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Sustainable supply chains

What are supply chains?
This section can Hotels, airlines, cruise ship and tour operators all rely on
be pulled out and suppliers of goods and services in order to provide their own
guests, passengers and clients with the services they
kept separately and
require. The process involves millions of individuals and
will build up
businesses all acting as links in a ‘chain’ to provide their
into a practical
customers with what they need, the ultimate customer
and comprehensive
being the end-user (see chart one). Supply chains in the
reference guide
tourism industry (particularly for tour operators) are often
on how to manage more complex than in other sectors. These pages bring
environmental together recent industry work, most notably by Richard
impacts at your hotel. Tapper of Environment Business Development Group and
Xavier Font at Leeds Tourism Group on how to manage
tourism supply chains effectively.
Why are they important?
Products and services can have negative environmental
and/or social impacts depending on the business practices
of the companies producing and supplying them. At the
same time, purchasers of goods and services can have
considerable influence through their spending power, by
using the procurement process to make their supply chain
more sustainable. This process is known as sustainable
supply chain management (SSCM), supply chain
‘engagement’ or ‘greening’ your supply chain. It can
address socio-economic issues such as local poverty and
exclusion as well as environmental impacts and might
include for example:
sourcing more products and services locally to
encourage local business, provide ‘authenticity’ and cut
down on transport energy
sourcing products with less environmental impact in
their manufacture, use and disposal
buying products in bulk and reusing packaging
importing only ‘fair trade’ products
ensuring that suppliers adhere to safe and ethical
working practices.
Choosing on the basis of the lowest cost provider is not
necessarily in the best long-term interest of your enterprise.
The benefits to be gained from more sustainable supply
chain management include:
a destination with more local colour and more to do –
creating a market advantage for new and repeat business
the potential for lower operating costs through
more efficient use of energy and water resources and
reduced waste
risk reduction by avoiding suppliers with a doubtful track
record on environmental and social issues
better relationships with suppliers giving improved
loyalty and service
a better relationship with the community whose
economy you are supporting
increased security of supply of the goods or service
through long-term contracts and a better negotiating
position (i.e. increased purchasing power)
the ability to demonstrate to all your stakeholders the
importance you place on sustainability issues.
Your suppliers may be concerned that a SSCM programme
may impact negatively on their bottom line. However, this is
not necessarily the case. A report conducted in 2001 on
suppliers’ views on effective supply chain environmental
management strategies1, concluded that for the majority of
participants (14 companies) environmental initiatives driven
by customers had a positive effect on their bottom line. Nine
companies said the initiatives had not impacted their bottom
line and only two said they faced a negative impact.
Where to start
1. Engage your business
Supply chain management should be fundamental to the
company’s overall philosophy and policy regarding
sustainability and should underpin its responsible business
objectives. You will need to:
a) have a clear sense of what you want to achieve through
the programme and motivate everyone so they are
behind it
b) evaluate your suppliers against your policy on a
continuous basis
c) set priorities and act on the policy by integrating it into
your procurement activities.
Assemble a team of people from all relevant departments,
particularly staff responsible for purchasing and restocking.

chart 1: Components of tourism supply chains

WHO SHOULD *Tour operating includes advertising, purchasing,

READ THIS? package development, marketing and sales and
purchasing. *Ground operations include ground
✓ Hotel general transport and excursions.
managers Tour operators contract suppliers to provide
✓ Staff responsible some of these components directly;
others are obtained by suppliers and
for procurement and
their suppliers. All suppliers providing
contracts
component goods and services that go
✓ Quality/EHS and into delivery of a tourism product are
sustainable business part of the supply chain for that product.
personnel
✓ HR or departmental
© Richard Tapper, Environment Business
& Development Group, 2003
managers responsible Source: Tourism Supply Chains – Report of a Desk Research
for training Project for The Travel Foundation by Leeds Tourism Group at
Leeds Metropolitan University, UK

1
Suppliers’ Perspectives on Greening the Supply Chain, produced by Business for Social
Responsibility Education Fund, June 2001
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RESOURCES
Practical Guides to Good Practice:
Managing Environmental and Social
Issues in the Accommodations Sector
and
Managing Environmental Impacts
in the Marine Recreation Sector
and Self Assessment Check-list
web: www.toinitiative.org/
supply_chain/supply.htm
Boosting procurement from
local businesses
web: www.odi.org.uk/rpeg/research/
propoor_ tourism/publications/tools&
tips/procurement.pdf
Business Guide to a
Sustainable Supply Chain
web: www.nzbcsd.org.nz/
supplychain/content.asp?id=237
Greening Your Business:
A Primer for Smaller Companies
web: www.greenbiz.com/
greenbizchecklist.pdf
Green Travel Market
web: www.greentravelmarket.info
Making Tourism Count for the Local
Economy in Dominican Republic:
Ideas for Good Practice
web: www.propoortourism.org.uk/
DomRepguidelines.pdf
Supply Chain Engagement for Tour
Operators – Three Steps Toward
Sustainability
web: www.toinitiative.org/supply_
chain/SupplyChainEngagement.pdf
Suppliers’ Perspectives on Greening
the Supply Chain
web: www.getf.org/file/
toolmanager/O16F15429.pdf
The Business of Enterprise –
Meeting the Challenge of Economic
Development Through Business and
Community Partnerships
web: www.iblf.org/docs/
BusinessOfEnterprise.pdf
Tour Link Project Sustainable Supply
Chain Management Guide
web: www.leedstourismgroup.com
Tour Operators Performance Indicators
web: www.toinitiative.org/
reporting/documents/TourOperators
SupplementNovember2002.pdf
Tourism Supply Chains –
Report of a Desk Research Project
for The Travel Foundation
web: www.thetravelfoundation.
org.uk/documents/Tourism_Supply_
Chains.pdf
Working with Suppliers for Sustainable
Development – Tour operator
practices and recommendations
web: www.leedsmet.ac.uk/lsif/
the/WORKING_WITH_SUPPLIERS.pdf
2 theknow-howsection greenhotelier january 2006
You might invite key suppliers to participate in the policy
and planning stages.
Communicate your aims and objectives in order to achieve
‘buy in’ from all staff and management.
Appoint a member of staff who will act as the central
co-ordinator for the programme.
Determine whether external stakeholders should be
involved – for example local authorities for waste collection
and disposal.
2. Create a supply chain policy
Develop a policy statement that explains your vision
and can be understood by suppliers and staff. Prioritise it
into the issues that are most important for your company.
Discuss the policy with staff and invite their input for
how best to implement it throughout the business.
List all the goods and services that you buy in.
Identify opportunities to improve the sustainability of these
goods and services. If you are unsure about how to do this,
consult with suppliers and similar companies who may have
been through the same process.
3. Establish a management system
Develop strategic goals to aim for so you can integrate the
programme into your business.
Agree on the targets you wish to achieve, linking these to
your policy. These should be SMART2 (specific, measurable,
achievable, realistic and time-specific).
Select a sample of suppliers for assessment (based on
type/spend/scope for improvement/risk etc).
Prioritise the list into areas and timeframes so that the
exercise is split up into manageable sections.
Establish standards against which you can evaluate
suppliers. You should identify a minimum level of
acceptable performance and the level you wish suppliers
CASESTUDY
TOI Performance Indicators
In 2002 the Tour Operators' Initiative for Sustainable
Tourism Development (TOI), in co-operation with the
Global Reporting Initiative (GRI), launched a ‘sector
supplement’ to the GRI 2002 Sustainability Reporting
Guidelines to provide indicators for assessing tour
operators' performance. The supplement applies only to
businesses dedicated to organising holiday packages.
Forty-seven performance indicators measure success in
addressing the environmental, economic and social
impacts of their business operations. The indicators are
grouped into five categories that reflect the life cycle of
the holiday product – from the planning stage to the
development and delivery of the product – and include
16 indicators for supply chain management. These cover
policy, screening criteria, consultation, implementation,
support, progress monitoring, statistics on percentages of
suppliers subject to the policy and participating in the
programme, actions taken, contracting policy, incentives,
joint initiatives for improvement and benefits for the
contracting organisation.
moreinformation
Helena Rey tel: + 33 1 44 377 638 email: hrey@unep.fr
web: www.toinitiative.org/supply_chain/supply.htm
2
As defined in ‘Supply Chain Engagement for Tour Operators – Three Steps Towards Sustainability.’
3
See Tour LinkProject, Sustainable Supply Chain Management Guide. www.leedstourismgroup.com
CASESTUDY
Adopt a farmer
In Tobago The Travel Foundation has been working with
the Hilton Tobago and the Mt. St. George Farmers
Association to pilot their ‘Adopt a Farmer’s Group Project.’
Forging greater links between the agricultural and
tourism sectors will decrease dependency on imported
produce. So far, seven farmers have been involved in
supplying the hotel with over TT$80,000 (over
US$12,700) worth of local produce. Consistent demand
has enabled the farmers’ association to increase
production. The plan is to involve more farmers and
hotels in making this an island-wide initiative.
moreinformation
Tess Forgan tel: + 44 (0) 117 927 3049
email: admin@thetravelfoundation.org.uk
to attain. Bear in mind the different kinds of suppliers
involved and your local conditions.
Set up a database so that information can be accessed
internally and used easily by all team members. This
should be integrated with existing databases such as
environmental, health and safety (EHS) or purchasing.
4. Consult with and assess your suppliers
Explain the policy and what you are aiming to achieve to
your suppliers. Visit them and let them visit you. Use
face-to-face meetings, briefing sessions and workshops
rather than sending impersonal letters or emails. Your
commitment to the programme will be judged by the
effort you put into it.
Establish levels of awareness among suppliers of the
environmental and socio-economic issues relating to their
products and services, challenges, threats and
opportunities for success.
Be clear about the information you are gathering from
them and how you intend to use it.
Conduct a baseline assessment3 of your suppliers, taking
into account:
a) qualitative performance aspects (either in the form of
yes/no responses or on a sliding scale of values
(say -3 for poor and +3 for good)
b) quantitive data such as performance data for
energy/water consumption, waste etc.
Evaluate the information you have collected and establish
which of the suppliers are most significant in terms of
having above or below average performance in relation to
your standards.
If a supplier does not meet your criteria, ask whether they
can supply a suitable alternative product or modify their
service at a similar cost.
Find out how your suppliers select their suppliers so that
you can examine further along the supply chain and develop
a fully sustainable supply chain in the future.
See www.toinitiative.org/supply_chain/SupplyChainEngagement.pdf

Supplier Meets criteria?
Company name (Excellent/very good/ fair/ Action required
type poor/unsatisfactory)
Work with supplier to
Ecofriendly
Cleaning reduce quantities required.
Cleaning Good
chemicals Install automatic dosing
Chemical Corp
equipment
Investigate whether they
Cleaning Chemical
can supply alternative
Solutions Poor
floor cleaner or modify
formulation
chart 2: Example of a simple supplier action plan
5. Define your work programme
You will need to draw up a programme of work based on
the results of the supplier assessments (see chart 2).
This should include:
a) a timetable
b) a budget
c) an estimate of the influence on the company
d) details of who is responsible for what.
Prioritise the action plan to focus on groups of suppliers,
such as those that have the greatest impacts.
You might want to concentrate first on the things that are
easiest to change and/or are without cost.
6.
Monitor and report on progress
Define indicators for monitoring the performance of your
suppliers against the standards you have set.
Meet regularly with suppliers to assess progress and
anticipate problems.
Communicate results internally, recognising everyone’s
input to maintain awareness and commitment.
If you are reporting publicly through a sustainability
report or within your annual report, communicate the
results to suppliers first.
Create a system whereby you are able to assess and
verify suppliers’ stated sustainability performance. This
might be through special visits by members of the team
to audit progress.
7. Support suppliers in achieving
your goals
Maintain awareness by encouraging and communicating
feedback to and from suppliers.
Provide information so that suppliers can develop their own
internal communications.
Partner with external organisations such as local or
regional business associations and training institutes who
can reinforce your efforts through their own programmes.
Assess whether any suppliers require technical support or
advice on relevant legislation and set targets for
improvement.
Identify with them appropriate actions and solutions. This
might include running in-house workshops or identifying
external specialists who can provide further training.
In encouraging small local businesses, make sure you
understand the issues that stand in the way of their
success. For example, small, start-up enterprises may not
have working capital and may need paying in cash on
delivery. They may need help to promote their services or
showcase their products to customers.
Recognise and reward suppliers for their sustainability
improvements in order to maintain momentum and
support for your programme. This can include the provision
of incentives such as:
a) special events for suppliers where the better performers
are showcased to inspire the others
THE KNOW-HOWSECTION
By Person Date Follow up Target
Cost
when? responsible achieved required date
Further staff
3/4/06 John Doe 6/4/06 training in two 6/6/06 £250.00
months’ time
Cannot modify
formulation.
16/2/06 Pedro Pérez 16/02/06 Investigate 3/4/06 nil
alternative
suppliers
b) making the best performers your preferred choice when
contracting
c) giving additional promotion to suppliers that have made
significant improvement
d) longer-term contracts offering them greater security.
8. Incorporate the policy within your
suppliers’ contracts
The ultimate aim is to integrate sustainability criteria
into your purchasing and contracting procedures to
support your overall sustainability objectives.
Agree on the internal approach and procedures required
for drafting clauses in contracts, ensuring that all legal
considerations are properly covered. You may need to
train your staff on contracting procedures for
sustainability issues.
In rewriting contracts to address sustainability issues,
set minimum baseline requirements that all suppliers
must comply with (such as having their own policy for
socio-economic and environmental issues).
Set additional milestones that suppliers can aspire to
which are realistic and achievable. Link their
achievement into incentives (as outlined in section 7).
Incorporate supplier sustainability progress reviews into
your existing supplier review process.
Agree on the mechanisms to be used when suppliers fail
to meet requirements. Depending on the seriousness of
the issue, these may range from identifying additional
technical support to the suspension of their contract.
If you do have to suspend a supplier, revisit the
situation in a few months’ time to see whether they have
taken corrective action.
Allocate responsibilities for updating standards, support
materials and databases and co-ordinating training – both
CASESTUDY
Hilton International
Scandic introduced its Suppliers Declaration in early
2003, following many years of non-formal dialogue with
its suppliers. Since then the company has had extensive
discussions with its 30 largest suppliers in the Nordic
region on how to take sustainable production and sourcing
to the next stage. Results achieved so far include
ecolabelled beds, soap and TV sets (Type 1 Nordic Swan
ecolabel) and, in Sweden, organic coffee (where 70 million
cups have been served since 2001). The declaration is also
used at hotel level in securing local suppliers. During
2006 a global supply chain monitoring system will be
introduced within Hilton International taking the current
Hilton and Scandic systems to the next level.
moreinformation
Jan Peter Bergkvist tel: + 46 709 73 59 63
email: janpeter.bergkvist@hilton.com
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CASESTUDY
MOREINFORMATION for suppliers and staff. You will also need to identify
individuals responsible for co-ordinating the monitoring, Pro-Poor Tourism Partnership
ANVR: Dutch Tour auditing and verification processes and providing
Pro-Poor Tourism (PPT) is an approach to tourism
Operator Association progress reports.
development and management that enhances the linkages
email: eceat.nk@antenna.nl between tourism businesses and poor people, so that they
web: www.anvr.nl/anvr 9. Tips for success are able to participate more effectively in tourism product
Environment Business Communication is the key to success. Be regular, clear, development. All kinds of links with 'the poor' need to be
Development Group straightforward and transparent in your communications considered: staff, neighbouring communities, land-holders,
email: rtapper@dircon.co.uk both with suppliers and internally.
producers of food, fuel and other suppliers, operators of
Ensure that your policy is reflected in your purchasing
Global Reporting micro-tourism businesses, craft-makers, other users of
decisions or it will undermine the credibility of your
Initiative (GRI) tourism infrastructure (roads) and resources (water) etc.
programme with suppliers.
web: www.globalreporting.org Aim for an inclusive rather than exclusive approach – The Pro-Poor Tourism Partnership (PPTP) has
International Centre for i.e. do not ‘drop’ suppliers immediately if they do not meet successfully proved in The Gambia, South Africa and in
Responsible Tourism your standards, but look to help them comply with your the Caribbean that sustainable supply chain management
web: www.theinternational requirements and ultimately raise sustainability levels can play a vital role in alleviating poverty in tourism
centreforresponsibletourism.org throughout the supply chain. destinations, particularly through mechanisms such as
Do not be over-ambitious. Work with a few suppliers at a marketing and technical support for local businesses,
Leeds Tourism Group time for continuous and measurable improvement rather
changes in procurement strategy, or direct financial and
web: www.leedstourismgroup.com than overnight transformation.
training inputs. Agricultural linkages for example, have
Remember that you may be able to learn as much (if not
Supply Chain Forum enabled local suppliers to provide fresher produce
more) from your suppliers about sustainability as you are
web: www.sscf.info involving fewer ‘food-miles’ and distinctive food and
able to tell them.
Sustainable Travel International Understand that suppliers may have different priorities recipes, helping to stimulate culinary, agro-herbal and
web: www.sustainabletravel.com and/or capacities for improvement and may not be able farm-based tourism and provide more authentic and
to improve at the same rate. memorable experiences for visitors.
Tour Operators Initiative When you are piloting new suppliers, ensure that your
for Sustainable Tourism critical needs are not threatened. moreinformation
Development (TOI) If using certification schemes as a means of identifying
web: www.toinitiative.org Harold Goodwin email: goodwinhj@gmail.com
sustainable suppliers, check that their standards and criteria
web: www.pptpartnership.org/pptpar2005.pdf
are in line with the objectives of your policy.
Ensure that any sensitive or confidential material in your
supplier database remains confidential.
Where insufficient numbers of suppliers are able to meet
CASESTUDY
your minimum requirements, consider working with
competitors and local tourism associations to help raise Tour Link Project
overall standards within the destination and to create a The Tour Link Project established an EU-standard for a
greater pool of suppliers to draw upon. Sustainable Supply Chain Management System for tour
Monitor the response and enthusiasm of suppliers and operators, which includes various common tools such as
identify successes and difficulties so that each year you a management guide, a multi-lingual training website
can improve the process. and benchmarking and self-assessment tools. The
system is currently being implemented by 250 European
CASESTUDY tour operators. Tour Link also established common tour
operator suppliers’ (of, for example, accommodation)
European supply chain tool sustainability checklists and online assessment systems
to be linked with sustainable tourism certification
Following completion of a pilot process, the UK
systems such as the EU Flower for accommodation and
Federation of Tour Operators (FTO) will launch their
the VISIT ecolabels. The tools and the suppliers’
Supplier Sustainability Code in the first quarter of 2006.
We would like to thank assessment system will be piloted in Austria, Catalonia
This is a practical guide for suppliers to the package travel
the following for their and Costa Rica.
industry on how to minimise negative impacts on the
help with this guide: environment and maximise social and economic benefits The project, which began in 2004, is being funded by
Xavier Font, to local people and communities. EU-LIFE and is due for completion in 2007. Partners
Leeds Tourism Group include the Dutch tour operators’ association ANVR and
The code, which has taken two years to develop and
Naut Kusters, Tour Link involved broad international multi-stakeholder the UK Federation of Tour Operators (FTO), Leeds
Tom Selänniemi, consultation, has been adopted by the European Union- Metropolitan and Lund Universities, the Austrian and
Aurinkomatkat-Suntours funded Tour Link Project as an important tool within the Catalonian Ministries of the Environment, the Dutch
Richard Tapper, Environment recently-adapted European Supply Chain Management Alps Platform, the Royal Awards for Sustainability
Development Group System for tour operators. and ECEAT-Projects.
Every attempt has been made
to ensure accuracy, however moreinformation moreinformation
ITP cannot accept any Chris Thompson tel: + 44 (0) 1444 457900 Naut Kusters tel: + 31 20 465 1318
responsibility for actions email: chris.thompson@fto.co.uk email: wn.kusters@eceat-projects.org
based on this information.

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