Big Idea Leads To Bigger Benefits
The Age
Monday May 14, 2007
A leading bank's demands for sustainability have paid dividends for one of its key suppliers, writes Pam Kershaw.
When digital agencyNetX first learned of Westpac's decision to introduce a sustainable supply chain strategy, NetX chairman and chief executive Craig Wilson recalls feeling simply "aghast".The bank was the largest and longest-standing client of the relatively small NetX, but in 2003 Wilson knew little about sustainable business practices and even less about what he would need to do to satisfy Westpac's new criteria."Our thoughts were that if we don't pass these tests, we won't be allowed to work for Westpac," he says.Wilson and his finance director pored over Westpac's questionnaire, which covered the five internationally recognised areas of governance and ethics, labour standards, community involvement, environment andmarketplace management.The pair struggled to understand some of it and when the results came back "we were even more horrified because we didn't rate that high", Wilson says.He requested a meeting with Westpac, was impressed by the executives who briefed him, then invested a third of his time over the next threemonths to bringing his company into line.This included developing a disaster recovery plan, a policy and procedures guide, core values, environmental policy, board responsibilities and a code of conduct."At the time itwasa bit, 'OhmyGod, this is a pain in the bum,' but afterwards it was a huge benefit to us as a company," Wilson says.NetX has since doubled in size from about 30 staff to 60, and the policies and procedures make it far easier to train new staff. Becoming sustainable has helped win new business, as potential clients are impressed with NetX's high standards.The company has an operating profit of about $1 million a year and Wilson estimates it achieves about $100,000 in annual savings through reduced resource use and greater workplace efficiencies. NetX has also attracted to its board the chief executive of Planet Ark, Sean Barrett,whom Wilson says was impressed by the Westpac sustainability "anchor" and NetX's ethics and professionalism.According to Susan Clark, senior manager for sustainable supply chain management at Westpac, the business sector's understanding of sustainable supply chains has moved a long way since the NetX dilemma of 2003."We get very little grief now," says Clark, who finds that while some companies want clarification of issues or consequences, they accept it as part of doing business with Westpac.The bank is transparent about its supply chain strategy, with a significant amount of information (including the sustainable supply chain management questionnaire) posted on its website.Clark says most suppliers are strong on workforce management because of the highly regulated Australian environment, but results vary in community involvement and the environment where there is less regulation.Large organisations show greater awareness than smaller companies of the strategic issues and risk management benefits.Westpac has about 10,000 suppliers, and its focus is on the top 100 suppliers by spend, on new suppliers, new tenders and high-risk suppliers such as those who rely on off-shore producers in their own supply chain.Prospective suppliers are asked to complete the sustainability assessment and, if necessary, sustainability action plans are developed to prioritise and resolve issues.For example, if a company didn't have a business continuity plan, Westpac would regard that as a major risk which required resolution.Over the past four years, Clark has seen sustainability become integral to many companies' operations.She regards the NetX experience as an excellent example of how suppliers can benefit from a free assessment of their business, from the knowledge they gain and the procedures and systems they improve. Costs can be reduced, revenue increased, and relationships with staff, clients and other stakeholders may be enhanced.One of Westpac's legal firms has "really embraced this", Clark says. "It sits with their own values and they enjoy being an organisation that's taking the lead on this."
© 2007 The Age