BSR Conference 2012: Fast Forward / October 23-26 / New York

Reaching Into the Root of Supply Chains: Perspectives From an End User

Leadership in Action Session / August 25, 2013

Speakers

  • Barry Parkin, Global Commercial Vice President, Mars Chocolate, Mars, Inc.
  • Kai Roberston, Director, Food, Beverage & Agriculture Practice, Advisory Services, BSR (Moderator)

Highlights

  • Mars, Inc. looks for sustainable sourcing solutions with a “mutuality” of benefits for the company, farmers, and other stakeholders.
  • While Mars monitors sustainability issues in all relevant supply chains, the company focuses on cocoa because it is its most salient product and the one in which the company can have the greatest impact.
  • Pre-competitive partnerships and collaboration have the potential to scale up small sustainability efforts to improve the cocoa supply chain and mitigate projected shortages of cocoa in the coming decade—all while building a more sustainable and economically inclusive supply chain.

Memorable Quotes

“If you just see [sustainability] as a cost, then you’ve missed the boat. We got real traction around sustainability when we really understood the mutuality—that this is a business issue and we can find a win-win-win … When you find [that mutuality], go after it hard.” —Barry Parkin, Mars, Inc.

“One of the famous quotes from the founder of the business was that ‘you can only sell it well if you buy it well.’ That’s a fundamental belief of our business.” —Barry Parkin, Mars, Inc.

“We need to make procurement sexy.” —Kai Robertson, BSR

Overview

Robertson opened the session by introducing Parkin, who provided background on Mars and his work there. Parkin explained that Mars is a family-owned business most known for its chocolate products, such as M&Ms;, Snickers, and Twix, but with additional business lines in food, pet food, and gum. “We’re a diversified business,” he noted, “but at heart we’re an agricultural business.”

Parkin went on to discuss Mars’ focus on “mutuality” in the value and supply chains. “We can only be successful as a company if those around us are successful,” he noted, especially in the cocoa supply chain. The company purchases cocoa from intermediaries, who in turn purchase it from myriad smallholder farmers globally, many of whom struggle to adopt professional agricultural techniques. Parkin explained that, “If the farmer is struggling, ultimately we’re going to struggle, and that turns it into a real business issue,” adding that the company projects a shortage of a million tons of cocoa in the next 10 years. Consequently, Mars is focused on increasing cocoa farmer productivity with an aim to triple yield and create benefits for the industry as well as stakeholders.

In response to Robertson’s question on the role of partnerships, Parkin recalled the industry’s history of multiple small partnerships with farmers. He argued that there needs to be more emphasis on aligning this structure and increasing its scale.

Oren Jaffe, client development manager at UL Responsible Sourcing, asked how Mars manages human trafficking risks in the supply chain. Noting that the company cares deeply about responsible labor practices, Parkin commented that he sees child labor as an issue rooted in poverty. Mars, he believes, can make the biggest impact by helping farmers become more successful so they can reinvest profits to employ others, instead of resorting to child labor. In addition to economic development, Mars also supports social programs.

Responding to a question from Andrea Useem, content director and associate editor at Devex Impact, Parkin explained how he approaches internal conversations about partnering with competitors on sustainability efforts. The challenge, he said, is to get people to see what is competitive and what is not. Collaboration in pre-competitive areas can garner internal support and have a positive impact.

Todd Yaney, manager, supply chain sustainability at Chrysler Group LLC, asked about Mars’ approach to managing the supply chain in the “mystery gap” between tier one suppliers and raw material suppliers. Parkin explained the importance of understanding each supply chain, mapping the impacts, and looking at the areas with the largest impact and where the company can have influence.

As Parkin touched on certification for responsibly sourced cocoa, Robertson asked how Mars fosters economic prosperity along with certification. Parkin underlined that certification should not just be auditing, but should include a full package of training and capacity-building. He added that a near-term shortage of certified cocoa would indeed be a positive sign of increasing demand: “It would be a great problem to have,” he noted, because it would drive more training and capacity-building.

Robertson’s next question centered on Mars’ memorandum of understanding with the government of Côte d’Ivoire. Having the blessing of the government, Parkin explained, is crucial to rolling out sustainability programs in a country, embedding long-term capabilities, and creating a platform for scale.

Robertson steered the conversation to discuss how Mars addresses commodities in which it is not as significant a player, such as the market for peanuts. Parkin commented that all sourcing efforts must have a sustainability element. Continuing on the subject in reply to a question from Carlos Viesca-Lobaton, director of consulting at DESUS, Parkin explained that Mars has a large team that works to make sure no sourcing issues fall through the cracks, but that the company focuses on areas where it has the largest role and potential impact.

Parkin went on to explain that the company has no standard metrics to evaluate “mutuality.” Instead, the company picks metrics that reflect the value it wants to create, whether that’s more financial benefit for the company and community, more kids in schools, or more health provision in the community.

Daniela Prusky-Sion, corporate responsibility manager for Strauss Group, asked how Mars communicates its sustainable sourcing efforts to consumers. While the company denotes relevant certifications on packages and sees surveys of consumer interest in such efforts, there is little evidence that they drive purchasing behavior. Nevertheless, consumer communications do benefit the corporate image and can sometimes provide a first-mover advantage.

In response to a final question about how the company addresses risk in non-agricultural products (e.g., toys with Mars brands on them), Parkin effectively summarized the session: “The trick is you look at everything, and then apply good judgments, and then go deep.”



Thank You, Sponsors

Executive Sponsors

Cisco Hitachi PwC Target UL Responsible Sourcing

Associate Sponsors

Anheuser-Busch InBev

Supporting Sponsors

Adobe AT&T ExxonMobil Green Mountain Coffee Roasters, Inc.

Participating Sponsors

American Express Baker & McKenzie LLP Best Buy BNY Mellon Ford Hyatt Hotels Corporation The Walt Disney Company UPS Vale

Contributing Sponsors

Chevron icix Levi Strauss & Co.

Convening Media

Bloomberg Business Week Weber Shandwick

Marketing and Media

3BL Media BEF Caixin Media Corporate Knights Globescan GreenBiz Group Inc. Hemlock Responsible-Investor Sina Stanford Social Innovation Review (SSIR) Tomorrow Partners