Russia: When Wicked Supply Chain Problems Become Less Wicked
By Scott Poynton, Skytop Contributor / April 11th, 2022
Scott Poynton is an Australian forester. He founded The Forest Trust (TFT) in 1999 and grew it into a global non-profit working in 48 countries, impacting more than $1 trillion in supply chain transactions.
Scott supported some of the world’s largest companies to be more environmentally and socially responsible. He brokered major transformations across the wood and agri-commodities sectors, pioneering responsible sourcing and launching the world’s first No Deforestation, No Exploitation commitments.
In 2020, Scott founded The Pond Foundation. Its My Carbon Zero program helps individuals and businesses take their own strong, credible climate action. He also leads A Different Way Limited, supporting C-suite executives and their organizations to grow values-based leadership while sharing the lessons of his experience through writing, presenting and lecturing.
Responsible Sourcing
Russia’s invasion of Ukraine raised challenging questions around ‘responsible sourcing’ for companies large and small all around the world. At the outset, many companies with direct business in the country withdrew to avoid contributing to its war chest. Others took longer while some remain, finding their own justifications. More indirectly, many companies source Russian raw materials as part of interwoven, often complex global supply chains. Cutting good quality, well-priced raw materials or components from your supply chain almost always causes pain; you’re using that supply because your due diligence told you it was the best. Moving to second, third or even fourth best supply options adds cost, makes you uncompetitive, ruins your quality, etc. A wicked supply chain problem indeed.
Much Hand Wringing
There’s been much hand wringing as companies ponder what to do. I saw news that one global homewares brand had closed its stores in Russia and were being lauded for doing so. Knowing a thing or three about their supply chain, I wondered whether the Chinese mega-factories that supply them would continue to import the vast amounts of Siberian wood they use to make the company’s furniture products sold to global consumers. There wasn’t anything about that in the press release…
Something of a Rubicon
Deciding what to do about Russian supply chain links should have become a lot easier in the past week. News of atrocities against civilians in the regions north of Kyiv and of a missile hitting a train station packed with civilians desperately trying to flee probably ought to represent something of a Rubicon. Though Russia fervently denies any involvement, as a brand in distant country X, or even neighbor Y, it’s probably time for you to ask yourself, “Do I want to be linked to that in any way, shape, or form?”
A Powerful Moment
Back in 2010, Nestlé were accused of killing orangutans when Greenpeace produced a powerful one-minute video of an office worker crunching on an orangutan’s finger he’d found in a KitKat. The video went viral and Nestlé, unhappy, tried to find a way out. After some false starts, the company announced the world’s first No Deforestation commitment. I mediated that dispute and drafted the No De commitment that Nestlé signed into life, sparking others to eventually follow suit. That wicked supply chain problem suddenly became a force for positive change. The day after the announcement, I went to Nestlé HQ to get started on implementation and was told by the receptionist how pleased everyone was that the company had taken that step, “We’re so relieved,” she said. “We don’t kill orangutans, that’s not who we are.” It was a powerful moment that has forever stuck with me.
Beyond Time to Act
Now, we must each ask ourselves that same question as we ponder our responsible sourcing challenges, “Who am I and what do I want to be linked to?” If you’re good with what’s happening in Ukraine, that’s for you to grapple with. If you’re not, and you have links to Russia, then regardless of the pain to your business, it’s probably beyond time to act.
Questions that Must Be Asked
As a final word, people might ask, “What about China?” Like many other countries, China hasn’t condemned Russia’s invasion, but nor are they condoning it. Like Europe and Russian gas, Chinese businesses still have links to Russia (see the furniture example above). Ultimately, it’s not for me to draw conclusions for you. These are all questions that business leaders must ask themselves. In grappling with the question, “Who am I and what do I want to be linked to?” one piece of advice I’d offer is to ask yourself, how this or that thing or event makes you feel. Follow that. Stay out of your head. I’m confident that navigating by what you feel won’t let you down. And if it causes business pain, that won’t necessarily be a bad thing. Matters of profit and loss, KPIs, logistics, etc. cease to be important at certain moments, and with our great intelligence, can almost always be navigated. Down the track, your decision to switch suppliers might, and likely will, bear unforeseen benefits. Keep your eye on the long-term, but also know that sometimes, wicked problems aren’t as wicked as we make out. They just come down to your values and what you’re prepared to accept.