Business Ethics and Sustainabilty in the steel industry - A Tata Steel case study

Introduction

Steel is a unique and vital material. It touches almost every part of modern life. It is a key element of our infrastructure. From buses to buildings, from canned food to computers, almost everything we see around us is either made of steel or is made using steel. Steel is essential to modern society. Tata Steel is the second largest steel producer in Europe and has its main steelmaking plants in the UK and Holland. It supplies steel and related services to major industries, such as construction, vehicle production and packaging. The European operations are a subsidiary of Tata Steel Group, one of the world’s top ten steel producers. The combined Group has around 80,000 employees.

The challenges of sustainability

A commitment to environmentally-sound practices is part of many businesses’ commitment to act responsibly. Social responsibility refers to an organisation’s obligations to maximise its long-term positive impacts and minimise its negative impacts on society. For Tata Steel, it is a core part of its vision to be ‘the global steel industry benchmark for value creation and corporate citizenship.’
Tata Steel is committed to tackling the challenges of sustainability. This means that it takes its responsibility towards both the environment and its communities seriously, balancing these against the need to make a profit. It has put systems in place to meet international standards for environmental management such as ISO14001.
Respecting and safe-guarding the environment is a central principle held by all Tata Group companies and can go hand-in-hand with profitable business.

What are business ethics and sustainability?

Business ethics

Business ethics means ‘taking the right course’. Acting ethically takes into account all the factors of doing business. These include production, business processes, and the company’s behaviour with its customers and the communities in which it operates. It is about doing the right thing in everything the company does.
Tata Steel has five core values which define the ethics of the company: integrity, understanding, excellence, unity and responsibility. These values are evident in everything that it does and drive the ethical behaviour of the company. For Tata Steel, taking responsibility for tackling the challenges of sustainability follows naturally from this ethical stance.

Sustainability

The Tata Steel definition of sustainability is ‘an enduring and balanced approach to economic activity, environmental responsibility and societal benefit’. Sustainability is about meeting the challenges of ensuring that future generations can enjoy the same kind of lifestyles people enjoy today. This naturally involves taking a long-term perspective on balancing economic, environmental and social impacts of business.
A commitment to ethical behaviour is often shown in the corporate social responsibility (CSR) policy of a business. Businesses are no longer judged solely on their ability to deliver goods and services but also on the manner of delivery and how they impact on society and the environment. The Tata Steel sustainability policy states that:
‘Our policy is to conduct our activities in relation to economic progress, social responsibility and environmental concerns in an integrated way in order to be more sustainable and to meet the expectations of our stakeholders.’

Legislation and ethical practice

There are current laws or regulations that encourage ethical and sustainable practices. For example, anti-pollution laws place strict limits on levels of CO2 emissions. Tata Steel, like any other company, must ensure it abides by these laws, but with its high ethical standards, it aims to go beyond the minimum required by law, making a positive contribution wherever possible.
This approach to CSR ensures that Tata Steel can tackle the relevant sustainability challenges and in particular satisfy all its relevant stakeholders. This is good for the environment, for the people that work with and for Tata Steel, for the communities in which Tata Steel operates and also good for customers and therefore for business and profits. Through saving energy and waste, Tata Steel can work more efficiently and reduce costs.

Benefiting business reputation

Acting responsibly also benefits its reputation. This enhances the image of Tata Steel as an environmentally-committed and responsible business, giving good PR in a competitive world market. Tata Steel also develops and sells products which enhance long-term sustainability and which at the same time provide additional margins.
Steel is one of the best materials to use to ensure sustainability. Steel is a unique material because it is truly recyclable – when steel is recycled it becomes new steel and not an inferior product. Since steel does not downgrade when recycled, it can be re-used over and over again. Steel is the most recycled material on Earth. The impact of making steel can be viewed as an investment in a material which will be used again and again, rather than a one-off, making steel a very ‘green’ material.

Making ethical and sustainable decisions

Tata Steel builds ethical and sustainable practices into all areas of its operations. Steel has the benefit of being truly recyclable but is produced by a process that produces CO2 emissions. Sustainability is about much more than CO2, but one of the major challenges of sustainability is to reduce CO2 emissions which may contribute to climate change.
Tata Steel is working to reduce these emissions using new technology and practices. For example, it has introduced technology to re-use gases produced at its Port Talbot plant to create electricity equivalent to 10% of its needs. This has reduced the need for natural gas for power and helped reduce its CO2 emissions by nearly 300,000 tonnes. Tata Steel’s work on reducing CO2 emissions is demonstrated through its climate change strategy. It has set itself specific goals, for instance, to reduce CO2 emissions to less than 1.7 tonnes per tonne of crude steel by 2012.

Setting priorities

Tata Steel has continued to invest effort and resources in relation to the five key priorities that underpin its vision with regard to climate change. These priorities are to:

• continue to achieve emission reductions
• invest in longer-term breakthrough technologies for producing low-carbon steels
• develop new products and services that generate lower CO2 emissions through the life cycle
• actively engage the entire workforce in this challenge
• lead by example within the global steel industry.

While Tata Steel is taking a responsible approach to its own operations, in terms of choices made by its customers and end-users of its steel, it is vital that balanced decisions are taken. This means not just looking at CO2 emissions, but at the whole range of environmental, social and economic considerations. It also means taking a ‘life-cycle’ approach to decision-making – assessing products in terms of how they are made, used and finally disposed of. Often, just one phase is included, typically just manufacture or just use-phase. However, Tata Steel promotes life-cycle thinking so that decisions are taken on the basis of manufacture, use and end-of-life phases for any material or product.

Assessing environmental impacts

Life-cycle assessments (LCA) assess the true environmental impact of a product over its full life. They look at the environmental impact of manufacturing a material, using it and finally disposing of the product. Through LCA Tata Steel is able to show that, in many cases, steel provides the most environmentally-friendly material solution. One example of the use of LCA was on a project to find the most cost-effective combinations of materials and technologies to make low and zero carbon buildings. Zero carbon buildings can use low carbon technologies, for example, solar panels, to generate all the buildings' power. They are also built using materials with a low carbon footprint.
A critical part of this project looked at the differences made by using alternative materials for building structures. It found that whereas at the end of the life of a timber or concrete framed building the materials are destroyed or dumped in landfill, a steel frame can be recycled as new steel. This lowers the building’s carbon footprint. The results of the study have given designers and developers clear guidance on how best to create buildings with sustainable, low or zero carbon impact.

Examples of promoting the sustainability of steel

Tata Steel demonstrates ethical and sustainable practice in its own operations. However, it goes further in encouraging its customers and markets to also make decisions based on sound sustainability principles. These three case studies demonstrate where life cycle thinking is helping Tata Steel to promote the use of steel, while at the same time encouraging ethical behaviour.

 Case study I: The automotive industry

A major part of the UK’s CO2 emissions come from cars, referred to as ‘tailpipe emissions’. The government has passed laws targeting the reduction in such emissions. However, this only looks at car emissions in the ‘use’ phase, rather than those caused by manufacturing and scrapping vehicles. One way to reduce use-phase emissions is to make the car lighter as lighter weight cars use less fuel.
However materials such as aluminium, magnesium or carbon-fibre reinforced plastics have high environmental costs in manufacturing and they are not as easy to recycle as steel. The savings made from using them are usually outweighed by the CO2 produced in the other life-cycle phases. Providing the whole life cycle of the material is taken into account (LCA) - not just the ‘use’ phase - steel has been shown to be the best material to decrease CO2 emissions of cars.
Outcome: Tata Steel has joined forces with other steel-makers to produce the ‘Future steel vehicle’ which showcases the latest advances in steel technology. Using its LCA studies, it is now influencing the next generation of legislation to move towards an LCA approach rather than just looking at ‘tailpipe’ emissions.

Case study 2: the construction industry

Traditionally, timber was used for constructing frames for buildings but it was difficult to find trees large enough for bigger buildings. New technology means that timber can now be used for large buildings and with increased concerns about sustainability, there has been a revival in the use of timber frames for buildings such as supermarkets, warehouses and schools. Timber is perceived as being a sustainable and ‘green’ resource.
However, when Tata Steel looked at the LCA of timber in terms of where it came from and how it was recycled, it found that carbon emissions were similar to a typical steel framed building. How the timber is dealt with once the building is demolished was found to have a major impact on the overall sustainability of the building structure. Most timber from demolished buildings is either land-filled or incinerated. The final result shows that using a steel frame (where studies have shown that 99% is recycled) produces less CO2 over the entire life-cycle than using a timber frame.
Outcome: The results from the LCA study of building structures are being used to provide facts to architects, engineers and legislators regarding material choice.

Case study 3: the packaging industry

Many consumer brands are keen to give an image of environmental responsibility. One way is to try to reduce packaging. It is an area where government regulators have a big influence too. The UK government’s goal is to reduce the carbon impact of grocery packaging by 10% by the end of 2012. One legislative approach to this is to reduce the total weight of packaging used.
However, LCA studies by Tata Steel have shown that focusing on weight reduction does not necessarily make for more sustainable packaging. Targets just on weight reduction could lead to the wrong decision, for example, to use alternative packaging materials that could take more energy to produce and are not always completely recycled when they are disposed of.
All steel cans that are collected are truly recycled. Steel does not downgrade when recycled. It can be re-used over and over again whereas other materials tend to be used only once and, even if recycled, will be used for alternative, lower-grade applications. When adopting the Tata Steel LCA approach, it is clear that steel cans, even though they may weigh more than some alternative packaging, provide a more sustainable packaging material.
Outcome: Tata Steel and its industry partners used their LCA approach to persuade regulators to take a different view on steel used in packaging. This resulted in national recycling targets taking a full life-cycle approach by using actual recycling rate as the measure, rather than reducing the total weight of cans.

Benefits of taking responsibility for sustainability

Sustainable practices are often the best business options for a company. As corporate reputation becomes more important and more companies are adopting ethical stances, taking responsibility for sustainability is increasingly important both to ensure reputation and also to satisfy the demands of a range of stakeholders.
The benefits of taking responsibility for sustainability include an enhanced reputation which, in turn, leads to greater customer loyalty. The benefits can also be seen in terms of efficiency, with businesses using fewer raw materials, less power and more recycling. Both of these have an impact on profits and shareholder confidence.

Achieving differentiation

Taking responsibility for sustainability is one way for Tata Steel to compete, by differentiating it from those competitors who are not able to promote such a positive stance. Moreover, taking these ethical and sustainable approaches helps the company to leverage its position and encourage sustainable decisions in others. This can help to promote its own products.
The benefits are also felt by employees, who are better motivated to work for a company that they perceive as ‘doing the right thing’, including working with governments and regulators to help achieve environmental targets.

Conclusion

Tata Steel has shown that it is committed to sustainable and environmental practices as part of its overall aim to act responsibly. It shows commitment and progress towards key targets of sustainability as well as encouraging sustainable decision-making in its customers and within their markets.
The key to the success of this approach is to recognise the unique properties of steel as a recyclable material and to ensure that measurements of sustainability are taken over the entire life cycle of a product, not just the use-phase.

Beyond corporate social responsibility - A Primark case study

Introduction

Primark is a subsidiary company of the ABF (Associated British Foods) Group. The company was launched in 1969 in Ireland trading as Penny's. By 2000, there were over 100 stores across Britain and Ireland. By 2012 Primark had 238 branches across the UK, Ireland and Europe. Primark has become distinctive for offering unbeatable value whilst never losing its innovative, fashion-driven edge.

Like many retail fashion businesses, Primark does not manufacture goods itself. Its expertise lies in understanding its customers and working with its suppliers to produce goods to Primark’s specification. It then gets the right goods to the right places at the right prices. Its profitability depends on sheer volume of sales. Primark's value-for-money prices rely on low costs. These are achieved in part through economies of scale and efficient distribution.

Primark’s products are mainly sourced from suppliers in Europe and Asia. Its key sourcing countries are China, India, Bangladesh and Turkey. Putting the manufacturing of garments into these countries creates jobs. These are often at better rates of pay than other types of work on offer, improving overall standards of living.

Corporate social responsibility

Primark has initiated a programme of activities which supports its corporate social responsibility (CSR) stance and ensures that its trading meets the company’s values and ethical standards. Underpinning its programme of activities is Primark’s Code of Conduct which ensures that all workers making its products are treated decently, paid a fair wage and work in good working conditions. For more information please visit www.primark-ethicaltrade.co.uk

This case study looks at Primark’s involvement in the HERproject (Health Enables Returns) which is raising awareness and delivering healthcare education to female workers in supplier countries.

What is CSR?

Businesses need to acknowledge and respond to factors in their environment, for example, changes in available workforce or the business’ impact on its local communities. Corporate social responsibility represents the responsibility that a business has towards all its stakeholders, not just to owners or shareholders, to deal with their needs fairly.

Internal stakeholders include shareholders and employees. Shareholders want a return on their capital and this depends on making a profit. That in turn means by adding value. Employees want job security, good pay and conditions and job satisfaction.

External stakeholders include customers, suppliers, non-governmental organisations, workers and the local communities where its products are made. All of these have different needs.

An organisation therefore needs to be able to respond and demonstrate responsibility in different ways. This might include activities as wide-ranging as encouraging employees to volunteer in community projects; sponsoring and supporting charity work; or contributing time and money to improving its environmental impact.

Why Primark embraces CSR

As an international business with a global supply chain and a growing retail base, Primark believes that business has a responsibility to act and trade ethically and that, by doing so, it can be a force for good. Its business directly contributes to the employment of more than 700,000 workers across three continents. Ensuring that their rights are respected is key to its continued growth.

Primark does not own the companies or factories that produce its goods, but it does have a responsibility to the workers in those factories, to its customers and shareholders, to ensure that its products are made in good working conditions. The HERproject in Bangladesh is an example of how Primark is actively seeking to make positive changes in the lives of its supplier workforces.

HERproject

In Bangladesh, over 50% of the manufacturing workforce is made up of women. The jobs available to women in garment factories give them greater independence and help to reduce poverty. However, these women often have little education and low levels of literacy as they drop out of education early to help their families.

They also lack basic knowledge of health, hygiene and nutrition and an understanding of how a woman’s body works. Poor hygiene often causes persistent and painful infections. Childbirth is particularly hazardous and post-birth complications are common. There is little understanding of the symptoms of sexually transmitted diseases (including HIV) or the means of preventing transmission. Far more women than men are malnourished and many women suffer from anaemia. These issues, often combined with a lack of access to qualified medical advice, mean that the female workforce is particularly vulnerable.

The HERproject uses education as the key tool against all these inter-related problems. The programme aims not only to improve the health of female workers through training and education, but also to give them the tools to help them take charge of their personal and working lives. These benefits in turn pass on to their families and help to enhance whole communities.

Making CSR happen

The HERproject is an initiative started by BSR (Business for Social Responsibility), a non-governmental organisation that works with over 250 companies on environmental, social and human rights. The HERproject has so far helped over 50,000 women in different countries. It has done this through working with companies like Primark, Primark’s suppliers and local health providers.

The HERproject is simple but surprisingly powerful:

• A small number of female staff in a factory (around 10%) is selected to become health education trainers called ‘peer group educators’.
• The local health service provider trains the peer group educators, who are then responsible for training the other women based in the workplace, passing on the message and helping to disseminate what they have learned.

The process emphasises mutual help and encouragement. The women trainers are effective because they fully understand the local culture. They are not seen as outsiders imposing strange ideas. Instead, the trainers understand why the women may be reluctant to seek help with issues that can be sensitive. They can build their self-confidence as well as their practical knowledge.

‘I didn’t have anyone to tell me how to look after myself, it wasn’t taught at school. The trainers told me that many diseases come from the unpurified water that I was taking from the tap. This water can be the cause of sickness, cholera and diarrhoea. At first my family said to me, how do you know this stuff? You work in a garments factory! I told them it’s what I have learnt from the HERproject. When I began to give them advice they started to get interested in the project. Everyone I have told now boils their water and they don’t suffer like before.’ Umme Habiba (garment worker)

The HERproject is also is helping others not directly involved in the project. Outside the workshops informal learning continues. Women build supportive relationships and talk to each other out of work. This is reinforced by the project helping to set up factory clinics and creating vital referral links to local hospitals.

Selina Kamal is a factory quality inspector and a peer educator for HERproject. Through her own training she is now more aware of the importance of cleanliness for herself and her children. They all now drink purified water and eat more vegetables. She has already helped a friend, Shilpi, who is a school teacher.

‘I came to Selina after I had two miscarriages and irregular periods. Selina advised me to go the doctor as she knew something must be wrong. The doctor prescribed me medication for my problem.’ Shilpi (teacher)

The value of the HERproject

Improving the health of women workers in Bangladesh and helping to empower and educate the female workforce is an important ethical goal in its own right. The benefits to communities can also been seen. Over time, initiatives like this can support key issues such as reducing infant mortality.

Factories in Bangladesh taking part in HERprojects have seen healthy returns on the money invested by Primark in the programme. This has been achieved through improvements in productivity, a more stable workforce, lower absenteeism, decreased labour turnover, improved quality and a reduction in housekeeping costs. As an example, the managing director of one factory in Bangladesh found that absenteeism in the factory fell by 55% during the first six months of the HERproject. Turnover of female workers dropped from over 50% to around 12%.

Seeing the benefits

Mrs Kaniz Fatema is the managing director of a medium-sized factory in Dhaka, Bangladesh. When the HERproject was introduced to her factory a year ago, she was unconvinced, viewing it as ‘just another project’. However, just one year later her view has been transformed. Women's health is now high on her agenda. A healthier workforce is literally paying dividends. Absenteeism and labour turnover are down by a startling 50%. Productivity is up and even internal staff communication is more effective. Mrs Kaniz Fatema now employs a female doctor and has set up a scheme to provide sanitary napkins to her female workers, helping to embed a new culture within the factory and allowing health education in the factory to continue after the project ends.

‘HERproject has made a real difference in my factory. The workers have increased their productivity as they are now looking after themselves better. I have become a lot closer to my female workers. I have also told other factory managers about the success of the project at our factory. The male workers are now asking when we will start a similar project for them.’ Mrs Kaniz Fatema (factory manager)

Other benefits are harder to measure but are increasingly recognised by the factory managers. Getting women to communicate effectively on health matters builds trust and confidence. This feeds back into better communication with supervisors and managers. This, in turn, leads to improved teamwork and the motivation to accept more responsibility and leadership roles in the community.

‘Workers now stay longer and are more productive. The HERproject has also helped my relationship with the women workers. They are not so shy to talk to me anymore. If there are problems, I now hear about them.’ Mr Riaz (factory manager)

Increasing motivation

This demonstrates the principles of the Hawthorne effect theory of motivation. Theorist Elton Mayo found that factory workers with long hours of routine work were motivated by someone taking an interest in them and their work. Feeling that they mattered as individuals, they experienced a new connection with the job. As a result, productivity improved. In a similar way, by focusing on the women workers and their health issues, the HERproject is also delivering improved motivation. See more on the HERproject at http://www.primark-ethicaltrading.co.uk/ourwork/c/womens_health

‘Not only has HERproject given women the knowledge to improve their health behaviour, it has empowered them to seek leadership roles in their jobs and their communities. The peer-to-peer model – with women teaching each other about women’s health – has given them the confidence to go against the grain in regions where the traditional role for women is not as strong.’ Racheal Yeager (BSR HERproject Manager)

Conclusion

The industrialised countries of the world benefit from the lower costs of labour in countries such as Bangladesh and India. However, more consumers are now asking if this is ethical and questioning its sustainability.

Some trade-offs between stakeholder needs are inevitable. CSR does not come free. It involves a real commitment of resources, management time and energy. On the other hand, as studies of the HERproject in other countries have shown, each dollar invested in the health of female employees can yield more than three dollars in business benefits. In addition, the improvements in human well-being are incomparable.

Despite criticism of globalisation, business and trade can be a force for good. This is increasingly recognised in the ways that consumers assign values to brands. Primark is making progress in taking on wider responsibilities and devising relevant projects that work on the ground. It has done this with help from NGOs and organisations such as BSR. Its approach with the HERproject is not purely about business benefits, but focused on making a difference to the lives of its supplier workers.

To date, 4,500 women in Primark’s factories have been trained under the HERproject in Bangladesh. The project results have shown such benefit that the project is being rolled out to Primark’s suppliers in China and India. Primark’s ongoing involvement with the women workers in Bangladesh and other supplier countries will help to provide it with a sustainable and ethical business model.

Delivering a superior customer experience - A TNT case study

Introduction

The reputation of a business may be affected by what its customers think and say about its products or services. This is driven by the experience of customers when dealing with the business. High quality customer service will encourage customers to become regular or repeat users or purchasers. On the other hand, a poor customer experience may damage a business through loss of consumer confidence.

TNT was founded in Australia in 1946 by Ken Thomas with a single truck. Today, TNT is a global business and the market leader in business-to-business (B2B) express delivery services, delivering up to 150 million items per year. It has the largest individual share of the national market and employs over 10,000 people across the UK and Ireland. TNT operates in the tertiary (or service) sector of the economy which provides widely varying services to other businesses and to consumers. The tertiary sector is the largest sector of the UK economy, ahead of the primary (extraction) and secondary (manufacturing) sectors.

The Customer Promise

In 2008 TNT recognised that the increasing expectations of customers meant the business had to make major changes to ensure it could meet their needs. In-depth research showed that customer satisfaction depended not just on the process of delivering the service, but also on how the service was carried out. This resulted in TNT adopting a core strategy focused on delivering a quality customer experience. It developed a two-year programme to implement and communicate its Customer Promise to employees and customers.

In order to achieve the levels of process innovation and continuous improvement that the customer focus strategy required, TNT also needed to ensure the capabilities of its people were aligned to this, particularly in delivering a high quality customer experience. A review of new employees to the company showed that only 10% held qualifications above QCF (Qualifications and Credit Framework) level 2, compared to the industry norm of 52% (as identified by Skills for Logistics Research).

This case study examines how TNT’s Customer Promise reflects its core strategy of customer focus and aligns with its corporate values to influence the organisation’s culture.

Why is customer focus so important?

Customer service is a series of activities designed to deliver customer satisfaction. The process of providing customer satisfaction is based on an understanding of what customers want and need.

Effective businesses aim to anticipate and meet or exceed these needs. It also requires effective communication.  A high quality customer experience needs to apply from initial contact through to after-sales care, whether the customer generates a one-off transaction or regular repeat business.

Factors affecting customer satisfaction

There are many different aspects which underpin customer satisfaction in a business. These include:

• ease of use – educating customers so that they know how to get the best from the service or product and designing services that are easy to use and access
• personal relationships – building a rapport with customers to make them feel valued and that their needs are important, so that they develop an attachment to the service
• appropriate payment systems – enabling customers to pay in ways that are convenient to them and at appropriate times, such as on satisfactory completion of service
• an effective complaints process – dealing with any problems or complaints promptly and making sure customers know of the outcome
• after-sales service – checking that customers have had a satisfactory experience and offering other potentially relevant services to extend the customer relationship.

The various elements of providing a satisfactory customer experience should relate to customer needs. Relevant factors for TNT customers involve:

• on-time delivery – TNT aims to deliver all documents, parcels and freight to the customer’s required timescale through its door-to-door integrated air and road network
• 24/7 tracking – TNT’s sophisticated online technology makes it possible for customers to track where their consignments are at any time of day, giving them reassurance
• personal attention – TNT can accommodate specific customer requirements for safe delivery of unusual or fragile items. For example, on one occasion, the company transported a life-sized fibreglass Friesian cow from Scotland to a farm in Northern Ireland!

The customer experience at TNT

TNT’s market is highly competitive. In TNT’s market there are at least 13 direct competitors. TNT’s Customer Promise is designed to deliver a competitive advantage, something that competitors will find hard to copy. As well as providing a ‘superior customer experience’, the Promise:

• supports TNT’s market-leading position
• helps to retain existing customers and attract new ones
• motivates staff by demonstrating their valuable input
• provides a means of differentiating the business.

In order to achieve differentiation, TNT has embedded the company’s values - ‘to be a trustworthy, values-based company with a reputation for integrity, transparency and compliance’ - into its Customer Promise. TNT claims: ‘Actions speak louder than words and that when we say “Sure we can”, we mean it’. This ‘can-do’ attitude and positive mindset affect all aspects of TNT’s business.

Demonstrating the Promise

The Customer Promise highlights the expertise and positive mindset behind TNT’s strapline ‘Sure we can’. It shows that TNT listens to customers and can add value. For example, TNT promises a ‘friendly voice at the end of the phone’. To ensure this, TNT’s own knowledgeable people deal directly with customers. Its promise ‘to resolve problems promptly’ is demonstrated by how it intercepts and repackages damaged parcels to avoid goods being damaged and customers disappointed.

Employees are instructed to be honest with customers – even if there is a problem. This fulfils its promise ‘not to over-promise’. TNT aims for its drivers ‘to do you proud’ by training them so there is the same focus on quality customer service throughout the whole process. Its promise ‘to look after you’ is demonstrated in a variety of ways: by offering a range of delivery options such as door-to-door delivery as well as online booking which allows customers themselves to reschedule deliveries where necessary to make things easier. Its promise ‘to keep our promise’ is upheld by the fact that the standards are set at the top by the managing director and communicated throughout TNT so everyone is working to the same values.

Other examples of practical changes to improve the customer experience include an online ordering service for customer stationery and an online invoicing option for those customers who want it. TNT monitors and reviews regularly all activities relating to the customer experience, both internally and externally, to ensure it remains fresh for both customers and employees.

Communicating the promise

TNT’s people meet with or talk to customers on a regular basis. They are the public face of the organisation and represent its brand values; they hear first hand what customers want or like.

TNT recognises that its Customer Promise will therefore only be effectively delivered if its employees understand every aspect of the customer relationship.

Part of setting up the Customer Promise involved communicating the change both within the organisation and externally to customers:

• Employees received a letter from the MD announcing the Customer Promise. TNT also arranged workshops to ensure everyone had the same information. It organised a job shadowing scheme so employees could understand how their roles affected other staff and potentially the customer. Alongside this, various communication tools were used to refresh the messages for all employees. These included a pocket guide, a key ring, posters, an internal magazine and videos on the intranet.
• Customers received new literature. These included the MD’s letter, an information pack for new customers and a regular customer magazine, as well as direct mail about the Customer Promise to 300,000 existing, lapsed and prospect customers. TNT also set up a new feedback option on its website for customers to give their views on the service.

Entrepreneurial culture

TNT encourages its people to ‘think on their feet’. They are expected to seize opportunities and not just meet customer requirements but also exceed them. This is part of the organisation’s entrepreneurial culture. TNT encourages people to make decisions for themselves (based around documented procedures and values), rather than wait to be told what to do.  This helps to give faster responses to customers.

TNT also set up an employee suggestion scheme, called I’dea. Employees can make suggestions for improving working practices and TNT can learn from its people as well as helping them to develop. This is part of its two-way commitment model.

Recognising the people behind the promise

Employees are one of the most important resources a service organisation has and TNT’s ability to deliver its Customer Promise rests in its people. Effective organisations need engaged people who have the skills to deliver the company’s aims and objectives. This needs a two-way commitment. Employees need to be committed to the organisation; the organisation needs to support and reward its employees.

TNT recognises the contribution its people make in different ways. First, it invests in developing people, offering a variety of career options from driving to marketing. It carries out a training needs analysis for new employees. This assesses their existing skills and abilities in order to identify the training and development requirements that employees may have in order to carry out their current roles effectively. This also helps them to progress their career within TNT.

Training and development

TNT provides the training people need to do the job (learning the specific skills and knowledge required to work in the TNT way), as well as opportunities for personal development. TNT was one of the first 16 businesses to achieve Investors in People (IiP) status. This is an independently accredited standard awarded to organisations that demonstrate commitment to people development. Investing in people helps to increase customer satisfaction and leads to more business.

TNT’s focus on enhancing people’s wider capabilities as preparation for future roles in the company leads to a ‘win-win’ situation. Employees gain from good jobs with prospects. The organisation gains from employing people who are able to promote its brand values and deliver exceptional service.  Developing people helps to ensure the company has the right skills in the workforce to improve performance today and grow the business tomorrow.

Examples of TNT’s training and development programmes include:

• a foundation degree with Hull College – this is mapped to national qualifications and focuses on the logistics industry. This is a great example of workplace learning and bridges the gap between academic study and work
• a foundation degree with Coventry University – this is mapped to national qualifications and focuses on management and leadership
• a five-year apprenticeship programme for young people in vehicle maintenance - this ensures that TNT has the skills it needs to keep its fleet up to standard.

Reward and recognition

TNT people are recognised in other ways. Employees are encouraged to move between roles to learn more about the company. This form of job enrichment means employees experience variety at work and improve their skills in different areas.

TNT also offers the opportunity to develop and progress within the company. Around 70% of supervisory roles are filled internally. Graduates who start working for TNT are expected to take on management roles within five years. High performing teams and depots receive recognition and rewards through TNT’s awards schemes. TNT’s ‘Delivering More’ scheme rewards and recognises those employees who have gone beyond the call of duty. Over 4,000 awards are made each year.

Conclusion

Effective customer service involves meeting or exceeding customer needs. However, customer service is not just about what you do for your customers, it also concerns how the service is carried out.

TNT monitors and measures performance to ensure its activities are delivering the strategy. For example, it conducts telephone interviews each week with a sample of customers to review their perceptions of its services and assess levels of customer loyalty.

Delivering results

Since TNT’s strategy of focusing on the customer experience was set up in 2009, it has delivered strong results:

• TNT has achieved the highest levels of customer satisfaction in its market measured on 31 aspects linked to the Customer Promise.
• The Customer Promise programme has increased productivity and generated savings overall of almost £660K.
• The company achieved its targets in 2010 and 2011 despite the difficult economic climate.
• 100% of new operations employees will have a relevant qualification, making TNT the industry leader.

Developing a sustainable supply chain to add value - A Lafarge case study

Introduction

Lafarge may not be a company name that you would quickly recognise but its products and expertise have helped to create some of the UK’s biggest infrastructure projects, including the M25 motorway, the Channel Tunnel, Canary Wharf in London and several UK power stations.

The Lafarge Group is the world’s largest supplier of building materials and has a global reputation for developing creative and innovative products, services and solutions. The company produces essential products – cement, aggregates and concrete – which are integral to society. Cement and concrete are basic materials in all walks of life – everyone relies on the country’s infrastructure such as roads, hospitals, power stations, housing and railways.

The Group employs over 68,000 people in 64 countries and Lafarge’s four Business Units in the UK (Cement, Aggregates, Readymix concrete, and Asphalt) have nearly 3,000 employees working across more than 200 sites around the country. As market leader, it holds around 40% of the UK cement market. Lafarge’s business is based on its core values. These, along with highly skilled and experienced people, provide the platform for operating safely and responsibly.

Lafarge is facing many interesting challenges. As a major extractor of raw materials in the primary sector, issues of sustainability and corporate social responsibility are of high importance. The drive for increased sustainability affects every part of Lafarge’s activities – from extraction and manufacture, to transport and delivery, to waste reduction and restoration. In recognition of its high record of achievement, Lafarge has won several major industry awards in the UK, including one from the Environment Agency for its work on recycling water.

Lafarge's values

Managing health and safety for employees, contractors, the wider public and environment throughout these processes is vital. Lafarge believes that ‘No task is so important that anyone should get hurt doing it’ (Dyfrig James, President Lafarge UK). It has a stated goal of ‘Zero Harm’ – that is, zero accidents, incidents or job-related illness. This objective applies to employees, its supply chain and the public.

Together, the drive for increased sustainability, coupled with a continuous focus on health and safety, is generating a need for high quality recruits at both graduate and apprentice levels. They will provide the creative solutions that the business and the industry need to meet these challenges. Such recruits are needed, not just in science or engineering, but also in manufacturing and commercial parts of the business.

This case study will explore how Lafarge UK is active in all three sector of industry and how it manages the need to develop the business alongside protecting the environment and respect for local communities.

Sectors of industry and sustainable supply chains

Business activities may be classified by the type of production that takes place. All activities fall into one of the following three sectors of industry:

• Primary – involving the extraction of raw materials or the growing of crops
• Secondary – involving a transformation of raw materials into finished goods
• Tertiary – covering the provision of services.

Since the C19th, the balance of UK activity overall has been changing, moving to an increasingly service-orientated economy. Industries such as mining (primary) and manufacturing (secondary) have reduced due to cheaper goods from overseas competitors. In 2011, the primary sector accounted for 1.4% of UK GDP, the secondary sector for around 22% of GDP, with the tertiary sector dominating with just over 76% of GDP. However, certain key industries in the UK, such as steel and cement, have experienced growth, with new technologies and innovation driving demand. Lafarge therefore needs more people with both specialist and generalist skills to meet that growth.

The interdependence between the sectors is known as the ‘chain of production’. This identifies the interlinked stages that a product goes through from raw materials to arriving at the final customer. Each stage adds value to the previous one. A sustainable supply chain aims to ensure that the business is conducted in a manner which can be maintained in the future and which does not impact adversely on future generations. The key challenge is to deliver products and services that give value to the business and the customer, whilst maintaining a positive environmental impact.

Lafarge operates in all three sectors of its industry, extracting raw materials, manufacturing finished goods and providing sales and after-sales service for customers. In this way, Lafarge is able to take control of and manage not just operational efficiencies but also quality, health and safety and its impact on the environment.

Primary sector

Cement is a product that originally dates back to the Egyptians and Romans. However, since its ‘rediscovery’ in the C19th, it has been evolving in response to new technology and innovation resulting in the complex product of today. In a typical year, the UK mineral products industry contributes to the building of 160,000 new homes, improvements to water services and the maintenance of the UK road and rail networks.

There are around 1,300 quarries and manufacturing sites in the UK producing £5bn worth of products each year. Over 80% of the raw materials used in its processes come from Lafarge’s own operations and are therefore under its direct control. This integrated supply chain ensures Lafarge can manage quality, quantity and guaranteed delivery though its own activities.

In its primary sector activities, Lafarge’s extraction processes involve drilling or controlled explosions to blast limestone, granite, shale or clay from quarries. This provides the raw ingredients required to make cement, aggregates and concrete. The rock is transported to a crusher to produce the different sizes of rock needed to suit different products for customers.

Sustainability 

Lafarge is committed to sourcing its materials and managing extraction in the most responsible and sustainable way possible. Rock quarries are usually operated for many decades and then restored. Sand and gravel quarries are shallower than rock quarries and can be worked in stages. This means the land is used and restored in phases. As the majority of raw materials to make cement come from new quarries, Lafarge is also investigating how it can reduce dependence on these sources. It is looking at ways of treating waste and by-products from other industries to replace natural materials. This is an important aspect of its sustainable practices.

In addition, it works with external bodies such as the Environment Agency in the planning stages of assessing a new quarry site. This means Lafarge can take into account key issues affecting the environment from the outset. At the end of the quarry’s life, Lafarge is committed to the restoration of land. For example, it uses recovered inert waste from its extraction and waste management processes as part of the restoration process.

It then works in partnership with other organisations (such as the Staffordshire Wildlife Trust) to re-use the land for the good of the community and to provide a lasting legacy. For example, the National Memorial in Staffordshire is on a former quarry site. Lafarge has also been involved in managing 34 SSSIs (Sites of Special Scientific Interest), as well as creating award-winning parks, lakes and education centres. Over 700 SSSIs have been developed in the UK from former sites of mineral operations.

Secondary sector

A business will aim to add value (both financial and non-financial) as a product moves from inputs to outputs across the three sectors of industry.

Globally Lafarge invests over 170 million Euros every year into research and development. This makes it one of the world’s leading research and development companies. This investment helps to provide ongoing innovation in its secondary sector production processes which benefits customers. Its skilled chemists and scientists work in laboratories across the UK. For example, it created a self-compacting concrete called Agilia®. This saves customers' time and money in the construction process.

It creates value for the client due to less time being needed for application and lower costs of equipment. This also contributes to a healthier environment for construction workers.

The manufacturing process to create cement involves heating the raw materials to a very high temperature, grinding the clinker finely and adding different minerals to the resulting cement to give different properties. Important properties customers look for include increased resistance to weather or a higher quality finish. Lafarge is the leader in the development of low carbon cement products and has five main manufacturing locations, producing 5 million tonnes of cement each year.

Reviewing processes

By its nature, cement manufacturing consumes large amounts of non-renewable resources and also generates CO2. Lafarge is therefore committed to reviewing its processes to reduce its impact on the environment. Its production plants are certified under British Standards for both quality and environmental management. One way in which Lafarge helps to minimise its impact and emissions is by having on-site concrete production plants for large-scale projects. This is more efficient and enables Lafarge to provide continuous supply throughout the life of the project.

As a major user of significant amounts of water in its processes, Lafarge is also piloting ‘water footprint’ assessments. These aim to use water more efficiently and reduce consumption where possible. Other examples of Lafarge’s ‘best practice’ include:

• using the fly-ash waste product from iron and steel smelting to make low-carbon cement
• using alternatives to fossil fuels (such as chipped used tyres) in the kiln heating process
• investing in more efficient manufacturing units
• offering a cement recycling service to customers for unused, outdated bags of products.

Lafarge also takes innovation right through the supply chain into its packaging. Its weather-resistant plastic packaging is easier to handle and is tear resistant. Both effects benefit customers. Plastic packaging for cement perhaps surprisingly, is more sustainable than paper as less material is lost through damaged bags, which is better for the environment.

Tertiary sector

At the later stages of the supply chain, Lafarge’s activities in the tertiary (or service) sector range from transporting finished goods to providing a specialist advice and after-sales service for customers. This ensures they get the best use of the products.

Lafarge supplies its products in large volumes to intermediaries, such as local authorities or building companies, where the products are used on major projects. An example is Terminal 5 at Heathrow Airport.

Lafarge uses different means of transport – road, rail and water – to help it reduce carbon emissions wherever possible. Lafarge has a fleet of road vehicles for transporting bulk cement. It has modernised the fleet to increase the loads each tanker can carry in order to reduce the number of vehicles on the road and reduce emissions. Of its nationwide network of 14 depots, 11 have direct rail access. More than one million tonnes of cement a year is moved by rail, more than any other company. This removes hundreds of thousands of vehicles off the roads each year, reducing congestion, pollution and CO2 emissions. Lafarge is also an expert in transporting by water.

Adding value

One important area of added value for customers is through Lafarge’s Construction Solutions and Contracting services. Its technical sales people, along with IT, purchasing and customer service teams, provide ongoing support and advice for customers.

• Lafarge Contracting specialises in providing asphalt based solutions for surfacing projects. These might be as wide ranging as car parks, race tracks, bus lanes, housing developments and airport runways.
• Construction Solutions uses all Lafarge’s expertise, from aggregates to cement, to offer a ‘one-stop-shop’ service. This provides all the expertise and materials to take a project from initial design, through production, to finished installation in one combined service.

Lafarge continues to demonstrate its innovation and sustainability in the tertiary sector. As part of its sustainability plans, Lafarge goes beyond simply managing or restoring its extraction sites. By adopting the principles of re-using waste products from other industries, Lafarge can respond to environmental challenges in a sustainable way:

• Its energy recovery service recycles used tyres for fuel.
• Landfill sites have processes for separating out waste in order to recover re-usable materials.

Conclusion

To generate the cement and concrete that the building industry needs, it is necessary to extract raw materials from the earth. In order to minimise the impact its activities have on the environment and create a sustainable business, Lafarge has put in place principles and best practices across its integrated supply chain.

By focusing on re-use, recycling and reducing emissions in every stage, from initial planning of a quarry, to final restoration of the land, Lafarge is maintaining a sound business whilst respecting the environment and supporting local communities.

Lafarge continues to be heavily involved in restoration projects such as the newly completed Chalk Grassland project in Kent which has restored 40 hectares of grassland for sheep grazing. It is also in partnership with the RSPB at a prospective project at the Dunbar Works in Scotland, where the quarry site is being transformed into a nature reserve.

Devising a communications plan - A Kellogg's case study

Introduction

Research shows that children benefit from eating a healthy breakfast prior to the start of the school day. However, too often children have no breakfast at all or eat chocolate or crisps and a fizzy drink on their way to school.

This case study examines how Kellogg’s devised a plan to communicate the importance of breakfast to selected target audiences through a multi-platform campaign. This was in support of its ‘Help give a child a breakfast’ campaign launched in October 2011.

Kellogg’s is the world’s leading producer of cereals. Its products are manufactured in 18 countries and sold in more than 180 countries. Kellogg’s produces some of the world’s most easily recognisable brands such as Kellogg’s Corn Flakes, Coco Pops and Rice Krispies. For more than 100 years, Kellogg’s has been a leader in health and nutrition through providing consumers with a wide variety of food products.

Breakfast clubs

Kellogg’s has been active in supporting breakfast clubs in schools for many years, working with the education charity ContinYou, the experts on breakfast clubs. Breakfast clubs provide a healthy meal at the start of the day in a safe and friendly environment. They also provide a great opportunity for kids to play, learn and socialise with classmates.

Since 1998, this partnership has set up 500 breakfast clubs in schools across the UK. Interested schools have been supported with training on how to start a club and have received a start-up grant from Kellogg’s.

According to research by Kellogg’s, many schools have run into trouble with the funding of their breakfast club due to recent budget cuts by the UK government. Kellogg’s responded by putting a team together to create a communications plan which highlighted the importance of breakfast clubs to parents, schools, the UK government and the public.

Writing a communications plan

The communication process involves transmitting information from a sender to a receiver. However, effective communication needs to ensure that the message has been not only received but also clearly understood. This is relevant whether the communication is internal or external. The message needs to be sent in a way that it will appeal to and be understood easily by the target receiver or audience. This involves selecting an appropriate format or channel to deliver the message.

Examples of media that may be used include a leaflet, a television advert and a personal letter. The feedback part of the process is vital as this is how the sender knows if the message has been received correctly.

For the message to be effective, barriers to communication (known as ‘noise’) need to be eliminated or reduced. Noise is anything that might distort the message or prevent the receiver getting or understanding the message. For example, noise might include using language or jargon that the receiver will not understand or using a channel such as email or the internet when the receiver does not have a computer.

Tailoring the message

A communications plan uses the same principles of tailoring the message and the delivery channel for a target audience. A communications plan also sets out the overall objectives to be achieved and the means by which these will be measured.

Businesses engage in both internal and external communication. Internal communication may involve transmitting messages to shareholders, senior managers, other employees or contractors. Communication externally may be to a range of stakeholders including customers, suppliers, the media, government or the wider public. In each case, the nature of the message and the format used may be tailored to suit the audience. An effective internal communications plan can help to give clear direction within the organisation and improve employee motivation. Externally, it can even change public opinion.

Background and purpose

Research commissioned by Kellogg’s showed that as many as 1 in 7 children in the UK do not eat breakfast and that up to 25% eat crisps, chocolate or fast food on the way to school. In addition, 1 in every 8 (around 3,000) breakfast clubs in the UK have closed due to government budget cuts and up to 45% of remaining clubs were at risk of closure.

Research with teachers showed that the majority believe that the lack of breakfast opportunities would lead to poorer academic results and worsening behaviour in schools. The purpose of the Kellogg’s campaign was to show its commitment to breakfast clubs in schools in the UK. The important messages that the campaign was aiming to get across were that:

• breakfast is important for people of all ages especially young people
• breakfast clubs positively impact on children’s behaviour, attendance and ability to concentrate in morning lessons
• Kellogg’s has supported breakfast clubs since 1998
• by buying Kellogg’s Corn Flakes you are helping to feed children at breakfast clubs.

Kellogg’s faced potential noise for its messages from different sources. At the time, the government spending review was high profile in the press which could have resulted in the Kellogg’s story being overlooked. In addition, other food companies also support breakfast clubs which could have led to confusion or dilution of its messages.

It also needed to make clear that this was not a marketing effort to promote Kellogg’s brands but a part of the company’s longstanding Corporate Responsibility programme. Corporate Responsibility involves understanding the impact the business has on the wider community and working to make that impact positive. Kellogg’s has been supporting breakfast clubs in schools and local communities for 14 years and has invested over £1.5 million to date.

Fitting the message to the audience

The Kellogg’s breakfast club campaign had a number of key objectives which depended on promoting the right messages to different audiences. Key aspects of the campaign were not only to get messages across about the benefits of breakfast and breakfast clubs, but also to raise funds for the clubs through the sale of Kellogg’s products and to make schools aware of the available funding from Kellogg’s to support their breakfast clubs.

In order to achieve these objectives, Kellogg’s devised a communication plan for internal and external stakeholders. The main internal stakeholders being targeted were Kellogg’s employees. They were encouraged to get involved through information posted on the company intranet (internal communication). Employees were also invited to attend a breakfast club in the atrium of the Kellogg’s building with two local primary schools and then visit breakfast clubs that received funding from Kellogg’s.

However, the campaign was primarily designed for the needs of external audiences. These included:

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• Schools – to alert them to the Kellogg’s grants available, inviting them to apply for funding.
• The media – to generate excitement and press interest about the campaign and to increase public awareness of the issues involved.
• Parents – to demonstrate Kellogg’s socially responsible stance and inform them how breakfast clubs could support their children.
• Members of Parliament (MPs) – asking them to encourage schools in their constituencies (i.e. the area that they had been voted to represent) to apply for funding.
• The public – to attract consumers to buy Kellogg’s products in order to generate additional funding for the breakfast club initiative.

Using the right medium

In order to convey any message effectively to a targeted audience, the most suitable medium and channel needs to be used. For example, if a company wants to promote products with a mass market appeal to a wide audience, it might use well-scripted television advertising. To advertise a job opportunity for a finance director of a company, a business might place an advertisement in the Financial Times (or other financial and business-related publications).

Take, for example, the message that ‘Kellogg’s supports breakfast clubs’. How should Kellogg’s communicate this message to children and parents? Kellogg’s approach was to use a multiplatform campaign. This is an approach which communicates over a range of media, rather than using just one, in order to reach many different audiences.

The various campaign communications involved a mixture of formal and informal communications. Formal communications are through approved channels and so might include, for example, a company policy document or a press release. Kellogg’s formal communications included the letters sent to MPs.

In contrast, informal communication is more spontaneous and less structured, for example, a chat with colleagues over coffee. Informal communication can be very effective in a business as it has the advantage of being quicker and more direct. Kellogg’s face-to-face interactions at breakfast clubs and the briefing to mummy bloggers demonstrated a more informal approach to communication. The problem with informal communication is that it could result in rumours that can cause messages to be mistrusted or even convey inaccurate information.

Conclusion

Breakfast clubs provide a healthy meal at the start of the day in a safe and friendly environment. They also provide a great opportunity for kids to play, learn and socialise with classmates. Kellogg’s has long supported breakfast clubs and so planned a multi-platform approach to communicate key messages about the importance of breakfast and breakfast clubs to various audiences. The feedback to any communication is important to evaluate whether your messages are reaching the target audience effectively. Kellogg’s therefore carried out an evaluation of its campaign. Highlights include:

• The first six weeks of the campaign generated 73 press articles across a variety of media – including news coverage on ITV’s Daybreak and news articles in The Observer and The Independent. All carried positive reaction to the messages and reached a potential audience of nine million people.
• Over 700 schools applied for the funding and around 500 of these received a grant of up to £450 for their breakfast club.
• Kellogg’s employees have attended 15 of those breakfast clubs with the local MP to see what difference the funding has made to the children.
• The money raised from the campaign will provide a million breakfasts by the end of 2012.

These results clearly indicate that Kellogg’s has communicated its messages effectively. The time taken in planning the communications through a multi-platform approach worked in relation to each of the targeted audiences. As a food company that takes its responsibility for nutrition seriously, Kellogg’s has maintained its commitment to write to and talk to key government officials to get the message over about the importance of breakfast for children. This highlights how effective communication is not just a one-off event but an ongoing cycle requiring evaluation and a response to feedback received.