Over the past several months, teams from SAP Labs and the Sustainability Executive Advisory Council (EAC) have worked to develop a framework and model based on the concept of sustainable business networks. Previewed last fall with the EAC, members inside the SAP community may find the working approach of interest as industries consider how to share and manage consistent supplier assessments, questionnaires, metrics, and reporting information.
Because of the interconnectivity of these value chain networks, manufacturers and their brands must demonstrate “flow down” of specific sustainability guidelines, standards, and regulations. These flow-down requirements — similar to ISO 9000 quality standards, regulatory requirements, or text found in contract performance language — can often lead industry participants in these integrated value chains to report in nonstandard forms (e.g., questionnaires and surveys) to multiple customers without additional coordination.
Some industries (e.g., the automotive industry) have addressed key regulatory issues on a per-issue basis. For example, the reporting against Restriction of Hazardous Substances (RoHS) was standardized, and a central database of substances – the International Material Data System –viewed as hazardous by the industry as a whole was established. Industry participants report into a centralized environment to achieve regulatory compliance accessible by all manufacturers who may require the use of the various components the participant developed. The manufacturer receives component substance information without divulging key intellectual property (IP), such as how the component is made and how the subcomponents structures are structured. Other industries, such as the computer equipment industry, have taken more tactical steps focused on a per-manufacturer basis.
In the social compliance area, standards such as SA 8000(R) for social accountability and the business improvement framework Social Fingerprint(R) provide similar reporting requirements for members of value chain networks. Even still, in many situations with a centralized reporting environment, suppliers, brands, and manufacturers often report in multiple nonstandardized approaches that can require manual data gathering and manipulation. This redundancy in reporting and management increases overall value chain costs throughout the entire business ecosystem, which then is ultimately passed on to the end consumer. Therefore, the impact to sustainability reporting isn’t just confined to the integrated value chain; instead, it represents an issue for the entire business network.
With the advent of new technologies, business networks allow the manual, paper-driven processes industries experienced in the early days of ISO 9000 quality compliance and year 2000 risk management to be enabled in an orderly managed environment using social business tools. SAP’s concept of a sustainable business network is a cloud-based environment that allows suppliers to share standardized information such as questionnaires and surveys with brand and manufacturer customers once (as opposed to fielding multiple, unique requests) while ensuring accuracy of reporting and ratings systems.