J. Lauritzen and NORDEN
The J. Lauritzen and NORDEN shipping companies cooperate on making requirements of suppliers' management systems - and not of their performance in specific CSR areas. In the long term, this will save resources for both the shipping companies and their suppliers.
For the Danish shipping companies J. Lauritzen and NORDEN, responsible supply chain management is an extensive task, since both companies have several hundred suppliers, spread all over the globe. They also have suppliers in many different sectors, ranging from major oil, chemicals, paint and spare parts suppliers, to shipyards and smaller suppliers of workwear and stores supplies, etc.
Shared toolbox and training of procurement staff
J. Lauritzen and NORDEN have therefore cooperated closely on developing shared responsible supply chain management tools.
These tools are based on inspiration material developed under the CSR project entitled "Course towards a better world" undertaken by the Danish Business Authority and the Danish Shipowners' Association. The inspiration material presents how shipping companies can integrate the UN Guiding Principles on Business and Human Rights and the UN Global Compact principles into their responsible supply chain management.
The shared toolbox includes a Supplier Code of Conduct. Rather than making requirements of suppliers' performance in specific CSR areas, this Code of Conduct makes requirements for suppliers to establish their own policies and processes that can help to identify, prevent and remedy the suppliers' adverse CSR impacts, and to report on these activities. The toolbox also includes a Self Assessment Survey that can be used by suppliers to assess their fulfilment of the expectations in the Supplier Code of Conduct, as well as a guideline for procurement staff to engage in dialogue and undertake supplier visits focused on CSR performance.
The two shipping companies held a joint course on responsible supply chain management for their procurement staff, to train them in using the tools. They also hold regular meetings between the shipping companies' heads of procurement and CSR managers, in order to share knowledge and experience.
Joining forces to exert greater influence
J. Lauritzen and NORDEN are engaged in sharing knowledge of the tools with other shipping companies in Denmark and elsewhere. The two companies believe that their cooperation on responsible supply chain management will enable them to exert greater influence on suppliers that are less willing to work with the CSR requirements made by the shipping companies. Joining forces in this way will also give the shipping companies the resources to target more suppliers, since many Danish shipping companies use the same suppliers.
The joint Supplier Code of Conduct facilitates cooperation on audits and sharing knowledge of suppliers' CSR levels and any progress made. Many Danish shipping companies are small companies compared to their suppliers. By pooling their interests in this way, they are better prepared for a more equitable dialogue with suppliers on establishing the processes expected of them.
Less risk of adverse impacts
For the shipping companies, the requirement to establish "due diligence" processes is a key element of proactive responsible supply chain management, since it contributes to minimising the risk of adverse impacts on CSR principles in the supply chain.
This approach enhances the shipping companies' opportunities to react before challenges arise, and to use their leverage to ensure that problematic issues are tackled and that the affected parties have access to complain. When the incidence of adverse impacts in the supply chain is reduced, the shipping companies also devote fewer resources to addressing these challenges.
Knowledge sharing and cooperation with suppliers
The two shipping companies believe that it is easier to cooperate and share knowledge with suppliers when the requirements concern their management systems - and are identical to the requirements that the shipping companies' own systems must comply with. "Being in the same boat" promotes a sound relationship based on trust, mutual appreciation and learning.
Cooperation on management systems may furthermore be less invasive than solely making requirements of suppliers' performance, with the potential to create productivity gains for both the shipping companies and their suppliers. In addition, if several customers make uniform requirements of their suppliers, these suppliers will be able to devote fewer resources to complying with the requirements