UNIT RESPONSIBLE TOURISM SUPPLY CHAINS Picture source: http://images.danviet.vn/CMSImage/Resources/Uploaded/baogiay2/261_11_thu-hoach-ca-chua.jpg Unit outline Objectives By the end of the unit participants will be able to: • Understand the mechanics of supply chains and the importance of building sustainability in the supply chain • Develop a sustainable supply chain policy and action plan • Implement a supply chain sustainability assessment • Identify strategies to support suppliers to meet supply chain sustainability goals • Understand how to monitor the sustainability performance of the supply chain and support continuous improvement Topics Introduction to responsible tourism supply chains Sustainable supply chain policy development and action planning Raising awareness and supporting suppliers to meet sustainability targets Monitoring and evaluate sustainability performance UNIT RESPONSIBLE TOURISM SUPPLY CHAINS TOPIC INTRODUCTION TO RESPONSIBLE TOURISM SUPPLY CHAINS Picture source: http://www.geograph.org.uk/photo/1520478 What is a supply chain? • The system of moving of a product or service from supplier to customer • Results in natural resources, raw materials, and components being transformed into a finished product • Tourism supply chains involve core and ancillary tourism goods and services • The final product purchased in a general tourism supply chain is the holiday Picture sources: vov.vn/Uploaded/VietHoa/2012_11_21/Bieu%20dien%20van%20nghe.jpg http://sinhcafe.com/photo_north/Maichau/maichau_hoabinh_trekking_adventuretoursdotvn.jpg http:// www.schoolanduniversity.com/images/page_uploads/Food-and-beverage-Management.jpg http://upload.wikimedia.org/wikipedia/commons/9/97/Premier_Executive_Transport_Services_Boeing_737-700_KvW.jpg http://www.relaxitsdone.co.nz/_media/images/257-luxury-accommodation-in-queenstown-at-45-south-luxurious-master-bedroom.jpg The key actors in tourism supply chains © 2003 Richard Tapper, Environment Business & Development Group The tourism sector supply chain Picture source: http://piboonrungroj.files.wordpress.com/2011/07/slide03.jpg Two compelling reasons why we need sustainable supply chains in tourism Consumers expect it You are eroding your core product Some other good reasons to develop a sustainable supply chain • Improved profile / brand • Improved market access • Increased operational effectiveness • Increased sustainability Some common sustainability issues in tourism supply chains ECONOMIC PERFORMANCE ISSUES Employee wages and benefits Local purchasing Revenue leakage Linkages with local suppliers and subcontractors Corporate responsibility-related payments ENVIRONMENTAL PERFORMANCE ISSUES Energy use Water use Waste management Wastewater management Contributions to biodiversity and nature conservation Chemical use Emissions (CO2, ozone depleting substances) Land conversion Air, water and land pollution Toxicity of materials and products used Purchasing guidelines Built environment (including protection of architectural, historical and archaeological heritage) Environmental management system SOCIO-CULTURAL PERFORMANCE ISSUES General Equal opportunities and non-discrimination Human rights (including combatting sexual exploitation of children) Workplace Workplace conditions Labour relations (fair wages, job security, working hours etc) Health and safety Training and education Children in the workplace Suppliers and subcontractors Labour relations and human rights practices Contracting with small and micro-enterprises Respect for rights of ethnic and minorities and of local communities Community Traditional rights and freedoms Local consultation and participatory decision-making Contribution to community development Economic linkages with local communities Source: Tour Operators’ Initiative for Sustainable Development (TOI) 2004, Supply Chain Engagement for Tour Operators: Three Steps Toward Sustainability, TOI, France 93% of your supply chain is invisible – and why this matters to you! • Most supply chains today are so complex that companies don’t know exactly what’s happening in them • Poor practices in the supply chain can result in serious risk and reputation issues, legislation and litigation issues and lawsuits for false claims relating to human and environmental issues • The impacts of poor practices by others can and will eventually affect you Source: Rowe A 2013, ‘93% of Your Supply Chain Is “Invisible”’, Network for Business Sustainability, Available [online]: http://nbs.net/knowledge/93-of-your-supply-chain-is-invisible/, Accessed: 09/02/2014 Providing support to meet sustainable supply chain goals • The process of businesses helping businesses is often referred to as b2b (“business to business”) exchange • b2b exchange refers to the dialogue and actions that take place between companies to create mutual benefits and gains • b2b exchange is a good way to foster sustainability improvements in tourism supply chains because: – You have an intimate understanding of your consumers – You have access to technology and information – By helping your suppliers you are helping yourself Improved & more sustainable goods & services B2B EXCHANGE ORGANISATION SUPPLIER Awareness raising Capacity building Incentives Picture sources: Pixabay, http://pixabay.com/ Supporting tourism suppliers through capacity building Network s Training Informati on resource s Fam trips Mentori ng CAPACITY BUILDING OPTIONS The TOI’s recommendations on incentives for suppliers to meet sustainability goals • Suppliers need to be convinced of the advantages of taking sustainability measures • Recognition and rewards help foster positive action • Develop a “preferred supplier” scheme for suppliers that meet sustainability goals which offers benefits such as: Higher rates Longer-term contracts Committed guarantees Joint marketing agreements More brochure space Joint promotional activities Favoured status in system sales searches Source: Tour Operators’ Initiative for Sustainable Development (TOI) 2004, Supply Chain Engagement for Tour Operators: Three Steps Toward Sustainability, TOI, France UNIT RESPONSIBLE TOURISM SUPPLY CHAINS TOPIC MONITOR AND EVALUATE SUSTAINABILITY PERFORMANCE Picture sources: Pixabay, http://pixabay.com/ The steps involved in a supply chain sustainability evaluation Decide what you are monitoring Let your suppliers know about the monitoring programme Tell your suppliers how they are performing Evaluate and assess your suppliers’ performance Foster continuous improvement Picture sources: Pixabay, http://pixabay.com/ Establishing sustainability criteria for the evaluation • Review results of baseline study • Use the sustainability standards and targets that have been established ensuring the targets are: – – – – SMART Prioritised Applied incrementally Written as short statements that require either an absolute figure, a relative figure, or a simple “yes/no” The main types of indicators Performance INDICATOR Process Perception • Reflect changes in outcomes • E.g The number of employees with formal employment contracts • Reflect changes in commitment • E.g The presence / absence of a minimum wage policy • Reflect changes in attitude • E.g The percentage of suppliers that believe their sustainability activities have improved community livelihoods Source: UNWTO & SNV Netherlands Development Organisation 2010, Manual on Tourism and Poverty Alleviation – Practical Steps for Destinations, UNWTO & SNV Netherlands Development Organisation, Madrid, Spain Communicating the sustainability monitoring programme and criteria • Use standard communication approaches • Ensure the message content includes: Benefits and consequences Evaluation criteria Criteria calculation methodology Definitions Implementation, roles and responsibilities Example of letter communicating a sustainability supply chain programme Dear supplier, Benefits Thank you for agreeing to work with us to improve your sustainability performance Consumers and governments alike are demanding greater sustainability and we believe that by starting now you and us will be ahead of the competition and also prepared for potential increased government regulations in the future At a more direct level, we also believe our sustainability standards will provide immediate benefits to you in the form of improved worker performance, enhanced reputation and cost savings through greater efficiency… In order to measure the success of the programme we need to ensure our suppliers are meeting our supply chain sustainability standards The key sustainability criteria we shall be monitoring of our suppliers include: SUSTAINABILITY CRITERIA UNIT OF MEASURE TARGET Supplier has policies on the purchase of local goods and services Formally approved company policy document local procurement policy developed and approved within months Supplier provides employment contracts for all staff Formally approved worker contract documents 50% of workforce have employment contracts in months, 100% in year Supplier implements strategies to reduce waste Formally approved action plan Evidence of waste management activities At least activities are undertaken in months; 10 activities completed in year … … … ENV SOC Criteria Calculations Our supply chain manger will contact you to review the progress quarterly, and kindly request your participation in providing evidence of performance to meet criteria such as power and water bills, action plans, policy documents… … Implementation, responsibilities Conducting the sustainability evaluation • Evaluate suppliers based on the size of the organisation and its supply chain and available resources, can be: Organisation led Contracted 3rd party Supplier self-evaluation • Collect information from suppliers and compile into a spreadsheet table for easy analysis • Examine results to review performance for: – Individual suppliers to meet supplier targets – Combined results to meet supply chain targets ORGANISATION SUPPLIER 3RD PARTY EVALUATION METHODS Example results of a supply chain sustainability assessment Individual supplier assessment SUSTAINABILITY CRITERIA UNIT OF MEASURE Supplier has policies on the purchase of local goods and services local procurement policy Formally approved developed and approved company policy document within months SUPPLIER TARGET 100% of workforce have Supplier provides Formally approved worker employment contracts for employment contracts in contract documents all staff year A B Yes Yes C D E Drafted but waiting Not started Not started approval F G Drafted but waiting approval Yes H I Yes Not started 20% 50% 90% 0% 10% 0% 30% 100% 50% Supplier implements strategies to reduce waste Evidence of waste management activities 10 initiatives completed in year 6 6 … … … Poor Average Good Poor Poor Poor Poor Excellent Average Individual supplier performance assessment Supply chain assessment NO PROCUREMENT POLICIES SUPPLIERS Approved local procurement policies Draft local procurement policies No local procurement policy TOTAL NO EMPLOYMENT CONTRACTS SUPPLIERS 75%-100% of staff in employment contracts 50%-74% of staff in employment contracts 25%-49% of staff in employment contracts 0%-24% of staff in employment contracts TOTAL WASTE MANAGEMENT >5 waste management activities 5 waste management activities 45% 44% Approved local procurement policies 33% 45%