Supply chain sustainability and responsible sourcing has become paramount to globally operating brands in an age of likes, shares and retweets. For many years, cost has been king, but the trends are shifting. Social and environmental focus in a procurement operation has become a priority, rather than a sideshow.
According to a report from Supply Chain Dive, Cargill is taking drastic measures to ensure their supply chain sustainability is keeping with the times.
One of Cargill’s suppliers in Guatemala – supplying palm oil – has failed to meet the standards of the company’s sustainability goals. For this reason, Cargill has been forced to cut ties with the supplier.
In 2014, Cargill set goals to “achieve a 100% transparent and sustainable palm oil supply chain by 2020” (Cargill 2018).
With this departure from the palm oil supplier, a set of new challenges will be put on Cargill’s procurement team. “Cutting ties with a supplier is not an easy move, as it can leave a gaping hole in the supply chain and invite immediate additional costs to the business” (Kapadia 2018).
However, holding on to defective supplier relationships and collaborations for too long can create irreparable problems for brand and top-line value.
Consumer concern for the sourcing of products and materials, with responsible business practices in mind, is at an all-time high. Hesitance on the part of Cargill could have created a tailspin of bad PR. For this reason, they’ve made a decisive call- in parting ways with the supplier.
Stories of this sort will continue to trickle out as consumerism becomes more aware of the brands they purchase products from. In response, businesses globally must look to implement strategies and technology to aid responsible sourcing, and transparency into supplier relationships.