20 Oct Why it’s time to build a more sustainable supply chain
In this age of sustainability and Green Recovery, more OEM and Tier One businesses are fulfilling their own commitments to responsible business practices by extending them to their value chains and asking for compliance from their subsidiaries and suppliers. There are several reasons for this, not only does a sustainable supply chain ensure greater governance and control, it also helps eliminate risk, aids cost control and reduces the societal and environmental impact of moving goods across the globe.
There are other factors influencing this change: · Global pressure is being driven by the UN’s 17 Sustainable Development Goals.
The UK Government has signed up to the Net Zero 2050 international legislation.
Regionally, local initiatives include the West Midlands Combined Authority’s Net Zero and the #WM2041 Pledge.
Consumers, particularly Millennials and Generation Z, are expecting companies and brands to do better and be better when it comes to their social and environmental impacts.
When businesses look for examples of supply chain sustainability, the same large corporations are often cited: Unilever, Siemens, Marks & Spencer, etc. However, supply chain sustainability is not a process reserved just for large corporations. They are relevant for businesses of all sizes that operate a responsible and efficient supply chain.
What does supply chain sustainability mean?
In today’s globalised economy, outsourcing business tasks does not mean outsourcing responsibility and risk – that remains the responsibility of the business at the top of the chain. After all, it remains their brand and reputation that the end customer is concerned with, rather than that of their suppliers. Therefore, the brand at the top of the supply chain not only needs to ensure continuity and manage operational costs throughout the supply chain, but must also manage its reputation downwards as well through good governance and due diligence.
Supply chain sustainability is a term used to illustrate a businesses’ role in addressing environmental, social and corporate governance issues throughout the lifecycle of its goods and services, with the objective of protecting the long-term viability of their business and demonstrating that they operate with a social conscience.
How do I demonstrate my sustainability credentials?
For businesses within the supply chain, taking the time now to implement more sustainable processes and procedures will boost the chances of securing higher profile, higher margin work and catapulting business growth. As a starting point, it is worth understanding the UN’s 17 Sustainability Goals and considering how you can start to implement some of them in your own business practices.
An easy place to start is with your social footprint. Suppliers have a responsibility to respect human rights within their business and to not infringe on the rights of others. Ensuring fair pay, good work conditions and workers’ rights may seem an obvious thing to do, but it remains an overlooked area of supply chain sustainability in many cases.
It’s also a good idea to consider your own carbon footprint
Where are your raw materials coming from?
How much is wasted?
Is there a more localised supplier you could use to reduce your carbon footprint?
Effective supply chains are no longer built on low cost options alone; executives are increasingly prioritising quality, localisation and partnership. Often, a local material supplier may appear more expensive than one overseas, but this could in reality be a false economy as local suppliers come without the cost of global transportation and the subsequent emissions that this produces as well as the increasing costs of shipping. This means sourcing locally where this is feasible could be a more effective option all round, mitigating a number of supply chain risks, and reducing the negative impact on the planet.
The final area to address is your company’s social conscience.
Supply chains are often fraught with hidden risks, one of the most common being procurement fraud and corruption. The consequences can be quite severe, stretching from poor product quality and indirect costs, to significant legal liability and damage caused to an organisation’s reputation. Businesses that engage with their supply chains with effective anti-corruption policies can manage and reduce these risks and build a more sustainable platform for growth, which will appeal to larger customers.
The movement towards more sustainable businesses has been growing for several years and sustainability is quickly becoming the most important factor of supply chain procurement all over the world. By taking steps to improve your own supply chain sustainability, your business will not only experience direct benefits such as improved product quality, greater productivity and reduced costs, but indirect benefits that could enable you to land your next major contract.
To take the first step towards building a more sustainable supply chain, contact us for an initial assessment using our unique suite of tools please contact us on 0330 311 2601 or [email protected]