5 Sustainability Questions Supply Chain Leaders have to Ask themselves
April 23, 2012|
In the past, “sustainability” within the supply chain meant little more than greenwashing. Companies would state they were making strides to be more eco-friendly—whatever that meant.
Today, however, sustainability has become a bigger part of the conversation within the supply chain and many companies are actually making great strides to reduce consumption, produce more economical products, and produce safeguards against working with suppliers with little regard for human rights.
A great impetus for this change has been consumers, as they’ve demanded more accountability from its suppliers. Shareholders, too, have taken notice and companies have been forced to react. It’s what Steve New called the “transparent supply chain” in his article in the HarvardBusinessReview.
But sustainability isn’t something that can be turned on by a light switch. Leadership has to step up to the challenge and work toward a better Earth and a better tomorrow. In fact, these discussions have been at the top of the docket for many supply chain leaders, according to one whitepaper from Oracle:
“Today, sustainability has replaced cost, value and speed as the dominant topic of discussion among purchasing and supply professionals.”
What are the questions that supply chain leaders need to ask themselves to ensure that sustainability can eventually become synonymous with cost reduction and social responsibility? I think it starts with these five:
- Are we measuring sustainability to the best of our abilities? Measurement is crucial because it shows leadership which initiatives are making a real, bottom-line affecting difference. Additionally, accurate measurement and analysis can help strategists gain better insight into the entire network. Today, many transportation management vendors offer route-optimization and measurement capabilities to help businesses reduce fuel consumption.
- Are we asking our suppliers to improve their own sustainability? Suppliers–without prodding—may not be making as much of an effort to improve the sustainability of their products. Supply chain leaders can ask for them to do more. Often, it just takes asking the question, “How can we help you improve your own processes?” This is the sort of olive branch that many suppliers can use to improve the relationship for both parties.
- Can we change our products to be more eco-friendly? Innovation at the product level can have a great downstream impact on other teams within the supply chain—reducing stresses and costs throughout. Companies have to either integrate this creative sustainability into their “company DNA” or ask themselves hard-questions on which products they need to rethink to make these goals possible. But it can be done—take a look at detergent companies that are now producing extremely concentrated-formula products. These companies have rethought their product in a way that is alluring to consumers and requires a lot less fuel to transport.
- How can we avoid relationships with socially-negligent suppliers? Unfortunately, it is hard for many suppliers to have constant oversight over the actions of suppliers. A lack of oversight—or even an unintentional slip-up can have dire consequences. One only needs to see how much it cost Mattel (hint: over $100 million) to recall its toys when it was discovered that its Tier 2 Suppliers were using unsafe levels of lead paint. Companies need to be transparent about their actions—but be okay to ask for outside help. Apple has done this, as they’ve now partnered with the Fair Labor Association to conduct external audits.
- Who can we ask to spearhead sustainability? If companies have any hope to produce a sustainable supply chain, they have to move their best people to these initiatives. Many businesses will have to rethink how they work with sustainability leaders—and employees, too, will have to understand and appreciate its greater importance in the grand scheme of things. But putting the brightest minds and most experienced professionals is the only way that these initiatives will be successful.
What are your thoughts on sustainability initiatives within the supply chain? What are the questions that leaders need to be asking? Please leave a note in the comments with your thoughts!
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