british american tobacco p.l.c. sustainability report 2009 - How we manage our supply chain

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SUSTAINABILITY REPORT 2009

Why a sustainable supply chain is important to us

We supply over 180 markets and our 50 cigarette factories are based in 41 countries. In 2009, we sold some 724 billion cigarettes. Our Group purchased approximately 400,000 tonnes of tobacco leaf in 2009 grown by around 250,000 farmers. Around 80 per cent of the leaf by volume is purchased from farmers and suppliers in emerging economies. As well as tobacco leaf, we purchase significant quantities of other raw materials to make our products, such as packaging, cigarette paper, filter materials, glues and inks.

 
Two thirds of the leaf we buy is purchased through direct contracts with some 160,000 growers. Our companies provide these growers with direct agronomy support, working alongside them in the field to provide quality seed and guidance on crop management, soil and water protection and environmental best practice. The other one third of our leaf is purchased on the general market from suppliers who, at our request, have adopted Social Responsibility in Tobacco Production.

 
How we manage our supply chainOur stakeholders expect us to manage our supply chain responsibly and we engage with our suppliers to understand and help address their social, environmental and economic impacts. This engagement creates greater transparency in our supply chain, enabling us to make better decisions and develop more creative solutions. This in turn results in better aligned processes and activities, generates efficiencies and facilitates better identification and management of risks.

 
How we manage our supply chain

Our supply chain – from leaf growing and product development, through materials procurement and manufacturing, to delivery and service to markets – is managed through our global supply chain service centre which includes the following elements:

Product development: Assures consistent and standardised products and balances local, regional and global priorities and resources.

Leaf: Leaf managers in our companies work alongside farmers to provide agronomy support to improve crop yields and quality.

Procurement: As well as tobacco leaf, we purchase significant quantities of other raw materials to make our products, such as packaging, cigarette paper, filter materials, glues and inks.

Manufacturing: Manufacturing tobacco products is a large-scale global operation and we have factories all over the world. We work to ensure that our costs are globally competitive while also managing our sustainability impacts.

Logistics: Provides strategic direction and coordination to benefit from economies of scale when moving our product through the supply chain.

With such a diverse and wide-reaching supply chain, we have a number of well established and effective approaches in place to help us minimise our environmental and social impacts while optimising economic benefits. These are designed to be used in collaboration with our supply chain partners, drawing on their experience and expertise. They include:

Social Responsibility in Tobacco Production (SRTP): Our primary tool in the area of leaf growing is SRTP. This is focused on driving improvement in the social and environmental performance of all our leaf suppliers. The process involves annual self-assessment and, where necessary, developing plans for improvement. These are then reviewed and assured by an independent company. We have shared SRTP with the rest of the industry and it has been adopted by a number of other manufacturers. You can read more about SRTP on www.bat.com Opens in new window and the details of the review criteria are available via the website of our independent reviewer: www.leaftc.com Opens in new window.

Business Enabler Survey Tool (BEST): BEST is our tool for establishing the standards we expect from our suppliers of materials other than leaf, and it provides a framework to continually improve their sustainability performance. We assess suppliers using an international pool of trained reviewers. Suppliers must obtain Approved, Qualified or Certified status in order to be retained by British American Tobacco. You can read more about BEST on www.bat.com Opens in new window.

Life cycle analysis: This is used to assess opportunities to reduce key supply chain impacts, such as energy use, water use and carbon dioxide equivalent.