Environmental, social and corporate governance (ESG) considerations are increasingly factoring into retailers’ supplier choices in order to satisfy their own responsible sourcing commitments and consumers’ sustainability demands. According to a 2021 survey conducted by Oracle Retail, 57 percent of consumers place importance on brands holding the same values as their own.
“Retailers are facing increased accountability from stakeholders and consumers to ensure the sustainable sourcing and ethical creation of their products,” Carla Anderson, senior cloud architect at Oracle Retail, told Sourcing Journal.
A new cloud application from Oracle Retail is designed to support merchants in this effort with tools for assessing and monitoring existing and prospective vendors’ compliance in social and environmental sustainability. The Oracle Retail Supplier Evaluation Cloud Service centralizes supplier data on ESG so that retailers can not only make sustainable sourcing decisions, but also more easily evaluate and reduce their own impact and risk.
“In the past, brands have struggled with limited visibility into suppliers’ production practices, hindering their ability to ensure their suppliers align with their brand values and protect their brand image while mitigating risk across their supply chain,” Anderson said. “This new service enables enhanced visibility into the procurement process and a centralized location to evaluate the governance of suppliers, making regulation easier and more accessible.”
Procurement activities have a substantial impact on a company’s sustainability profile. Per McKinsey & Company, on average, suppliers account for two-thirds of a company’s total ESG footprint. Additionally, the top-performing organizations in ESG see faster growth as well as cost reductions of 5 to 10 percent tied to efficiency improvements and lower waste.
With Oracle Retail’s Supplier Evaluation application, which will be available from July 14, companies can ask their suppliers to register and share their information. Vendors can also upload certifications and other documentation proving their compliance with certain standards and criteria.
“Historically, this was not data that was easily accessible—nor verified—for a retailer or buyer during their buying process. There may have been certain suppliers who provided their ESG credentials, but it was the exception or only for certain categories of goods,” Anderson said. “By adding sustainability into the sourcing process, retailers are able to make informed decisions at the beginning of the procurement process.”
When retailers want to evaluate a new supplier or reassess an existing one, the application includes the capability to build and issue assessments. The results are then used to create a general performance score. Merchants can also use the application to set up and conduct audits at facilities. The platform allows retailers and vendors to coordinate and keep tabs on corrective actions, including building workflows.
Supplier Evaluation also allows for centralization of guidelines including standards, policies and training materials, making them accessible both for the retailer’s internal staff and supplier collaborators. The platform can be used to notify parties of upcoming changes to policies and standards, and retailers can disseminate tests to determine the understanding of these new guidelines.
Within the application, retailers may establish processes to ensure that the right steps and assessments are taken—for instance, during supplier onboarding or re-evaluation.
All of the information gathered in the application is pulled into a dashboard that shows the performance of each supplier, facility and supply chain. In addition to monitoring individual assessments and certifications, the platform enables merchants to see combined scores for each supplier, product category, standard or policy.
“As the suppliers update their information, complete their audits, etc., their score will be updated automatically, which is available when viewing items, orders or the suppliers,” Anderson said. “Supplier Evaluation provides a level of consistency and accuracy in reporting that is not available with spreadsheets or other solutions.”