The supply chain connects consumers with their choice of products and services around the world. But, it also has had a severe effect on the environment, which cannot be overlooked. Therefore, it is of utmost importance to introduce sustainability into the supply chain and minimise its drastic effects on the environment.
Doing so will not only reduce the irrevocable impact that the supply chain has on the ecosystem but also increase the benefits to your organisation in the long run. However, it is not just the environmental impact of the supply chain that is concerning, but also its economic drawbacks.
Why is sustainability important?
According to Unilever, scarcity of water and low agriculture yield has resulted in 300 million annual losses. When you manage the environmental and social, as well as economic performance across the supply chains, you can save resources and costs and in turn increase the productivity of the company.
That said, many companies talk about sustainability programs but fail to implement them. A 2021-2023 UN Global Compact Strategy report says that several companies and businesses across the globe are considering taking the leap and switching to sustainability, however, implementation of supply chain sustainability remains a struggle.
Here are some of the ways to make solid progress towards creating a sustainable supply chain.
1. Identify key issues
The first step toward making a sustainable supply chain reality is finding the key issues that exist in the supply chain. Analyse the system and figure out exactly which elements in a supply chain prevent it from being sustainable. The easily noticeable elements may include a factory producing life-threatening chemicals, emissions from haulage, or other safety hazards in the company which usually get ignored.
After identifying the potential elements causing problems in your supply chain, making improvements in the areas where it’s possible should be the next step. Properly addressing these key issues can help your goal of achieving sustainability.
2. Involve suppliers
Some companies can control their entire supply chain, whereas others have to engage with suppliers and other third parties. This means you may not have full control over their functioning, but this should not deter you from making efforts to include sustainability in the process. Encouraging and engaging suppliers in this regard is a must. Here are some things you could do:
- Have conversations about sustainability with them
- Expand business while keeping the environmental standards in mind
- Give credits and recognition
- Make sure to share the sustainability costs
It is safe to engage with suppliers that operate and adhere strictly to environmental standards. This will help in making significant improvements for supply chain sustainability.
3. Manage performance
Communicating your expectations and thereby managing performance is the right way to go forward with achieving your suitability goals. There are several tools available for companies to prioritise how and where their organisation can make changes to improve the supply chain and make it sustainable.
The United Nations Global Compact has set out guidelines that any company looking to go sustainable can follow for incorporating a supplier code of conduct. After selecting your suppliers and setting regulatory standards, it is advisable that you perform an assessment by collecting data from the target suppliers to get a better understanding of how you want to move ahead.
Many renowned organisations around the world do self-assessment or through surveys and questionnaires analyse and evaluate the performance of their suppliers. These companies also strictly follow the code of conduct guidelines set by the United Nations Global Compact.
Additionally, the pharmaceutical industries and electronics sectors have come up with surveys across industries to minimise the burden on suppliers. It allows the industries to answer questions regarding information varying in content and format and reduces the suppliers’ obligation to respond to questions out of their domain.
4. Training programs
One of the most important steps towards having a sustainable supply chain is creating awareness about the subject. The more people it reaches, the better. Many resources such as audit programs, assessments, incentive programs, etc are available to help improve sustainability and drive behavioural changes across the supply chains.
However, an effective way to share knowledge is to present case studies from the best suppliers during annual vendor conferences. What also works in this regard is having online learning and training modules and developing capacity building programs.
When you show the success stories of renowned suppliers, companies also take away the enormous benefits of sustainability in the long run, apart from appreciating the efforts made by the suppliers. They also demonstrate this information to others in the market.
For instance, HP has conducted several training programs across countries on a diverse range of topics such as labour rights, women’s health, and energy efficiency among others. Through these programs, HP has trained more than a hundred suppliers already.
Businesses through their supply chains affect the environment in many damaging ways. Introducing the concept of sustainability is the only way to prevent any further damage to the environment. However, it is always easier said than done.
Many companies, despite making big claims regarding the inclusion of sustainable supply chains, have failed to implement what they said. The importance of having a sustainable supply chain goes beyond being environmentally aware, for it also helps in reducing costs, improving continuous supply, and protecting against damage to the company’s reputation.
Nicole Garrison has been in the business management industry for years. She helps big companies manage their business performance and improve their revenue. Apart from this, she also likes to write and is the essay writer where she deals with a variety of subjects including business, culture, education, etc. Nicole also writes for TrustMyPaper. There is no better way to learn how to manage in a field but by working in it.