13.1 Improving Supply Chains and Supplier Performance
There are numerous ways by which to improve the supply chain. This section highlights some of the more common methods and their benefits.
The Same, But Better
Working with an existing supply chain has the major benefit of keeping out new and unknown suppliers or materials, with all the risks that these can entail. If the chain has developed successfully, a degree of understanding and trust already exists among the organizations that make up the chain. Therefore, working with existing supply chains to achieve more responsible sourcing is a desirable option when heavy investment has been made in establishing the chain or in the timber it supplies; the suppliers involved have unique skills, technology, or sources of raw material; or a change in suppliers may have an adverse impact on business.
If working with existing supply chains is to be a viable option, they need to be able to demonstrate a commitment to, and acceptance of, the purchasing organization’s policy and targets; a willingness to improve transparency in sourcing; a commitment from the forest sources involved to achieve certification within an agreed-upon period; a commitment from the intermediaries in the supply chain to achieve chain-of-custody certification within an agreed-to period; and the commitment of forest owners to seek participation in a stepwise approach program (such as the GFTN) to otherwise attain credible certification.
New Source, Same Suppliers
Manufacturers or processors supplying directly to the purchasing organization may have difficulty tracing the sources of their forest products, or it may become evident that these sources are illegal or include unmanaged high conservation values. Where the direct supplier demonstrates sufficient commitment and it is evident that the forest sources involved are unwilling to improve their practices, re-sourcing is the only option.
Re-sourcing while using existing suppliers offers the following benefits
- Maintenance of existing relationships and quality and investment
- Ability to carefully scrutinize new sources of forest products to ensure that operations are acceptable,
- Potential to source from a participant in a stepwise approach program (such as GFTN)
- Potential to source from certified forests.
All-New Supply Chains
Radically altering supply chains to improve the responsible sourcing of forest products can be the quickest way to ensure such improvements, but it is also the riskiest.
The following are potential risks:
- The quality and capacity of the new supply chain may not match expectations.
- The efficiencies arising from long-term relationships will be lost.
- The change may result in the use of different species of timber or other types of forest product, and this change may meet resistance in the marketplace.
- Costs may be higher.
The potential benefits include:
- Higher quality
- Greater efficiency in the supply chain, achievable through streamlining
- The potential to develop new markets through the use of new species and types of timber
- Realization of lower costs through competitive tendering
- An opportunity to negotiate the required degree of transparency and traceability at the outset
- And the possibility of sourcing from higher-category or certified forests
Other Ways of Improving
The ability to challenge, innovate and ultimately change can be extremely useful when pursuing the goal of responsible purchasing. Not every purchasing organization can change its sourcing or its products easily or quickly, but some purchasing organizations have this ability and can benefit from such changes.
The exploitation of alternative species of timber provides opportunities to source more responsibly, although if the purchasing organization lacks experience or familiarity with the timber some risks may be involved. As with all timber species, secondary (or nontraditional) species have inherent characteristics that can make them excellent substitutes for primary (traditional) species for some uses but unsuited for others. In fact, up to 70 per cent of output in some major producing countries consists of nontraditional species, and these species command considerably lower prices than the primary species. This potential provides a financial incentive to organizations able to develop markets for such timber species.
Initiating funding or research into the process of certification and the requirements of supply chains is an option for responsible purchasers. Not all purchasing organizations have the resources necessary for such work, but some major corporations have provided funding in the past. This type of initiative has direct benefits, not just to the donor organization but to all aspiring purchasers in a position to gain by using the findings of the research.
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