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Supply Chain

Creating a sustainable palm oil supply chain – 1


The supply chain is key in any enterprise. These days, consumers don’t simply require businesses to behave according to certain standards and principles, they also increasingly expect the company’s supply chain to conform to the same codes of conduct. But how are companies going to ensure that their suppliers are on the same page when it comes to things like code of ethics and sustainability principles?

In 2014, GAR decided to extend its sustainability policy to cover its entire supply chain because it recognised that unless it could bring its suppliers along on the journey the effort would be incomplete.

Since then we have been reaching out pro-actively to our suppliers, getting to know and understand them better. In the process we have mapped 489 individual mills that supply our processing facilities in Indonesia. These mills supplied more than seven million tonnes of palm oil and palm kernels to GAR in 2015.

Getting to know nearly 500 suppliers isn’t a simple process and there are no shortcuts. The first step involves obtaining and checking details about each and every one of the mills, things such as their location down to the exact coordinates and whether they have a sustainability certification.

GAR uses information such as the coordinates to check against maps indicating critical areas for conservation such as legally-protected zones, peat lands or areas where orangutan also live. Suppliers in these sensitive areas are prioritised for visits by GAR teams working together with The Forest Trust (TFT).

These site visits are crucial. Nothing beats being there on the ground, seeing for ourselves and hearing about our supplier’s experience and challenges as they try to apply sustainable practices. And at the same time GAR also gets a chance to talk to others in the area such as local community, local government and local NGOs.

Taking a moment for a photo after a site visit with suppliers in Aceh
Taking a moment for a photo after a site visit with suppliers in Aceh

Listening to our suppliers, we are able to see where we can best help them improve their environmental and social practices. Chances are we have experienced similar situations and challenges.

We are going out to meet them with the message that we are there to help and offer support. We believe this is the best way to transform our supply chain.

“We know that it’s not easy to change and adopt new practices, especially if a company has limited resources or experience in areas like sustainability. That’s why we are going out to meet them with the message that we are there to help and offer support. We believe this is the best way to transform our supply chain,” said Daniel Prakarsa, the Head of Downstream Sustainability Implementation.

GAR meeting suppliers in Medan
GAR meeting suppliers in Medan

Our suppliers are also giving the thumbs up to GAR’s approach.

“We see GAR as a true partner. We are able to benefit from their expertise and experience as well as share our own experiences and challenges. By investing in supplier outreach and training, GAR has shown that it is serious about helping all of us improve our sustainability practices,” said Berlino Mahendra Santosa, Planning and Development Director of PT Perkebunan Nusantara 5.

GAR visited seven mills in 2015 and is planning to visit 26 more in 2016. This is just the start of a long-term ongoing relationship with our suppliers. Step by step, through site visits, consultations, workshops and training we will continue to help our suppliers.

GAR hasn’t finished the process of knowing who supplies its business with palm oil. Next step ? we will be working with our suppliers to map the supply chain to the plantation. This will give us an even clearer idea of where our oil comes from and will let us start engaging with our entire supply chain all the way to individual farmers.

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