Supply Chain Innovation
Procurement, working in collaboration with suppliers, has various initiatives to drive sustainability, innovation, efficiencies and other supply chain improvements.
RAI operating companies have implemented a Value Improvement Process (VIP) team program in which various internal and external stakeholders regularly meet to discuss supply chain issues and opportunities. These teams elevate decisions to the Supplier Management Team, which is empowered to make recommendations for the companies. The RAI operating companies also created an Indirect Supplier Management Team to review and monitor indirect supplier activities and establish appropriate KPIs to ensure consistency across the indirect supply base, such as:
- Customer response time; and
- Issue resolutions.
In addition to VIP, key suppliers have been involved in a Value Co-Creation (VCC) program by which suppliers and the operating companies drive value into the supply chain by implementing programs to reduce total product cost.
The RAI operating companies have leveraged the VCC program with key direct material suppliers to generate numerous new initiatives. Through the VCC process, we worked with our printed packaging supplier to develop alternatives to hot foil-stamping and metalized board. Printed packaging with hot foil-stamping cannot be recycled and any in-process waste has to be disposed of in landfill. Working together, we were able to replace hot foil-stamping with mirror tech metallic inks. This innovation enables the recycling of in-process materials, minimizing our in-process packaging waste.
In 2016, the RAI companies created the Upstream Team of the Corporate Sustainability Committee, whose members work throughout operations, including both procurement and leaf. The team is responsible for identifying, evaluating and implementing new supply chain sustainability initiatives.
Our companies work with a wide array of suppliers to reduce our environmental impact through materials reduction, recycling and other initiatives. Environmental supply chain initiatives include:
- Zero waste-to-landfill;
- Moving to sustainable packaging;
- Demand-based purchasing; and
- Network optimization.
In 2016, R.J. Reynolds began implementing several initiatives to reduce its supply chain environmental impact:
- Participating in the U.S. Environmental Protection Agency’s SmartWay program; and
- Minimizing the environmental impacts of its distribution facilities.
Read an example of how R.J. Reynolds is promoting environmental sustainability in the supply chain.
To show our appreciation, each year we award selected suppliers the Most Valuable Partner (MVP) award based on performance metrics. We also acknowledge suppliers through three additional Leadership awards: supplier diversity, sustainability and innovation. Suppliers are encouraged to self-nominate for the Leadership awards. By recognizing the efforts of suppliers, we collectively learn from and share their successes and best practices.