Implementation of Supply Chain Management

1. Implementation of Supply Chain Management Rachel Butler Environmental Manager Finnforest UK

2. Who are we? • Finnish owned company,Metsaliitto, importing over 1.2 million cubic metres annually • Over 80% of volume is certified to either FSC or PEFC; the remainder are mainly in, certification or chain of custody process, meeting Controlled Wood Standard, TFT process • Don’t represent the end user; sell through DIY, Merchant & Construction customers

3. How Timber Policy works in practice • Introduction of a Procurement Policy five years ago was easy…… • Implementation of policy more difficult! • Buyers are judged on their performance i.e. stock turn, quality and competitive prices. • In merchant/retail outlets buyers are mainly judged on commercial considerations & whether they meet budgets/cost reductions • Commercial realities of running a company can sometimes be in conflict with a Responsible Timber Policy. • However, competitive price does not necessarily always mean non-certified V certified.

4. FFUK Policy Actions & Self Policing • Risk assess all suppliers for products & rate • More likely to get information from suppliers using one format hence why FFUK signs up to the TTF’s Responsible Purchasing Policy • New suppliers from certified or low risk countries – documentation checked out, confirmation of sourcing areas is asked for. • Policy all new suppliers from risky countries have to be signed off • Safeguards if this does not happen; SAP report every month notifies of new suppliers! • Suppliers who become de-listed for environmental or quality reasons – vendor blocked on SAP - so no orders can be placed

5. Policy: Boycott v Engagement • Policy for Indonesia – suspended until the mill(s) committed either working towards legality & sustainability or gained it – now supplying FSC Hardwood Ply into the market place through Tjipta • Was this the right decision to suspend? • Brazil – FF have supported the State of Acre and now importing the first Hardwood Plywood from the region. The project is a visionary & been personally pioneered by Governor Jorge Viana.

6. Policy: Boycott v Engagement • China – stayed out due to environmental & social concerns. Commercially we lost business but are in discussions with some potential suppliers; no business unless commitment to improve is gained. • Generally engagement is preferred over boycott; • Need to engage to maintain some leverage over suppliers • Boycott can simply mean companies will sell to other markets or change land use. • Certain countries such as Burma, Liberia; boycott in view of international or national guidance.

7. Supply Chain Management • Timber trade is part of a supply chain & we know that the public is not generally interested. • UK Government as demand-led policy is increasing awareness for legal & sustainable timber – but more awareness needs to be done • All elements of supply chain need educating; recent WWF report stated 65% of London Local Authorities do not assess their timber/paper purchases. • Estimated that anywhere between 20 – 40% timber is purchased by public sector, what does a typical LA consume – the need for a footprint? • The larger companies are pretty much aware of the issues & commercially have been hit by environmental campaigning! What can be done to educate the other players?

8. Supply Chain Management: Policing • Company self-policing, long term relationships with suppliers; lack of credibility? • Through external agencies such as TTF’s RPP & GFTN who offer company auditing to prove the claims made; therefore greater credibility • External auditing through civil society • Environmental campaigns undoubtedly have an impact – discrimination? • Strengthening TTF’s Code of Conduct & make it easy for those outside the trade to report issues • If it works extend to other organisations in the supply chain e.g. Builders Merchants & Retail • Legislation • To level playing field & base the market on actual prices rather than alleged illegal logging for some products • How practical & feasible?

9. THANK YOU rachel.butler@finnforest.com