Introduction
Recently, Gartner Inc. released a report ranking the thirteen best companies in terms of their ESG performance. The companies garnered a score of 10, which has prompted scholars to review each one of their codes of Conduct (COC) and Corporate Social Responsibility. Among the listed companies, British American Tobacco stands out. Therefore, it is necessary to look into its practices while carrying out business from the source of its raw materials to its market.
Company Background
British American Tobacco (BAT) is a leading international tobacco company with a portfolio of well-known brands, including Lucky Strike, Dunhill, Kent, and Pall Mall. It is one of the world’s largest tobacco companies, with its supply chain extending from the tobacco plant to the finished product. The chain of BAT includes a wide range of activities, such as farming, manufacturing, distribution, and retail (Gomis et al., 2022). The latest Corporate Social Responsibility (CSR) report consists of some of the critical initiatives undertaken by BAT to make its supply chain more sustainable. These programs involve working with farmers to reduce harmful pesticides, investing in more efficient manufacturing processes, and improving the traceability of tobacco products (Gomis et al., 2022). The elements of British American Tobacco’s supply chain featured in these research materials include the company’s supply chain management strategy, its global supply chain network, and its approach to managing risk and uncertainty in the supply chain. BAT has implemented best practices relative to supply chain management by effectively utilizing Gartner research and other resources to enhance its understanding of optimizing its supply chain.
The Code of Conduct for British American Tobacco includes a section on Responsible Sourcing, which outlines the company’s commitment to ensuring that its suppliers adhere to ethical and sustainable practices. The Responsible Sourcing section of the Code of Conduct sets out the company’s commitment to ensuring that its suppliers adhere to ethical and sustainable practices. The selection includes several principles that suppliers are expected to uphold, including a commitment to human rights, environmental sustainability, and compliance with local laws and regulations (Gomis et al., 2022). To ensure that its suppliers adhere to these principles, British American Tobacco has established a Responsible Sourcing Team responsible for conducting audits of suppliers and monitoring their compliance with the Code of Conduct.
The team also provides support and guidance to suppliers on implementing the Code of Conduct’s requirements. In addition to the Responsible Sourcing section, the Code of Conduct includes marketing, advertising, and promotion; product safety; and employee health and safety. The Supply- Chain Management section of the CSR report addresses the company’s attempts to enhance the productivity and sustainability of its distribution network. The Gartner study includes a section on sustainable Sources that highlights the company’s attempts to ensure that such suppliers follow ethical and ecological standards (Gomis et al., 2022). The company has implemented several initiatives, including supplier audits, training, and certification programs. The company has also established a code of conduct that requires suppliers to adhere to ethical and sustainable practices. The Gartner research features a section on Responsible Sourcing, which discusses the company’s efforts to ensure that its suppliers adhere to ethical and sustainable practices.
Supply Chain Elements
The company’s CSR report and the Gartner research features contain a section on Supply Chain Management and Responsible Sourcing. Both of them discuss the company’s efforts to improve the efficiency and sustainability of its supply chain and the company’s efforts to ensure that its suppliers adhere to ethical and sustainable practices, respectively British American Tobacco Supply Chain features several elements, as highlighted in the CSR report and Gartner research materials (Greenland et al., 2020). The company is committed to delivering sustainable growth, reducing its environmental impact, and supporting the communities in which it operates. The company’s supply chain is a crucial area of focus for its sustainability efforts.
In recent years, BAT has been working to improve the sustainability of its supply chain. The company has set some ambitious targets, including reducing harmful pesticides in tobacco farming and increasing the proportion of sustainable tobacco sources. Firstly, BAT has set a target to reduce the use of pesticides by 50% by 2025 through the development of more sustainable methods of tobacco production (Doerper-Reckeweg, 2022). These methods include training farmers on alternative methods, like Integrated Pest Management (IPM). IPM is a more sustainable approach to pest control that uses a combination of techniques, such as crop rotation, to reduce the need for pesticides (Gomis et al., 2022). BAT also develops new varieties of tobacco, more resistant to pests and diseases, which further reduces the need for pesticides.
Secondly, BAT has set a target to reduce its greenhouse gas emissions by 2030 by investing in varying technologies to improve its manufacturing processes. Some of these technologies are installing more efficient heating and cooling systems, using renewable energy sources, like solar and biomass, and investing in new sorting and recycling technologies (Greenfield et al., 2020). Finally, BAT has set a target to source 100% of its tobacco from traceable sources by 2025 (Greenland et al., 2020). It uses various technologies to trace the origin of its tobacco, including GPS tracking, barcodes, and RFID tags, which help track its tobacco’s transit from the farm to the finished product. BAT has also developed a system that allows tracing its tobacco source, which helps ensure that tobacco is sourced from sustainable farms. Its commitment to improving the sustainability of its supply chain is commendable, and these efforts will help to create a more sustainable tobacco industry. They could set a precedent for other companies to follow.
Supply Chain Best Practices
The elements of supply chain management that represent best practices include planning, execution, monitoring, and control. Planning ensures that all the resources needed for a supply chain are available when required, while implementation ensures that the supply chain is carried out as planned (Bowersox et al., 2020). Monitoring allows the supply chain to be assessed for performance and potential problems. At the same time, control enables the supply chain to be controlled so it can be optimized for performance (Doerper-Reckeweg, 2022). BAT is undertaking several initiatives to make its supply chain more sustainable. These include working with farmers to reduce toxic pesticides, investing in more efficient manufacturing processes, and improving the traceability of tobacco products. BAT company also audits its suppliers regularly to ensure compliance with these standards.
BAT has long been a leader in developing more efficient and sustainable tobacco products. It has developed several products, like heat-not-burn products and snus, designed to be more efficient and less harmful. From a logistics and supply chain management perspective, some of the best practices that BAT is undertaking include investing in more efficient manufacturing processes and improving the traceability of its tobacco products. Investing in more efficient manufacturing processes can reduce overall costs and enhance the company’s competitiveness (Bowersox et al., 2020). Additionally, by improving its tobacco products’ traceability, BAT can better control its supply chain and ensure its products are of the highest quality.
Conclusion
All the efforts by BAT to improve the sustainability of its supply chain are commendable. BAT takes proactive approaches to reduce the negative impact of its operations on the environment and the lives of those who work in its supply chain. In return, it benefits from all its policies in the tobacco business through improved customer satisfaction, enhanced brand image and reputation, increased market share, and improved financial performance. Since its inception, the company’s efforts in improving the efficiency of its products and processes have benefited its overall competitiveness assisting it in meeting the increasing demands of its customers effectively and on time. All the initiatives have begun to pay back, and BAT is now well-positioned to increase its market position in the following years.
References
Bowersox, D., Closs, D., Bixby, M., & Bowersox, J. (2020). Supply chain logistics management (5th ed.). New York, NY: McGraw-Hill.
Doerper-Reckeweg, J. R. W. (2022). Initial coverage report on British American tobacco transformation towards a smoke-free future (Doctoral dissertation).
Gomis, B., Gallagher, A. W. A., Rowell, A., & Gilmore, A. B. (2022). Turning a threat into an opportunity: British American Tobacco’s weakening of the protocol to Eliminate Illicit Trade in Tobacco Products. Tobacco Control, 31(1), 40-49.
Greenland, S., Lužar, K., & Low, D. (2020). Tobacco CSR, sustainability reporting, and the marketing paradox. The Palgrave Handbook of Corporate Social Responsibility, 2020, ISBN: 978-3-030-22438-7.