As further evidence that global companies must have truly global standards for supply chain and supply responsibility practices,Nestle recently announced it will adopt a global sourcing standard for the cocoa in a key global product: the crispy, mildly chocolaty KitKat bar.
This announcement has some significance, as the Consumerist blog reported, because the chocolate industry has faced allegations of using child labor. It also would make KitKat the first global chocolate brand to use only sustainably sourced cocoa.
According to Nestle, the timeline for making the global switch is aggressive – Q2 2106 – by which point the company will only use sustainably sourced cocoa from suppliers accredited by independent third parties to make its KitKat bars. Nestle says sustainably sourced cocoa is already used in certain markets, however, it will now extend the practice worldwide. This includes the US, which is where Hershey holds the license to produce KitKat candy bars.
The challenge of moving to global sustainably sourced cocoa is not simple, because of the fragmentation of the supply market. According to Nestle’s Cocoa Plan site, “Most cocoa farming is small scale. Around 95% of cocoa is grown in smallholdings of less than 4 hectares (10 acres) and is typically a family enterprise, much as it was 100 years ago. The whole process of growing, harvesting and drying the beans is usually not mechanised.”
In other words, accreditation not as simple as onboarding a few dozen larger suppliers and having them fill out a conflict minerals-like disclosure or attestation statement; rather, small suppliers must be found, counted, managed and developed.
There are, of course, broader lessons in this for procurement organizations of all sizes. These include:
- The need to think globally rather than locally from the start in terms of supplier management programs, including governance, risk and compliance (GRC), environmental, health and safety (EHS) and initiative-based standards. Scaling programs globally requires a different mindset and capabilities.
- The importance of working with third parties, including industry groups and consortia, both nonprofits or for-profits, to help localize, scale and report on supplier management programs. In other words, co-opt the watchdogs. Don’t just fear them.
- Finding the right technology to support small suppliers – not just large-scale corporate supplier management onboarding programs. Crowd sourcing information from local farmer smartphones is one, in this environment, to get local intelligence on practices.
(Cross-posted @ Spend Matters)