Sustainability Questions for Supply Chain Leadership

August 1st, 2012 by John Dinesh Mascarenhas Leave a reply »

Over the past several years, both consumers and shareholders are asking businesses for more accountability and transparency within the supply chain. Because of this, discussions around sustainability — and how to drive efficiency in the supply chain — are at the forefront of business leaders’ minds.

“Today, sustainability has replaced cost, value and speed as the dominant topic of discussion among purchasing and supply professionals,” write Brian Mace and Dave Food, the authors of Oracle’s The Shape of Tomorrow’s Supply Chain.

What are the questions that supply chain leaders need to ask themselves if they want to successfully integrate sustainability into their business and products, as well as ensure these projects become synonymous with risk mitigation and cost reduction?

Michael Koploy, ERP Analyst at the online company Software Advice, recently interviewed four experts in supply chain sustainability to learn the most important conversations that need to be occurring. He pinpointed 5 questions:

1. How can we better measure sustainability? Accurate measurement is one of the most important steps in developing a sustainable business. Measurement is pivotal to understanding the return on investment (ROI) of sustainability projects, as well as gaining a greater understanding of the entire supply chain.
2. How can we instill sustainability into our suppliers? Scorecards and sustainability guidelines are powerful ways to influence suppliers to focus on sustainability within their own operations. More sustainable suppliers can lead to more business for partners and reduced costs for businesses — as well as more sustainable products, that an increasing proportion of consumers are demanding.
3. How can we design more sustainable products? Innovation at the product-level is another key way to improve a business’ sustainability. By integrating sustainability into products’ DNA, every downstream partner is able to enjoy the benefits. (For example, cleaning product companies are focusing on concentrated formula products.) This way, production costs are decreased, and transportation needs are reduced, and consumers can experience products that meet their qulaity expectations while helping to reduce the impact on the environment.
4. How can we avoid socially-negligent suppliers? While it sounds like one of the easiest steps in building a sustainable and socially responsible business, even the largest companies have been ill-affected by non-compliant or negligent supply chain partners. For example, Mattel was forced to spend over $100 million in product recalls when its products were found to contain dangerous amounts of lead paint. Gaining visibility into the actions of all partners is an important topic in risk management today, and can potentially save millions of dollars and a damanged company reputation down the road.
5. Who can we trust to drive sustainability? If business leaders want to build a sustainable supply chain, they need to entrust their best personnel to leadership positions that involve sustainability. This also means that employees will need to accept the importance, responsibility and career value of sustainability efforts and roles.

You can read more on this discussion at: 5 Questions to Start the Sustainable Supply Chain Conversation.

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