5 trends making supply chains more sustainable
Sustainability is an element of supply chains that has garnered increased attention over the past several years. Consumers are moving away from brands that don’t promote sustainable supply chain practices and closer to ones that do. While we know to associate sustainability with positive, green change, what does this really mean for a supply chain leader? What does a sustainable supply chain look like and more importantly, what are some steps you can take to create a sustainable supply chain?
What is Sustainability?
Sustainability in supply chains pertains to operational efficiency related to procurement, logistics, deliveries, human resources, and achieving pre-determined goals. In the modern supply chain, sustainability must also cover more consumer centric aspects such environmental sustainability and social responsibility. Despite the evidence indicating the need for sustainability, some supply chains are still lagging. This could be due to lack of proper education, resources, or simply not knowing where to start. Here are a few actionable steps you can take to make your supply chain more sustainable.
1. Supporting lower tier suppliers
Despite implementing sustainability practices, companies are still at significant risk if second- and third-tier suppliers aren’t implementing those same practices. We’ve all seen news articles on giant companies sourcing materials from lower tier organisations that have abysmal track records in sustainable practices.
Companies like Dell, Apple and HP have been in the spotlight for procuring electronics from companies with poor ethical and environmental standards. The reliance on ‘sweatshops’ for the manufacture of high-end products like Nike and Adidas has also show the reputational damage that companies face when not promoting sustainable practices.
Finding lower tier companies that adopt sustainable practices can prove quite challenging, which is why the current trend in supply chain is to foster those changes from the top down. Larger corporations are adopting peer learning whereby smaller organisations in their supply network are gaining insight into sustainable practices - with awards, long-term contracts, and preferred status the reward.
2. Industry-wide collaboration
Building a sustainable company requires interaction from all active players- we essentially need to start conversations. Collective and collaborative efforts of those in the supply chain industry, coupled with their individual governments is essential for seeing real change. To meet the global labour, social and environmental practices within the industries, companies need to collaborate with their competitors across the supply chain.
This is a welcome trend and has resulted in the formation of a number of global networks and alliances such as the Responsible Business Alliance (RBA), the Action for Sustainable Derivatives (ASD), the United Nations Global Compact and the Carbon Disclosure Project’s (CDP’s) Supply Chain Program, among others. This pooling of resources and expertise increases the speed with which companies are adopting sustainable practices and expands the pool of reliable suppliers.
3. Training and incentives
There is a lot of legislative information surrounding sustainability requirements, and one of the biggest hurdles to achieving these goals is a lack of proper education and training. To combat this, the latest trend in sustainable supply chain is effective training of procurement officers, as well as the provision of worthwhile incentives for meeting goals. Sustainability centres on the three Ps: Profit, People, and the Planet. While profit has always been the driving force, procurement officers need to understand this isn’t possible without focusing on people and the planet as well. When we train the necessary people and prioritize our planet when implementing these changes, companies will ultimately see the profit on the time invested.
4. Data collection and analysis
Supply chains are full of insightful data that holds the answer to many sustainability challenges. By adopting relevant technologies and taking a collaborative approach, organisations are able to collect measurable data related to the supplier’s capacity and sustainability performances. Data analytics provide the visibility required for a company to understand if their sustainability goals aren’t being met. By integrating the proper data analytics into your supply chain, these issues can immediately be addressed before they become problematic.
5. Assign a sustainability team
The training and incentivisation of procurement officers is important, but the responsibility of achieving sustainability in supply chain can’t fall on them alone. That’s why companies are now establishing sustainability teams or councils, ideally with representatives from each sector in the supply chain. They’re tasked with strategizing the sustainable practices, oversight, and the removal of any barriers to supply chain sustainability.
Key takeaways
When it comes to sustainability in supply chain, companies must consider the social and environmental elements alongside cost-saving practices. Without these elements working in conjunction, there’s a risk of lagging in sustainable practices; ultimately leading to reputational damage and a loss of profit.
By assigning a dedicated sustainability task team, collaborating with competitors, and providing the necessary skills training to suppliers and staff, companies are better prepared to meet their sustainability goals. This is not an isolated challenge, it’s one that all companies across the supply chain need to address systematically, working together to secure a more sustainable supply chain future.
