Responsible Supply ChainRead More about Responsible Supply Chain
Responsible, innovative and flexible supply chain
Our extended supply chain includes tens of thousands of suppliers who partner with Strauss Group to supply products and services in the markets in which we operate. This supply chain is an integral part of our ability to offer tasty and nutritious food and beverage products that provide the optimal solutions for our customers every day. Our suppliers are partners in fulfilling our mission, so we expect them to follow the same standards of moral, responsible and sustainable business operations according to which we conduct ourselves at Strauss Group. We ensure that we behave with integrity towards our suppliers. We make sure we act honestly towards our suppliers and we choose to work with suppliers with values that are common to ours.
The Corona crisis, which started in early 2020, was a challenge for the food industry because of the need to meet the heavy demands in the shortest time while being dependent upon a wide global supply chain. Our supply chains around the world coped with many challenges, from operational difficulties in light of lockdowns and illness, to logistical problems regarding transporting the raw materials that the company needed to import, and availability of technicians to service the factories. The successful management of the supply chain in this challenging time proved Strauss Group’s ability to respond quickly, to best meet the growth in demand, and even to gain a competitive advantage, all while providing a sense of security and stability to our customers in a period of uncertainly.
All the Group’s companies worked to guarantee business continuity and respond to the needs of consumers who enjoy Strauss products all over the world. The Group’s sites throughout the world were compelled to adapt their operations to the changing directives in each country, and based on the severity of the pandemic throughout the crisis. It was clear that we needed to create uniformity in our operations and in dealing with the crisis, while this was also an opportunity to learn and implement uniform processes and standards quickly and efficiently.
We formulated a clear and immediate plan for a gradual response:
- Preventative measures – to maintain a clean, safe and healthy factory for our employees
- Backing up the workforce – in cases where employees are diagnosed with Corona, and to prevent closure
- Utlizing inventory – when employees aren’t allowed to work on site, managing inventory to ensure product delivery.
- Back-up production plan – based on widespread mapping and formulation of a detailed workplan according to the products that are essential for delivery, and based on six scenarios – from total shut down of the factory, to partial shut-down due to shortages of raw materials. Solutions include contracting with new suppliers, enlisting the help of other factories in the Group, etc.
In addition, we decided to implement a mutual learning processes and expand initiatives that were successfully implemented at various sites.
The Corona crisis that started in China, compelled Strauss Water to immediately respond to concerns about shortages in parts that originated in the East. Consequently, the company formulated an operational model and defined a front office in China that includes processes for handling shipping challenges, defining the operational models, reporting mechanisms and more.
The company formulated an immediate and comprehensive plan for providing a solution to the volatility in the supply of raw materials from China. The company’s inventory plan for this period includes a distinction between device components and inventory management. For example, the policy included a two-week increase in device security inventory, maintaining an inventory of perishable parts, risk management, and more frequent approvals. In addition, tighter procurement processes were defined to prevent shortages and ensuring complete coverage for all the company’s sites in China, England and Israel. The Strauss Water supply chain implemented procedures for close monitoring of suppliers for increased transparency, reporting, real time feedback about critical shortages, installing a dashboard to show all factory data, and presentation of changes for optimal decision making.
As soon as the COVID-19 crisis began, Strauss Israel set up a Corona “situation room” in the Supply Chain division that included the most relevant senior managers. The team analyzed the ongoing events and began managing the risks in the supply chain using a clear and orderly methodology: identifying risks, assessing them, managing them quickly and controlling them. This later proved to be the right decision.
The situation room team identified the following main challenges:
- Difficulty transporting raw materials and packaging materials to Israel (as a result of disruptions in maritime and air transport).
- Concern over shuttering the factory, halting production lines and/or shift shutdowns in Israel and abroad.
- Potential disruption of supply sources for the organization’s factories/suppliers
- Coping with supply chain overloads in Israel (transportation, logistical center, distribution).
In order to manage these challenges, the management of the Strauss Israel Supply Chain took the following steps:
- Support of local suppliers: We connected with all our local suppliers and gave them access to vital information to ensure the continuity of their business activities. In addition, the suppliers were updated about the support fund that Strauss Group established to assist them in coping with the challenges of the new and complex reality (we support our suppliers with all our heart and in every situation).
- Suppliers Abroad: We connected with all our suppliers abroad, and increased our orders and deliveries where relevant. We maintained kashrut supervision in our factories using mobile kashrut supervision units from Israel and sent supervisors from country to country based on the limitations of their lockdowns. We maintained direct contact with our suppliers abroad, and frequently monitored their production yields.
- Close supervision of delivery supplies: The delivery center increased the frequency of supervision of maritime, air and land deliveries, and even closely monitored the state of the ports in the various countries (active/inactive). The center provided a daily overview of the number of containers, their location, and estimated arrival in Israel. These increased tracking methods facilitated optimal production timing based on the dynamic availability of raw materials.
- Supply assurance: The Strauss Israel Supply Chain management, along with the Business Unit, created alternative production plans for unavailable products.
- Increased production capacity: Strauss Israel provided a suitable response to the increase in demand for products by adapting a variety of products and focusing on, among others, the production of essential products. These adjustments reduced assemply times of the machinery on the production lines, and contributed to a significant increase in output.
- Increase in direct supply from factories to customers: The supply of volumetric products (e.g., Tapuchips, Doritos, coffee, etc.) directly from the factories. The increase in direct supply provided an immediate answer to the rise in demand, and reduced the pressure on the logistics centers.
- Arranging work teams in capsules: Staffing permanent work teams for work in shifts (in the factories, logistics centers, and HQ). First and foremost, this aimed to safeguard the health of the employees, reduce the risks of infection and infecting others, and of course, to prevent the shut-down (partial or full) of the operational and supply systems.
- Expanding supply windows: Expansion of work hours for suppliers and customers to 24 hours a day. This allowed for unloading and loading goods in the evenings and at night. It provided maximum flexibility for transportation to the logistics centers and distribution of goods to customers, and reduced congestion in the supply processes.
- Advanced monitoring of supply status and service levels: Regular monitoring of inventory, supply and sales. The monitoring takes place using advanced control systems, which display daily performance based on a variety of performance metrics (KPIs). The KPIs measured include sales categories such as quantity of daily aggregate sales, daily aggregate delivery rates, levels and freshness of inventory, daily aggregate returns rates, and more. These advanced monitoring methods enable us to make the best possible decisions and to improve our service to our customers, even in this challenging time.
A Partnership in the Shadow of the Corona Crisis
Supporting Suppliers and Strengthening the Supply Chain in the Shadow of the Corona Crisis
Our suppliers are integral partners in our successful continuity and maintenance of food supply and in our operational continuity. Strauss is committed to its suppliers, and as such, as soon as the Corona crisis began, we set up support systems for them. At Strauss Israel, we launched a 7 million shekel fund to support our suppliers with pre-payments, loans assistance, etc. In addition, we defined a rapid approval mechanism to assist the suppliers who requested immediate payment to expedite their cash flow.
As soon as the Corona crisis began, we realized that there were suppliers who needed information and explanations about the best way to conduct their business during the crisis period in light of the changing guidelines of the Health Ministry and other authorities. Therefore, we provided our small and medium-sized suppliers with a website with information and benefits. This is in addition to responding to them by telephone and answering every enquiry as needed.
In addition, several initiatives were taken in Israel, including:
– From the Field to You – connecting farmers and consumers through the “Taste of Nature” marketplace to support medium and small suppliers during this challenging time.
– A move to acquire small chocolate and food manufacturers to support the Confectionary Division’s initiative. During the first lockdown in Israel, dozens of packages of chocolate were purchased from small chocolate businesses. The packages were distributed to medical teams and youth institutions, in addition to Elite candies.
– Support of small dairies – Strauss Dairies launched a project to support small dairies and family dairies whose stability was significantly impacted by a drop in consumption outside the home (dairies focused on the institutional market), a drop in the purchase of premium products, and the lack of infrastructures for direct sales to consumers. The initiative included a call to the general public to buy products from these small dairies, while Strauss subsidized 75 shekels of the total purchase. In order to ensure the effectiveness of this project, the participating dairies created “purchase kits” at a cost of close to 75 shekels, so that the consumers only had to add a small amount themselves.
– Projects providing employment to our suppliers in the fields of media and production, for example, the Milky Summer Events.
Responsible Purchasing and Human Rights
Our global supply chain includes over 14,000 suppliers of materials, products and services, to the value of over $1 billion per year, and is an integral component of our ability to offer tasty and nutritional food and beverages that will fulfill the expectations of our consumers every day. The majority of our production takes place at our 26 factories around the world, and is supported by an operational chain of warehouses, logistics and distribution to supply our products to our consumers.
We believe in the value of all individuals and their inalienable rights as represented in the United Nations’ Universal Declaration of Human Rights and acknowledge the importance of the international frameworks for the safety and security of all girls and boys, men and women and work tirelessly to promote and ensure full respect of human rights and the fulfillment of related duties. Strauss Human Right Policy is based on the United Nations Guiding and Principles on Business and Human Rights. By upholding human rights, we help Strauss Group become the first choice for employees, consumers and other business partners.
We expect our suppliers to operate according to same standards of ethical activity, responsibility and sustainability as Strauss Group. Partnership and integrity, as well as working with suppliers with similar values to ours, enable us to gain the trust of our consumers and of our other stakeholders. In addition, we are committed to respecting human rights throughout our supply chain and in the communities in which we operate. We comply with the human rights laws in the countries in which we operate and run our business operations out of a respect for human rights and in line with the principles of the Global Compact initiative of the United Nations, which Strauss joined in 2008. Our approach is supported by the Group’s Responsible Procurement Charter (published in January 2020 – see here) as well as by the Strauss Ethics Charter for Suppliers, which, in recent years, has increasingly been included in the terms of the agreements with our suppliers in the Group’s areas of activity (for more, see “Supplier Commitment to the Ethics Charter”).
As part of the Group’s new sustainability strategy, Strauss’ procurement organization set a goal to increase transparency and responsibility along the supply chain. Among the leading projects of the past year:
Supplier Commitment to the Ethics Charter
All Strauss Group’s new suppliers are requested to sign the Ethics Charter for Suppliers, which is based on Strauss’ Code of Ethics, and was drafted to address challenges and work between the company and its suppliers. At Strauss Israel, 88% of the suppliers have already signed, and this is due to the implementation of the charter over a number of years, suppliers sign the charter after a personal training with a procumbent representative. The charter has also been used by Strauss Water, where it is included as a condition in every new or updated agreement, and has also been widely used by the Group’s Sabra and Obela companies. (for more, see the Strauss Group’s Ethics Charter for Suppliers).
Strauss Israel has a preference for procurement from businesses owned by women. In 2020, procurement from suppliers owned by women at Strauss Israel was 123 million shekels, while those businesses made up 8% of all suppliers in this area of activity. Furthermore, we are heavily investing in the development and expansion of our projects that focus on fostering female business initiatives in communities around the world (for more, see Project Florada, Project Tribos, MTAC Initiative).
Managing Climate Risk in Procurement
In 2020, as part of its general risk management process, Strauss Israel started to examine managing climate risk on a geographic level, with an emphasis on the physical threats that climate change creates for parts of the supply chain. Supply chain appointees at Strauss Israel studied relevant methodologies in the field and began formulating practical risk reduction measures, by mapping and locating additional supply sources and distributing procurement among suppliers from different geographies. For example, a decision was made to add cocoa raw material purchasing from Europe to the existing purchasing based on crops in the Ivory Coast, and this is partly to reduce the impact of potential climate risks.
In 2021, the supply chain in Israel is expected to expand its activities and internal implementation in this area.
As part of the process of examining climate risks, we will assess the proportion of food ingredients sourced from areas at high or very high risk of a water crisis. Accordingly, we are monitoring procurement from Ghana and the Ivory Coast (cocoa), which have been identified as potentially risky.
At Strauss Coffee, a similar test was carried out about water risk, and the level of procurement in countries at high risk or very high risk of a water crisis was calculated at around 2.7%, and therefore, the risk at this stage was classified as negligible.
In addition, Strauss manages two main programs related to reducing fertilizers: the first is Sustainable Dairy Farm” through which we eliminate the use of unnecessary chemicals in dairy farming. The second is our thorough suppliers’ management scheme through which we ensure adequate farming practices of our local suppliers around the world.
The activities of the Strauss Israel work team, headed by the company CEO, to increase productivity in the Arab society in Israel, made it clear that a key opportunity lies in encouraging diverse procurement. Consequently, Strauss Israel announced increased support of diverse procurement on a national level, and, with the team, began to promote, guide and develop a platform that connects a diverse population of suppliers (who undergo a process a process of due diligence) with large companies, with the goal of increasing purchasing from them. The platform, called Wesource, enables companies to promote procurement from diverse entities, and thus mitigate risk, increase matching between diverse suppliers and diverse customers, encourage dynamism, flexibility, innovation and quick responses to market needs, as well as fulfilling the expectations of the stakeholders in this area.
Diverse procurement enables local economic development, increased growth and prosperity, while nurturing communities and creating jobs.
As part of this process, various suppliers were identified as meeting the following criteria:
- Small and medium sized businesses
- Owned by women/minorities
- Located in the periphery/locally
- Socio-economic model
- Employees from underemployed populations – women, disabled, Arabs,
Ultra-Orthodox, Ethiopians, new immigrants, youth with no family support
- Approved as a diverse business by Wesource
- In business for over 3 years
- More than 3 employees
- Annual turnover of 300,000-20 million shekels
- Legally registered and pays salaries according to the law
- Shows growth
- Positive past experience / trained by Wesource
- Active in the internet sphere
(For more about Strauss Israel’s commitment to diverse procurement, see the CEO discussing this issue on N12 news in Hebrew after participating in the ‘Populations Panel’ at the Israel Economic and Social Conference on December 28, 2020.)
In addition, the Strauss Israel supply chain began a process of seeking ways to strengthen and empower its diverse suppliers. This included supporting the upgrade of a local warehouse in Yarka, in Northern Israel to one with leading safety SAP-based food and safety standards that meets the company’s requirements as a central warehouse. As part of this successful partnership, the Strauss Procurement department contributed its know-how, experience and accumulated capabilities to assist with local economic development and to provide social and business resilience to the suppliers. These steps are slated to be expanded to additional suppliers in 2021.
The following picture illustrates the success of our warehouse project in Yarka.
In the coming months, the Supply Chain will complete the formulation of its vision for diverse procurement, implementation of improvements to the management and control of procurement data from diverse businesses, and setting Strauss Israel’s goals for diverse procurement
Sustainable Local Procurement
Strauss Israel promotes procurement from local suppliers with the view that a local supply chain boosts the resilience of communities and the local economy. As a result, we are primarily committed to our farmers. For example, Strauss Israel set a goal of 90% of all procurement from local Israeli agriculture. For instance, 87% of the potatoes used at our Tapuchips factory in Sderot are sourced from local farms (for more information see the Strauss Israel Salty Snacks website).
[A wide range of locally grown raw materials
Hummus Achla (local hummus)
Tapuchips (local potatoes)
Taste of Nature Products (All vegetables are locally grown) ]
Another example of local procurement is Strauss’ Florentin organic hummus and spreads brand that is marketed in Europe. As part of the organic distinctiveness of this brand, the procurement activity for the Florentin brand aims to reduce transportation distances and its resulting environmental footprint, and to increase local employment in the EU. Implementing this policy requires locating suitable organic suppliers in the target regions. A clear example where, in the past years, we moved from purchasing the majority of our organic hummus beans needed for production from Turkey to organic growers in Italy. Another example is the shift of part of the procurement of avocados from Mexico to Spain.
“My sense of purpose as a farmer has been strengthened by working with Florentin. Ultimately, every one of these hummus beans becomes a healthy, high-quality food product for consumers. I am so happy to see how my work supports this.” Salvatore Lorenz, Italy.
As part of our activities in Australia and New Zealand, the Obela spreads company aspires to local procurement practices. Based on a company assessment, about 20% of the raw materials and packaging that the company uses are produced in South Australia (where the company’s center of production is located), and over 65% of all raw materials and packaging are manufactured in Australia. This high rate of local production saves the need for long-distance maritime transportation and consequently, significantly prevents the emission of greenhouse gasses. This is in addition to strengthening and supporting the local Australian farmers.
High-quality Coffee Beans Directly from the Fields to Beanz Café
Beanz Café is Strauss Coffee’s innovative and first-of-its-kind venture in the world that was launched in 2019 in Israel to enable consumers to enjoy high-quality fresh coffee at home. This project provides fresh coffee beans from small, selected farms around the world directly to the home (Farm to Cup). The beans are ground in a dedicated, innovative machine just before preparation, at the home of the consumer. This project is based on long term, fair and responsible relationships, and a close connection with the coffee farmers in countries such as Colombia, Indonesia, Brazil, India, Costa Rica, and others. We adapted the most suitable type of roasting to each of the unique types of coffee, in small servings, while ensuring its ultimate freshness. The project was developed as part of the global trend of consumption of higher quality coffee, a developing coffee culture and increased interest in quality, the source of the coffee beans, coffee varieties, different methods of preparation, and the people and brands behind them.
In July 2020, we held our annual Strauss Israel Supplier Conference, with a focus on small women-owned businesses. The conference was held digitally due to social distancing requirements, with the participation of about 50 local entrepreneurs. The opening remarks of Strauss Israel VP Operations and Supply Chain touched on the importance of open dialog; listening to opinions, ideas and ways to improve our work together; and providing added value to the entire organization. In light of the crisis and the related needs of the suppliers, tools for coping with the directives for operating during the Corona period were presented along with a range of ways in which Strauss Israel assists its suppliers. In addition, lectures were given by non-production procurement managers on how to improve negotiations with procurement organizations in the company so as to provide additional support for ongoing supplier engagement.
The Home of the Suppliers
Within a framework innovation and progress, in 2020, the Strauss Israel Supply Chain developed a website to strengthen the direct relationships between Strauss and its suppliers. The purpose of this website is to implement business value-based leadership for the company’s suppliers, which will help strengthen the relationship and open and ongoing dialogue, along with providing them with knowledge and tools. This is out of an understanding that the suppliers are the company’s central partners and stakeholders, and are a vital part of Strauss’ business activities.
The website offers the suppliers access to information, know-how and tools; an open digital channel, feedback and potential for efficiency and improvement of work processes with the aim of improving our service and accessibility. In addition, the website offers transparency of Strauss Israel’s Supply Chain systems as per the expectations of the suppliers, openness in all that is required from a business relationship with us, and more. Furthermore, the website offers access to information about promoting corporate responsibility among our suppliers.
Promoting Sustainability Practices among our Suppliers
Our responsibility to act ethically flows throughout our supply chain. Consequently, we were pleased to support the Maala non-profit organization in Israel, which encourages companies that embrace corporate responsibility to promote sustainability in small and medium-sized businesses in Israel. Over the past two years, we’ve mapped all our relevant suppliers, and encouraged the key suppliers to become part of Maala’s practice of reporting and increased sustainability practices, and corporate responsibility. In 2019, 86 small and medium-sized companies took part in Maala’s reporting and ranking process, of which 37 (43%) were Strauss suppliers. In 2020, these activities were suspended because of the Corona crisis, but we intend to continue to encourage corporate responsibility among our suppliers.