How VF Corp Manages Industry-Leading Transparency [Interview with Sean Cady, Vice President, Global Supply Chain and Responsible Sourcing at VF Corporation]
This Fall Sourcemap's Shayna Harris sat down with Sean Cady, Vice President, Global Supply Chain and Responsible Sourcing at VF Corporation, to talk about VF's supply chain transparency work.
What are the motivations behind VF's investment in supply chain mapping and transparency?
We are a purpose-led organisation. It is not about charity or philanthropy, instead we use purpose-led as a strategic filter for our decision making guides how we act and grow our business. Our goal is to drive profitable growth and address societal needs. Traceability gives us visibility to every aspect of our supply chain, and areas to be improved, while transparency is the vehicle for us to build trust with stakeholders and consumers. It's not easy to do, and Sourcemap has been a great partner to us. Our supply chain spans over 40 countries, and thousands of supplies. We are constantly driving and striving for traceability for raw materials and distribution.
We believe that supply chain mapping and traceability creates value in 4 ways:
It allows us to understand all tiers of our supply chain, and allows us to advance our values and compliance principles to improve lives
We know that our biggest environmental footprint comes from raw material extraction and conversion. Traceability allows us to know where this occurs and to reduce impacts
Understanding the flow of raw materials allows us to make better business decisions. For example, through our traceability due diligence, we identified some potential areas of risk associated with sourcing leather from Brazil. We invested in more due diligence and ultimately made the decision as an enterprise to stop sourcing leather from Brazil, due to what we learned. We would not have been able to make these decisions as a business had it not been for supply chain traceability.
A key component of value creation is storytelling about our products in an easy-to-use interface. Sourcemap is great and works very well for our storytelling.
How does supply chain mapping inform your sourcing strategy?
In addition to the example I gave you above, I think about our ability to provide assurance that we are not using cotton from Uzbekistan or Turkmenistan, aligned with our Turkmen Cotton Pledge. In 2018, CBP conducted an audit and asked us to assure them that the products they selected did not include Turkmenistan cotton. This was a month-long audit of our organization. It was our traceability work that provided CBP the assurance they needed that there was no Turkmenistan cotton in our product. We were the only company audited for proof of this and we satisfied their needs because we have a traceability system and Sourcemap in place.
Another example is with conflict minerals - traceability allowed us to make better decisions. As a publicly traded co we are required to produce a report to the SEC each year and traceability allows us to understand the metals used in buttons, rivets, and zippers. Tracing metal back to the smelter allows us to ensure we are only using smelters that are not contributing to bad behavior in the DRC and other central African nations.
When the US government promulgated the North Korean Labor Prohibition Act, traceability is what we used to support our compliance, given the extent of North Korean labor sent to China and used in smaller factories there.
How are you using Sourcemap? What does Sourcemap provide that is unique, or that can’t be done in house?
First of all, we use Sourcemap to map and share the journey of our products from origin to distribution. The story is done in a deliberate and engaging way for our users - internal and external alike. We talked about the value creating opportunity. Sourcemap allows us to improve areas of our supply chain, deep in our supply chain, that need improvement, to tell a story, to make better business decisions and build trust at all levels. With a complex global supply chain spanning across 40 countries, this type of visibility is incredibly challenging.
In 2018 we published Sourcemaps for 9 of our most iconic brands. We are now extending this to cover more brands and best-selling products. We have published 46 product maps. By the end of 2021, we will have mapped and published 100 products, from production to distribution.
We are working to create a knowledge base that we can share with our stakeholders and our partners. We are just at the cusp of understanding the value creation from using Sourcemap and mapping our products.
I think the benefits of traceability and services that Sourcemap provides that we cannot do in-house are endless. There are more areas for us to explore to enhance our business decision making, storytelling, environmental impact, compliance, and so much more.
What is the benefit of supply chain visualization?
We operate with many suppliers and multiple tiers of supply chain. The data can be complex and even intimidating for some stakeholders. The Sourcemap maps give us the channel and tool to bring our traceability efforts to life in a way that is easy to navigate, and represents real data in an approachable and digestible way for even our mainstream, conscious consumers.
The maps also provide a compelling story where we can bring our supply chains to life and highlight all the great work we do. Consumers of our branded products are looking for this type of information.
Sourcemap in the user platform really does allow the user to drill down: our traceability maps are the most frequented pages in the sustainability section of our website, followed closely by our factory disclosure list. We found that there is more click-thru to the source maps than the majority of stories we push out on our website. That is true internally, as well as externally. We are seeing an increased amount of interest in our pages that show our source maps. We do think there is interest indeed in Sourcemap mapping and traceability, and we have quantitative data to support this.
How is VF's supply chain transparency being received, both internally and externally?
The work that we are doing thorughout our sustainability and responsible sourcing efforts has been received incredibly well internally and externally.
For example:
- We were rated #1 by Barrons for most socially responsible companies this year
- We were also named among America’s Most JUST Companies by Forbes Magazine in 2020
One of the things we should highlight is that the mapping in and of itself is one piece of value creation. There is much more use with Sourcemap beyond their mapping tools which helps us to substantiate business decisions. For example, we had implemented full leather traceability in Brazil more than a year before we made the decision to stop sourcing in Brazil, but it wasn't published. It was used internally, equally through visualization and software to understand and provide assurance that our leather (to the slaughterhouse) was not violating our responsible sourcing standards of not sourcing leather from cattle grazing in the amazon biome.
The majority of the benefit is not what a general visitor to our website would see; the majority of the value is in making better business decisions, upholding our company values in our global supply chains, and reducing our environmental impact.
How is VF keeping tabs on its leather sourcing?
Our policy remains intact, until we can restore our confidence that Brazilian leather production meets our standards. We continuously monitor the situation in Brazil.
Should things change, and we can gain confidence that we can responsibly source leather in Brazil, we will go back to work with Brazilian ranchers and hide providers
Right now, our Brazilian leather ban is indefinite until we have the assurance that it is not being produced in the Amazonian biome.
This is a great example of how our business decisions support our environmental beliefs and policies - we do not support the destruction of the Amazon biome. We chose different suppliers that share our values.
What is next for responsible sourcing at VF?
There is a lot in the future, I can tell you that. We recently enhanced our traceability mapping program and are now disclosing supplier information for Tier 1 through Tier 4 of our supply chain, that’s the most visibility available in our industry.
Sustainability today is a core pillar of our business strategy. We believe it will be more and more important in the future. We are elevating and integrating it into our business strategy, Elevating our company purpose. Sustainability aligns all decisions that our 50,000 associates make. Traceability will help us to select more sustainable raw materials. We recognize that agriculture is our largest environmental impact. We are focusing on suppliers who are looking to reduce their environmental footprint.
Sustainability will help us attract talented professionals for a global workforce that care about the same things we do. All part of our business strategy as we move towards the future
Sustainability goals are threefold: (1) circular business model, (2) scale for good, enviro targets (3) becoming a movement maker. We believe traceability of our supply chain adds value to all three of these pillars. Less than a year ago, we announced science-based targets for carbon reduction. 50% scope 1 and 2 and 30% in scope 3 emissions. Scope 3 is related to the supply chain, we won't be able to meet these goals without understanding and influencing the origin of our raw materials. This will only happen if we have expanded traceability in our supply chain.