Supply chain sustainability sounds like it should be table stakes for our industry. However, rapidly changing business conditions often cause organizations to suffer from unplanned heavy demand and unrealistic deadlines. This causes upstream suppliers to request overtime from their resources to meet demand surge. Even though downstream organizations follow sustainability guidelines, high demands and local laws and regulations often make it more difficult for upstream organizations to do so.
According to UN Global Compact: “Supply chain sustainability is the management of environmental, social and economic impacts and the encouragement of good governance practices throughout the lifecycles of goods and services. The objective of supply chain sustainability is to create, protect and grow long-term environmental, social and economic value for all stakeholders involved in bringing products and services to market.”
We continue to uncover incidents such as suppliers dumping toxins into rivers, diesel cars that are cheating emission tests and the Rana Plaza collapse in my region, for example, that bring glaring supply chain sustainability issues to the surface. The COVID-19 pandemic has only reiterated how the loss of habitats and natural ecosystems can poorly impact human lives. It is an obvious fact that organizations must understand that they are part of a larger system which is beyond just “going green.”
Sustainability in a supply chain include the sustainable sourcing of raw materials, reducing pollution, reducing amount of waste, reducing carbon emissions along with ensuring health, safety and good conditions for workers where no child-labor violations exist. A sustainable supply chain helps to improve productivity and efficiency while creating significant cost savings.
Overcome your barriers to establish a sustainable supply chain with these seven steps:
1. Set the stage
You can’t possibly reform your whole supply chain at once in a sustainable way. Reviewing your supply chain network design and identifying critical issues from top to bottom where most emissions and risks are located help ensure a smooth start. Don’t forget to look at global sustainability agendas, scientific research and government regulations for guidance. Once all improvement areas are identified, you can treat them as key areas to focus, prioritize them, establish a long-term strategy and set goals and objectives for the organization and how to achieve them.
2. Establish internal policies and procedures
Stick to your strategy, goals and objectives by creating policies and procedures that align with them. This step requires employees who understand the business processes and have skill to redesign them. These employees can act as change agents inside the organization to reinforce and cascade the meaning of your sustainability strategy.
3. Engage with suppliers
Sending sustainability surveys to evaluate where your suppliers stand in the process is a good start. After determination, if they have no ongoing sustainability effort, you may help introduce sustainability programs that directly support your own goals. For suppliers who already have a sustainability program, you may consider engaging them by:
- Delivering training to increase knowledge transfer and ensuring best practices are followed
- Implement carbon emission ratings in supplier scorecards
- Establishing and communicating expectations through a supplier code of conduct
- Giving sustainability awards and recognitions
4. Improve visibility
Modern digital technologies make it possible to provide real-time visibility despite supply chain complexity. In large organizations, end-to-end supply chain planning is used to make operations more efficient and sustainable. It is no secret that leveraging the best in available technologies can lead to more sustainable supply chains.
5. Integrate sustainability across functions, roles and responsibilities
Even though procurement may play the biggest role here because they can directly address suppliers’ social and environmental impact, all departments and employees at all levels should take sustainability training to understand its importance and how to align their own performance targets with the company’s sustainability goals. Implementing sustainability teams that track impact and progress could be beneficial to improve cross functional cooperation as well.
6. Put a governance policy in place
Establishing a governance policy helps to maintain accountability throughout the entire process. Going through a routine audit will also help protect the liability of your governance team and ensure that best practices are followed.
7. Track performance
Incorporating specific and measurable key performance indicators (KPIs) will help keep track of your organization’s sustainability progress. Supplier scorecards might come handy for external performance measurement in addition to supplier self-assessments and supplier audits.
To help our customers meet sustainability goals, we have developed the Strategic Network Analysis Process (SNAP). Learn more about SNAP and how improving network design could trim more than 15% off your supply chain costs, while furthering your global mission of sustainability.