increasing importance of traceability for the luxury goods ... · QUICK GLOBAL OVERVIEW Source:...
Transcript of increasing importance of traceability for the luxury goods ... · QUICK GLOBAL OVERVIEW Source:...
BIOTRADE CONGRESS INTEGRATING REDD+BIOTRADE STRATEGIES
December 12th
Session 4: Value chain enhancement
Filippo Nishino - Supply Chain Operations Project Manager & Rossella Ravagli - Head of Corporate Sustainability & Responsibility Gucci
AGENDA 12
• CSR Gucci Strategy
• Analysis of the context
• Partnership Conservation Python
GUCCI’S STRATEGIC PILLARS
“Made with Integrity” as a brand value
GUCCI’S STRATEGIC PILLARS
Environmental Management System Sustainable Products
HUMANITY ENVIRONMENT
Stakeholders Engagement
Training / Education
Reporting
NGOs, Universities, Trade Unions, Government
Employees, Suppliers, Consumers
Sustainability Reporting, EP&L
ENVIRONMENT
Human & Workers’ Rights Community & Donations Soustainable Products
HUMANITY
CSR
& SUSTAINABILITY
GUCCI’S DRIVERS
GUCCI’S MISSION
GUCCI’S VALUES
Sustainable Products
Human Resources Supply Chain
Management
Environment &
Biodiversity
Community &
Donations
Reporting Training Stakeholders’
Engagement
Human Rights
Gucci CSR Pillars
GUCCI CSR & SUSTAINABILITY LIFE CYCLE POSITIONING
CSR & SUSTAINABILITY PHASES
INFORMAL
CURRENT
SYSTEMATIC
INNOVATIVE
Ethic Code
Social Reporting
Philanthropy
Certifications
Monitor social and
environmental impacts
Stakeholders
engagement
New welfare initiatives
Research of innovative
and competitive solutions
Identify and anticipate
new environmental and
social needs
CSR as a real and
effective strategy to
conduct the business
Occasional Activities
Integration of CSR activities
with corporate strategy
Environmental Profit & Loss (EP&L) Carbon Emissions
Leather - No New land conv. Responsible Skins and Furs Sourcing Minerals & Diamonds Sustainable Sourcing Waste Generated PVC Elimination Toxic & Harmful Substances Elimination Sustainable Paper and Packaging
Environmental Profit & Loss
Evaluating employment conditions
GHGs
Water
Raw materials
Toxics and waste
New business models
Sustainable products
Empowering people and communities
KERING PUBLIC TARGETS - 2016/2020
Some Gucci’s supply chain projects
ENVIRONMENTAL PROFIT AND LOSS … A BROADER SCOPE
Retail
CO2
Water use
Waste
Water quality
Air pollution
Toxics
Land Use
Current
environmental
reporting
Deeper in the supply
chain
Expand
reporting
elements
Raw
Materials
Processing Operations Consumer
use
and
end-of-life
Manufacturing
In scope for E P&L + translate these impacts into cost
(EURO)
In scope for E P&L
Operations Management
Model
In sourcing
Mixed (in sourced & outsourced)
Outsourcing
UE Country Sourcing Strategy Global Sourcing Strategy
(-)
Sup
ply
Ch
ain
& In
no
vati
on
Pro
cess
Co
ntro
l (+)
(+) Quality & Value Perception (-)
SC Footprint Control
Margin Impact
VERY HIGH
VERY LOW
HIGH MEDIUM MEDIUM
LOW LOW
HIGH VERY HIGH
LOW
MEDIUM HIGH HIGH
MEDIUM MEDIUM
Margin Impact
Supply Chain Flexibility
MEDIUM
HIGH
LOW
SUPPLY CHAIN’S ROLE IN FOOTPRINT CONTROL & PERFORMANCE MANAGEMENT
Supply Chain Flexibility
Investments & Leverage
SC Footprint Control
Operations Management
Model
In sourcing
Mixed (in sourced & outsourced)
Outsourcing
UE Country Sourcing Strategy Global Sourcing Strategy
(-)
Sup
ply
Ch
ain
& In
no
vati
on
Pro
cess
Co
ntro
l (+)
(+) Quality & Value Perception (-)
Margin Impact
VERY HIGH
VERY LOW
HIGH MEDIUM MEDIUM
LOW LOW
HIGH VERY HIGH
LOW
MEDIUM HIGH HIGH
MEDIUM MEDIUM
Margin Impact
Supply Chain Flexibility
MEDIUM
HIGH
LOW
Supply Chain Flexibility
Low SC & Operations control / High quality
perception if communicated
Operating Margin improvement
Medium Innovation capabilities + SC Footprint Control + Margin improvement vs medium
leverage and SC Flexibility
High Innovation capabilities + SC Footprint Control + Margin improvement vs higher leverage and lower
SC Flexibility
SUPPLY CHAIN’S ROLE IN FOOTPRINT CONTROL & PERFORMANCE MANAGEMENT
SC Footprint Control
Investments & Leverage
SC Footprint Control
Operations Management
Model
In sourcing
Mixed (in sourced & outsourced)
Outsourcing
UE Country Sourcing Strategy Global Sourcing Strategy (-
) Su
pp
ly C
hai
n &
Inn
ova
tio
n P
roce
ss C
ont
rol (
+)
(+) Quality & Value Perception (-)
Margin Impact
VERY LOW
HIGH MEDIUM MEDIUM
LOW LOW
HIGH VERY HIGH
LOW
MEDIUM HIGH HIGH
MEDIUM MEDIUM
Margin Impact
Supply Chain Flexibility
MEDIUM
HIGH
LOW
Supply Chain Flexibility
SUPPLY CHAIN’S ROLE IN FOOTPRINT CONTROL & PERFORMANCE MANAGEMENT
GUCCI:
MADE IN ITALY WITH DEEP SC INTEGRATION TO DRIVE SUSTAINABLE GROTWH
SC Footprint Control
Investments & Leverage
SC Footprint Control
Analysis of the contest THE TRADE IN SOUTH-EAST
ASIAN PYTHON SKINS
ILLEGAL TRADE
-There is strong financial incentive for illegal trade in python skins. -Hunters are typically poor and hunt pythons as an additional source of income.
CAPTIVE BREEDING
The cost of breeding, feeding and maintaining skins to reach slaughter size appears much higher than the market price.
TRACEABILITY
There are currently discussions at international level, i.e. CITES, about the need for a traceability system.
SUSTAINABILITY
A number of attributes make these species resilient to high levels of harvest (for example, large numbers of pythons are slaughtered before they reach sexual maturity).
ANIMAL WELFARE
Three common methods of python slaughter are in use: -Decapitation (Malaysia); -Brain destruction (Indonesia); -Suffocation (Viet Nam).
Source: The Trade In Southeast Asia Python Skins – International Trade Centre
THE “PYTHON CONSERVATION PARTNERSHIP”
A COLLABORATION LAUNCHED AT THE END OF NOVEMBER 2013 BETWEEN:
WITH THE AIM OF
KERING AND GUCCI THE INTERNATIONAL TRADE CENTRE (ITC)
INTERNATIONAL UNION FOR CONSERVATION OF NATURE
(IUCN SSC Boa & Python Specialist Group)
contributing to the improved sustainability of the python trade and helping facilitate
industry-wide change
THE PROGRAMME OF RESEARCH OVER THE NEXT THREE YEARS WILL FOCUS ON FIVE KEY AREAS: 1) Monitoring wild capture to improve sustainable
sourcing 2) Differentiating between captive-bred and wild
animals through innovative technology 3) Developing and promoting the highest standards
of animal health and welfare 4) Exploring ways to improve captive breeding 5) Better understanding the impacts of the python
trade on local livelihoods
The data and findings will contribute to the Convention on International Trade in Endangered Species of Wild
Fauna and Flora (CITES) process, which supports a framework for countries to manage their trade in
endangered species such that it contributes to local livelihoods and does not threaten the survival of species
in the wild
THE “PYTHON CONSERVATION PARTNERSHIP”
WHY WE CAN MAKE A DIFFERENCE
SCIENTIFIC DATA
the PCP will be the first time that scientists, trade
experts and the private sector collaborate to
collect the information needed upon which we
can base recommendations for improving the trade
ANIMAL WELFARE AND TRACEABILITY
It would be possible
monitoring the sustainability of wild animals caught and
verifying the source of the pythons and the
treatment of the animals
LOCAL COMMUNITIES
This will help hundreds of people of people in
rural communities that are able to earn a living
from their natural resources. This is
significant especially for countries like Indonesia where there may be few
opportunities for alternative employment
INDUSTRY CHANGE
The partnership will facilitate change
through supporting the CITES process; working
with and supporting Range State government
authorities
THE “PYTHON CONSERVATION PARTNERSHIP”
CAPTIVE BREEDING VS. WILD HARVEST
CAPTIVE BREEDING
can contribute to the sustainability of the trade,
and should be linked to supportive actions towards enhancing wild harvested pythons and livelihoods. .
The key is to offer a diversity of sources of precious skins, while ensuring biological sustainability of the
species in the wild. The final aim is to preserve the
resource and its natural habitats
CAPTIVE BREEDING operations should be complementary to wild
harvest
WILD HARVEST
contrary to many people’s beliefs, maintaining a
sustainable wild harvest is actually very important –
the key is to create a balance between captive-
bred and wild-caught pythons so the benefits can be spread among
stakeholders, while still maximizing python
conservation
In both cases it is very important to ensure that the animals are
treated humanely
ENFORCE GUCCI’S COMMITMENT TRACEABILITY INNOVATIVE MATERIALS INCREASE VISIBILITY OF SUSTAINABILITY INITIATIVES
PROACTIVE APPROACH TOWARDS OUR CLIENTS
NEXT CHALLENGES
THANK YOU !
BIOTRADE CONGRESS INTEGRATING REDD+BIOTRADE STRATEGIES
December 13th
Session 5 -b: Importance of traceability Systems
Filippo Nishino - Supply Chain Operations Project Manager & Rossella Ravagli - Head of Corporate Sustainability & Responsibility Gucci
AGENDA 13
• Overview & Strategy
• Impact on our Business Model (SC&O)
• Case Study on Tracebility
GUCCI’S STRATEGIC PILLARS
“Made with Integrity” as a brand value
GUCCI’S STRATEGIC PILLARS
Environmental Management System Sustainable Products
HUMANITY ENVIRONMENT
Stakeholders Engagement
Training / Education
Reporting
NGOs, Universities, Trade Unions, Government
Employees, Suppliers, Consumers
Sustainability Reporting, EP&L
ENVIRONMENT
Human & Workers’ Rights Community & Donations Soustainable Products
HUMANITY
CSR
& SUSTAINABILITY
GUCCI’S DRIVERS
GUCCI’S MISSION
GUCCI’S VALUES
CUSTOMERS’ PERCEPTION ON RESPONSABILITY
Customers are interested to learn more about the initiative of the companies in CSR
Trace-ability
Luxurious Sustainabi
lity A product
driven approach
Whole purchasing process
Differentiated
customer focus
Engagement
Relationship building
Sharing, behavioral change
Traceability can promote increased
consumption awareness of sustainability in
general
Survey insight:90% percent of
consumers find increased material origin information
will add value.
More than 75% on all other types of
extra product information
Traceability has the potential to be effective pre, during and post
purchase
Traceability focus can be differentiated from engaged
to disengaged customers
Activation and engagement of
luxury customers
Transparency in the whole process and a 360°view of the production is highly appreciated
Environmental risks are
a growing concern
amongst global experts
and customers
1,000
500
250
100
50
Fiscal
crisis
Extreme consumer
price volatility
Slowing Chinese
economy Corruption
Terrorism
Unlikely Likely Very likely
Regulatory
failures
Asset price
collapse
Geopolitical
conflict
Extreme energy
price volatility
Exp
ecte
d im
pact (B
illio
n U
SD
)
Likelihood over next 10 years
Environmental risks
2009 2011
Climate change
Flooding
Storms and cyclones
Air pollution
Water security
Biodiversity loss
Economic and geopolitical
risks 2011
Source: World Economic Forum Global Risks Report (2009 – 2011)
QUICK GLOBAL OVERVIEW
Source: Global Demographic Trends - Finance & Development, September 2006; How To Feed the World 2050 (FAO)
Very high Male/Female ratio (which suggest female infanticide /neglect of female newborns or selective aborting)
People in less developed countries aged +60 are expected to exceed 12- to 24-year-olds by 2045 (same phenomenon occurred in developed countries in the late 1990s)
9.1 billion pepole in 2050 In 2050 about 70% of world’s population will be urban compared to 49% today
In order to feed the world’s population – which will become larger, more urban and richer - FAO estimates that food production has to increase 70% circa for 2050 (annual cereal production will need to rise c.a. 3 billion tonnes from 2.1 billion today and annual meat production will need to rise by over 200 million tonnes to reach 470 million tonnes).
80% of the necessary food production increases would come from improvements in yields and cropping intensity and 20% from expansion of arable land. Distribution of arable land is concentrated mainly in LATAM and Africa. Water sources are also unevenly distributed Climate change and mainly increased biofuel
production represent major risks for long-term food
security
SC&O VALUE CREATION PRINCIPLES
WEIGHTS ON CRITICAL KEY SUCCESS FACTORS CHANGES DYNAMICALLY AND HAVE TO BE ASSESSED CONTINUOUSLY IN THE SC&O BUSINESS MODEL AND STRATEGIC PROJECT PIPELINE
SC&O → MARKET DRIVEN APPROACH Consumer’s perception and though CRM plays a fundamental role. The ability that SC is able to respond and react to different consumer’s demand, within given constraints (i.e. design, performance of products, costs etc) is a highly valuable asset
SC&O → SC FOOTPRINT CONTROL
Push
Pull
Back - end
Front - line
FROM: *Nice to Have *Additional Cost *“Made In…”
High
Low
SC&O → VALUE CREATION ROLE
FROM: *Pure Operating Activity *Cost efficiency
TO: *Must Have (anticipated through Kering) *Investment / Competitive Advantage *“Made with…”
TO: *Also marketing&communication role *Also ”Quality of Costs”
SUSTAINABILITY AFFECTS BRAND IMAGE
Water
Water
Will consumers
associate the things they
buy with the images they
see?
Either negatively…
Migrant Labor?
Biodiversity
Endangered species and deforestation?
Economic Well-Being
Gucci’s supply chain projects DEFORESTATION FREE LEATHER
a beautifully crafted range of handbags made
from Amazon leather which sets new standards in traceability and ecological certification
Some Gucci’s supply chain projects
BOVINE LEATHER TRACEABILITY PROJECT
Study the leather supply chain of Gucci and develop a traceability strategy to establish the country of origin of the leather used in each product, allowing Gucci to communicate these findings with confidence both internally and to external stakeholders” To map out the various levels of transparency achievable with cost/integrity implications highlighted with each option To examine various marking systems and their potential impact on cost/hides To examine how the introduction of a traceability system will affect the working patterns of the various parties in the chain.
Some Gucci’s supply chain projects
ENVIRONMENTAL PROFIT AND LOSS
An Environmental P&L account is a
means of placing a monetary value on the
environmental impacts along the entire
supply chain of a given business
First EP&L to be published by 2016 on 2015 data
Some Gucci’s supply chain projects
ENVIRONMENTAL PROFIT AND LOSS … A BROADER SCOPE
Retail
CO2
Water use
Waste
Water quality
Air pollution
Toxics
Land Use
Current
environmental
reporting
Deeper in the supply
chain
Expand
reporting
elements
Raw
Materials
Processing Operations Consumer
use
and
end-of-life
Manufacturing
In scope for E P&L + translate these impacts into cost
(EURO)
In scope for E P&L
THANK YOU !