Supply chains have become a focus for many companies since they use a lot of resources and money and are frequently a source of waste. As a result, supply chain sustainability has become a top corporate priority. From the beginning to the end of their life cycles, businesses have begun to assess the environmental and societal impact of their products and services.
Companies' attempts to address the environmental and human effect of their products' journey through the supply chain, from raw materials sourcing to manufacture, storage, delivery and every transportation connection in between, are referred to as supply chain sustainability. The goal is to reduce environmental damage caused by elements such as energy use, water consumption and waste creation while also benefiting the people and communities in and around their activities. These considerations are in addition to standard revenue and profit concerns in the business supply chain.
What Is Sustainably Managed Supply Chains?
Sustainable supply chain management aims to respect environmental and societal values as opposed to traditional supply chain management, which focuses on speed, cost and dependability of operations. Climate change, water security, deforestation, human rights, fair work standards and corruption are all examples of global challenges that must be addressed.
Why Is Supply Chain Sustainability Important?
The supply chain is responsible for the majority of a company's environmental impact. Supply chains, by their very nature, sometimes involve energy-intensive manufacturing and transportation as items are manufactured and transported throughout the world. As a result, rather than other business processes, companies can typically make the most effect by changing their supply chain.
Supply chain sustainability is especially difficult due to the intricacy of numerous supplier connections and border crossings. This complication can make it difficult to see critical operational considerations like a supplier’s labour conditions.
It is challenging to integrate sustainability into a company's supply chain, yet failing to do so could be the most dangerous risk of all. Several preliminary measures can be taken by businesses to move toward more sustainable supply chains:
1. Create a supply chain map:
Many businesses do not have a complete awareness of their supply chain's sustainability implications. Inventorying suppliers, identifying the most severe environmental and social concerns they face and prioritising work with suppliers are all important first steps.
2. Make expectations clear:
Focusing on sustainability in your supply chain is an excellent approach to promote your company's values and culture to suppliers and customers. A supplier code of conduct is an important step in enlisting suppliers in your sustainability initiatives since it establishes and communicates expectations.
3. Supplier performance at the start:
Collecting data from suppliers via a simple benchmarking questionnaire or self-assessment can provide you with an insight of your starting place once you know who your target suppliers are and have defined compliance rules.
Many companies, such as retailers and large brands, have begun using questionnaires and surveys to assess the performance of their suppliers. In self-assessments connected to areas that are crucial to their business, businesses are increasingly incorporating all topics mentioned in their code of conduct with specific focus and weight.
4. Create training and capacity-building initiatives:
This is a critical step in enhancing sustainability and influencing behavioural changes across your supply chain. There are numerous external resources available to aid these efforts, some of which are targeted to specific sector needs. Using best practices and case studies from top-performing suppliers at yearly vendor conferences, online training modules and capacity-building programs is one effective way to transmit knowledge across the supply chain. Companies not only celebrate the efforts of selected suppliers by presenting their success stories, but they also showcase the actual benefits of sustainability initiatives to others in the supply chain.
5. Encourage employees to enhance their performance:
An audit program can monitor performance improvement over time once the baseline performance of suppliers is known. Onsite audits can uncover local practices, behavioural issues and practical chances for development that are difficult to find through questionnaires alone.
Once your company has implemented an audit program, be ready to act on the results by developing and implementing corrective action plans, clearly communicating the results and your expectations to suppliers, developing a capacity-building program and if necessary, terminating clients that are not compliant.
Assessments and audits, when combined with incentive programs that recognise and reward sustainability efforts, have a larger impact on sustainability performance. Promoting openness and selecting or awarding more business to suppliers who perform better in terms of sustainability can be quite successful in promoting progress. If this isn't achievable, incentives such as increased access to your value chain, such as access to consumers or clients, can help.
6. Participate in industrial collaborations:
Many businesses understand that supply chain challenges cannot be solved by individual efforts alone and that industry-wide collaboration is essential. Peer companies with similar supply chains can develop shared standards and best practices for sustainability performance in a pre-competitive context, allowing suppliers to be evaluated on the same metrics. These alliances enable suppliers trying to satisfy comparable client criteria avoid audit fatigue, redundant training and mounds of paperwork. Working with your colleagues in the industry is a wonderful method to share information about your suppliers' sustainability performance.
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https://www.prologis.com/what-we-do/resources/sustainability-in-supply-chain-management https://www.netsuite.com/portal/resource/articles/erp/supply-chain-sustainability.shtml https://www.greenbiz.com/article/6-steps-more-sustainable-supply-chain https://www.globaltrademag.com/10-technologies-that-promise-a-more-sustainable-supply-chain/