The WFEB is right in stating that business cannot continue in its present structure. Many companies today report that procurement expenses account for over 80% of cost of goods sold, causing that over 2/3 of the value creation is done by the upstream value chain – sub-suppliers that are generally unknown to companies. Stakeholder pressures increasingly urge companies to bring transparency into their value chains, identifying sub-supplier sites and their practices. Realizing that they are linked with various problematic production steps and industries they never had on their radar screen, companies start engaging with their full value chains of suppliers and sub-suppliers. Yet, how to align sub-suppliers with strategic objectives and behavior is still to be understood.
Dr. Joerg S. Hofstetter is President of the International Forum on Sustainable Value Chains (ISVC), Vice Director of the Chair of Logistics Management and Assistant Professor of Management, University of St. Gallen, Switzerland. He holds a M.Sc. in Mechanical Engineering and a Ph.D. in Management.
His research and scientific consulting addresses how companies manage their multinational multi-tier value chains: How to improve transparency in value chains and how to successfully influence the various players therein.