19/05/2010: Interview with Luca Guzzabocca, head of Logistics Costs and Supply Chain Management at GRUPPO MONTEPASCHI.
1) Why is Sustainable Procurement important for GRUPPO MONTEPASCHI?
Sustainable Procurement is one of the significant engagements GRUPPO MONTEPASCHI has in CSR policies. For GRUPPO MONTEPASCHI, Sustainable Procurement is important because we are aware of the impact we can have by changing the way we procure goods and services. As the third largest bank in Italy, we work with more than 24 000 suppliers, from whom we purchase a large amount of goods and services.
As the oldest bank in the world, we believe that making far-reaching efforts towards a more Sustainable Procurement process can bring real changes in the market. Sustainable Procurement is not about competition between companies: it is about differentiation. We hope that our action in order to embed sustainability in our supply chain will be followed by other companies, that others will join our vision.
2) What part of the program are you the most proud of?
Honestly, there isn’t something specific we are proud of. What we are proud of is Gruppo Montepaschi’ holistic and pragmatic approach towards Sustainable Procurement.
The approach GRUPPO MONTEPASCHI has built is based on a holistic view. To formalize our Sustainable Procurement program, we have dedicated a lot of time to increase our awareness on all the issues involved, and different areas of the company were implicated in the execution and the overall management of our Sustainable Procurement Program.
Further, the approach we choose for Sustainable Procurement is really pragmatic: our Sustainable Procurement program is not only geared towards buying environmental-friendly products, but the program also takes into account the cost savings and the benefits the company can gain from the Sustainable Procurement process. We look at the proper trade-off between sustainability and competiveness.
3) Is it feasible to assess and develop the CSR performance of suppliers?
Yes, of course it is feasible to assess and develop the CSR performance of suppliers.
For the assessment of suppliers, the decision to introduce EcoVadis was part of our holistic view on Sustainable Procurement. EcoVadis allow us to look after the CSR commitment and profile of our suppliers. In 2009, we launched our first CSR evaluation program with EcoVadis, which involved 50 suppliers. The outcome was very interesting for our suppliers because they got the chance to look at themselves in the mirror.
Once EcoVadis provided us the results of the assessments, we organized one-to-one meetings with our 50 suppliers’ portfolios to explain the results in detail to all the persons interested. All of our suppliers wish to do something regarding their CSR performance, but there are differences according to the size of companies. Big companies are familiar with CSR topics and issues, they have set up plenty of CSR initiatives, and they report on their performance. On the contrary, the CSR approaches of small and medium enterprises are more critical, so we have to make more effort whilst outlining our requirements to them.
For GRUPPO MONTEPASCHI, it is a priority to support our suppliers, and they are learning from our meetings. We really expect to make a significant step forward in CSR commitment with our suppliers.
4) What results have you achieved?
Regarding our organization, we have included three dedicated resources to manage all aspects related to Sustainable Supply Chain Management, and we also provided training and awareness to all Procurement and Logistics staff (418 hours overall).
We improved our procurement process by assessing the CSR performance of our suppliers using the EcoVadis rating solution (50 top suppliers assessed in 2009; plan to cover 650 by 2012), and by defining a new selection process for products and services, which combines sustainability requirements with economic, technical, quality and innovation criteria.
GRUPPO MONTEPASCHI has also developed contract standards to capture sustainable requirements with a fair and mutual responsibility approach towards suppliers.
In order to measure the performance of our program, we have implemented a KPI framework and a control process to monitor supplier performance regarding sustainability and identify opportunities for improvement.
Finally, as a direct consequence of introduction of CSR concepts, the group has been able to achieve savings of 12.800.000 €, thanks to new energy, printing and office products policies (98% of the Group’s electric power coming from renewable sources; optimization of print device; majority of orders for office products restricted to a green catalog etc).
5) What advice for a Purchasing Director who would start today?
I would give four principal pieces of advice to a Purchasing Director who would start today embedding sustainability in the supply chain.
The first piece of advice is to learn day-by-day how to manage Sustainable Procurement in an effective way. Benchmarking activity and knowledge sharing is the key for a good start.
My second piece of advice is about the time objective of a Sustainable Procurement program. It is essential not to have a short term objective, but a long term objective of 20 years isn’t required either. In my opinion, a step by step 3 year plan is appropriate to embed a Sustainable Procurement process.
Thirdly, a company should invest in a full-time person to be their “champion” in Sustainable Development. This person will have an important role to play regarding Sustainable Procurement, including inspiring the process, supporting buyers and pulling good practices together internally.
Finally, and this piece of advice is of the essence: if a company doesn’t have a CSR commitment, if CSR isn’t supported at top level, embedding a Sustainable Procurement policy will be very difficult. A clear and firm CSR commitment from a company is crucial in order to set up a Sustainable Procurement process.
Many thanks to Luca Guzzabocca for participating in this interview.
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