In recent years, there has been a renowned renewal in using sustainability methodology to improve supply chain practices.
The average citizen might understandably think of a supply chain as the supplier of goods and services to a company. However, research shows that organizations can enhance their performance by improving the sustainability of their supply chains.
There are best practices and key value drivers for sustainable procurement and economic indicators that apply across a number of elements as explained in the following five ensuing areas:
Risk Management
By mitigating and responding to social, environmental and economic risks in the supply chain, companies can protect their market share and reduce risk premiums. Ultimately, the goal is to develop flexible supply chains networks that can profitably respond to dynamic changes.
Cost Saving & Realizing Efficiencies
The connection between supply chain and sustainability are erroneously considered as a sunken cost for many companies. Those who started proactively incorporating sustainability concepts into their supply chain found financial savings, cost-cutting and added value to their operations.
On the other hand, investing in local purchasing and building capacity with local suppliers greatly helped companies to reduce the cost of importing goods and materials, therefore, supporting the local economy to grow and prosper.
Producing Sustainable Products
Consumers are increasingly making difficult buying decisions based on social and environmental impacts. Making products more sustainable can reach a growing market sector and making smart sustainable decisions today can position a company to be more competitive and more aversive to risk.
Many companies practically focus on designing a linear process of supplying materials rather than products that reduce waste and pollution through innovative product and process design, integrating sustainability throughout the whole product cycle.
Sustainability As A Vehicle For Cleansing Suppliers & Transparency
Creating a sustainable supply chain means leveraging the supply chain to ensure fair treatment of people as well as taking a broad view that everyone along the supply chain is a stakeholder. The ultimate goal of engaging with suppliers is to develop a shared mindset about sustainability issues and work more closely with them with shared priorities.
These relationships can, in turn, provide companies with crucial information about potential trends, market changes, and other external influencers that could impact business.
Ethical Business Conduct
A sustainable supply chain is also about the encouragement of good ethical and responsible governance throughout the life-cycles of goods and services. These practices contribute to building a healthier economy by fighting procurement fraud, bribery, and non-ethical business relationships.
The direct costs of these corruptions are considerable and affect the quality of the product and indirect costs related to management time and resources spent dealing with issues such as legal liability and damage to a company’s reputation.
Conclusion
Claiming that a sustainable supply chain is just a voluntary exercise that can improve business reputation does not make sense today.
As sustainability consultants, we see more and more best practices in the successful implementation of a sustainable supply chain. Some companies and industries have invested strongly in a sustainable supply chain, finding that sub-tier suppliers have the most significant challenges in addressing sustainability issues, and these companies started incorporating changes to advance practices that create value for their businesses as well as for economy at large.
Monaem Ben Lellahom is a Co-founder and Head of Sustainability Consultancy services at Sustainable Square Consultancy & Think Tank. He focuses on developing Enterprise Sustainability and Responsibility strategies and programs and Social Return on Investment (SROI) analysis for clients across various industries. He also focuses on Sustainability reporting and has produced key successful Enterprise Sustainability reports and case studies in the Middle East region showcasing their social, environmental and economic performance. Monaem possesses expertise in Enterprise Sustainability strategy and implementation as well as the measurement systems, governance, capacity building and stakeholder engagement aspects of this agenda. Download the full article and engage with Monaem via Twitter: @MonaemL.
