P&G Scorecard Puts Supply Chain on Notice

OAKLAND, CA —  The number of companies that responded to Procter & Gamble's first supplier environmental scorecard exceeded P&G's expectations, and after a few tweaks the scorecard will be sent out to even more suppliers and start affecting how P&G rates them.

"Simply put, the scorecard matters," said P&G Chief Purchasing Officer Rick Hughes during a webcast today.

The scorecard, released about a year ago, asks suppliers about their resource use and emissions, and also seeks ideas related to sustainability. The initial scorecard was send to 383 of P&G's biggest suppliers and intended to make sure the company could get clear data and feedback.

With about 310 companies responding, and many reporting on energy use, direct and indirect emissions, and waste, P&G will send out an updated version to around 600 suppliers and for the first time use the scores to calculate suppliers' ratings, which are also influenced by costs, quality and other factors.

P&G, whose brands include Duracell, Tide, Pampers and Old Spice, had included suppliers on the board that developed the scorecard. The process is intended to increase collaboration in the supply chain, improve environmental performance and share ideas. "We made every effort to ensure the scorecard was not developed only with input from Procter & Gamble," Hughes said.

Packaging maker Amcor was one of those suppliers in from the start. "Amcor works with many companies and P&G is one of the first to come to use and say, 'Work with us, share your thoughts, where can we improve?'" said Gerald Rebitzer, Amcor's sustainability leader. "The scorecard allows us to align our internal system of measuring and managing sustainability with the system of P&G."

Another benefit, he said, is that it makes it easy for Amcor to communicate the benefits of their work and products directly to P&G.

Suppliers get scored based on their year-by-year results, and P&G will publicly reward "exceptional performance," Hughes said. Rewards will also go to those that bring in innovative ideas. When suppliers score poorly, P&G will develop improvement plans to get them on track.

In the updated version of the scorecard, suppliers will be able to automatically see if they've improved while filling out the card and also get an interim rating once they finish it. Larry Loftus, P&G's director of global purchases capability and strategy, said that many suppliers reported they wanted faster, clearer feedback.

"We believe these changes will build transparency into the ratings, foster more productive feedback discussions and encourage even more of our suppliers and agencies to join the scorecard process," he said.

Out of the suppliers that filled out the scorecard, 94 percent reported on their energy use, and the metric that the fewest (63 percent) reported on was Scope 2 greenhouse gas emissions. Almost 40 percent also submitted sustainability-related ideas and input.

Pushing sustainability into suppliers and sharing information with them will also help P&G meets its own environmental goals, such as its plan to eventually use 100 percent renewable or recycled material in all products and packaging, something possible only with materials and packaging providers on board.