers by road and replenish the smaller fulfilment centres in Europe.
Leader of the pack
Long-time RS customers will have spotted their goods early as they arrived in the distinctive white box with the red company logo. No more. A shift to brown cardboard that enables higher recyclable content has been made in Europe with the US operations following suit. Paper tape has also been introduced.
Reusable totes and pallets shift product in the distribution centres. In addition, RS has installed automatic packaging machines, which produces made-to-fit boxes reducing excess space.
“We work with the suppliers to ensure that what they send us in terms of product and product housing is as compact as possible, and that it is packed in or contains recyclable materials,” explains Barrett.
Progress is being made to replace Jiffy envelopes. The plan is to remove single use plastic from the supply chain while ensuring the goods are protected to arrive at the customer in perfect working order.
While RS improvement teams liaise with suppliers and customers, employees at RS Group’s Nuneaton distribution centre picked up the baton, identified 50 areas of improvement and used the unwanted plastic to build an elephant!
“It’s become a mascot to bring the message home to all of us,” smiles Barrett. Not to be outdone, a team at Distrelec, an RS Group company, now has a plastic shark.
