Imagine you're head of supply chain at a popular and growing consumer health products company, facing the usual challenges of sourcing safe and effective ingredients, evaluating suppliers, negotiating contracts and working with your internal manufacturing.

Now imagine that same scenario, except every ingredient and material you buy has to be certified all natural and preferably Kosher and every supplier you work with has to document they do not perform animal testing. And your company has recently been acquired by one of the largest consumer products makers in the market.

What might be a nightmare to some supply chain professionals is the dream job for the supply chain team at Kennebunk, Maine-based Tom's of Maine, the popular maker of all-natural toothpaste, deodorant and other consumer healthcare products. Colgate-Palmolive acquired the company in 2006.

While most buyers have the challenge of narrowing down a wide array of materials suppliers, Bill Hetzel, supply chain leader at Tom's, says often he has the opposite challenge of finding at least one or two suppliers that meet Tom's very strict supplier evaluation criteria. Besides requiring certification that suppliers' products are all-natural and include as little processing as possible, Tom's insists that suppliers have positive environmental and product stewardship practices.

Hetzel heads up a three-person supply chain team that sources just about all of the ingredients for Tom's products and packaging (indirect materials procurement is handled separately) and spearheads much of the production forecasting and scheduling. The secret to finding and working with suppliers that match the company's values, he says, is a deeper level of partnership than is typical in the consumer products industry. And while Hetzel admits "partnership" is an overused term in the supply chain today, he insists it's the best way to describe Tom's supplier management strategy.

"Long before it was fashionable to reduce and partner with your supplier base for strategic reasons, we, as an all-natural company, used that as part of our values—it's essential for our success to develop deep supplier relationships," Hetzel says. "There are fewer all-natural suppliers and what we ask of them is more demanding. If we're working with a brand-new supplier that is not familiar with us, we have a stewardship model that provides the standards for our sustainable, natural and responsible goals."

For example, Tom's of Maine asks its suppliers to document they do no animal testing, which can cut the number of suppliers down considerably in some areas.

But while there may be fewer all-natural suppliers to choose from, Hetzel points out "there are more certification agencies today that will certify products and suppliers," which helps expand the potential supply base. In fact, in some cases, rather than find a new supplier to provide an ingredient, it's easier to have an existing supplier that understands the company's philosophy develop the ingredient or product.

Hetzel points to a recent supply chain quandary as an example of the lengths Tom's is willing to go to in maintaining its all-natural status. Tom's wanted to develop a toothpaste for sensitive teeth, but the Food and Drug Administration's requirements for such a product require the use of potassium nitrate. For most companies, it would mean simply sourcing a synthetic version of potassium nitrate from any number of suppliers. But since Tom's uses only all-natural products, it had to find a natural source of potassium nitrate.

"So we found a mine in Chile that produces potassium nitrate," Hetzel explains. But the naturally occurring potassium nitrate did not meet the FDA's purity requirements as it came out of the mine. So Tom's found another company that could purify the naturally occurring potassium nitrate to make it acceptable to the FDA's purity levels.

"Although it costs up to three times more than the synthetic version, we are willing to go to that length because we know there is a consumer that wants an all-natural sensitive toothpaste."

And therein lies another major challenge for Hetzel's team: ensuring that its stable of all-natural suppliers don't force Tom's to charge overly high prices for its consumer products. In fact, one of the company's statements of belief is that it can "operate in an environmentally sustainable manner and still be financially successful," according to Hetzel.

"We don't treat it as a trade-off, but a belief that we can do both together. We use creativity to find a way to make it a win-win," Hetzel says. "And a lot of that is done through communication with both our customers and our suppliers," he adds, referring to the company's efforts to identify its customers' needs and match those up with its suppliers' capabilities.

"If it were truly too expensive or if it were truly not an all-natural product, we couldn't do it. But typically we can find the balance and create a match."

Some of its Green supply initiatives can in fact reduce supply chain costs. For example, Tom's receives the packaging for its deodorant products in large corrugated containers. Typically a company will open the corrugated, remove the packaging for use and recycle or trash the larger corrugated containers. But Tom's goes one step further and ships the corrugated back to its supplier for re-use.

"This worked so well for this supplier on both an economic and a sustainability level, they are now encouraging other customers to do the same thing," Hetzel reports. "So that is an example where one of our practices really impacted those of our supplier for a win-win."

Another example of Tom's sustainability efforts benefiting its suppliers came from examining and understanding the ink used on its corrugated boxes. After talking in-depth with its corrugated supplier, Tom's discovered that the ink used on the corrugated being shipped was a "perfect black" ink, which produces a waste ink as a byproduct.

"During the course of our conversation we discovered that they pool their waste ink and it's just basically a black ink of lower quality. We don't need a perfect black ink on our corrugated. So we worked with the supplier to use the waste ink to print on our cases. So using the waste ink helps the environment, reduces the supplier's costs and meets our needs."

Global sourcing is something of a grey area when it comes to Tom's of Maine's usually very clear values. While the company tries to use local suppliers whenever possible, Hetzel says the company doesn't "set artificial boundaries that say we won't import products from abroad. All things being equal, we prefer to work with a supplier closer to us just for the sheer energy savings."

For example, Tom's recently released a new toothpaste that used a surfactant ingredient that is sourced from licorice. But licorice doesn't grow in Maine, so the company sourced the product abroad. "We would be doing our customers a disservice by saying 'we can't make that product because licorice doesn't grow here.' That's a great chance to get into a new product line."

Even recruiting new employees for an all-natural manufacturer is different. Chris Chappell, consumer care director at Tom's, says one of the criteria for hiring a new employee is their ability to grasp and understand the company's mission and values—much more so, perhaps, than at other manufacturers. "We know there's a big learning curve and we'll have to train someone no matter how much industry experience they have," Chappell says. "We would rather have someone that can work with our mission because in the long-run that person will help our company more. So we start with the stewardship model."

In addition to fully understanding and embracing the company's stewardship model, one of the primary training vehicles for employees is the Saltwater Institute, a non-profit, educational foundation co-founded by Tom Chappell (the "Tom" in "Tom's of Maine") to build "values-centered leaders and organizations" according to its website. In addition to employees, some suppliers even take courses at the Saltwater Institute to get a better understanding of Tom's of Maine's goals.

"For example, if an advertising agency we hire is going to 'get' what we're after, they will need to go through some of this training so they can speak in our voice," says Chris Chappell.