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5 Tips for a Sustainable Supply Chain

Sustainable Supply Chain

The supply chain is the network of organizations, materials, technology, and activities involved in the creation, movement, and final sale of a company’s goods or services. Although the quantity and nature of the activities in a supply chain vary from company to company, three central functions of this sequence are 1) the supply of raw materials to manufacturer, 2) the actual manufacturing process, and 3) the distribution and eventual delivery of the finished product to the customer.

Now, traditional supply chains are configured so that the product’s journey, from raw material supplier all the way to customer, can be made as cheap, as fast, and as convenient as possible, with no consideration as to how it affects its people or the planet.

This manner of operation, however, is proving shortsighted and unsustainable. One way or another, companies who neglect caring for the human and environmental aspects of their supply chain end up reaping the consequences of the corners they cut in ecological catastrophe following irresponsible resource and waste management, in public outcry regarding exploitative labour practices, or simply in the disruption of the supply chain due to environmental overcapacity and climate change.

Clean Lines, Strong bonds

In contrast, a sustainable business thrives on a supply chain that is fair, green, and transparent. While it strives to optimize its processes, the sustainable supply chain’s commitment to lasting progress for all three Ps (people, planet, profit) makes it as positively impactful as it is resilient in the face of business risks that often plague corporations that are strictly financials-focused.

Whether your company was ‘born green’ and has run on a conscientious, nature-friendly system since day one, or you’re new to the eco-ethical world and need some help integrating nicely, these tips lend sustainability to your supply chain, and help your business foster genuine continual growth.

Study Product & Map Out Supply Chain

Take the time to research your product: what is it made of, where do the raw materials come from, who are its key makers, what are the tools and activities needed in order to assemble it? Enumerate all resources, organizations, and processes within your supply chain and draw it into a map.

Talk to your suppliers, identifying the biggest social and environmental hurdles they face, and select which ones to focus on.

Guidelines & Communication

Review your supply chain map. Using tools like the UN Global Compact’s sustainability manual, “Supply Chain Sustainability—A Practical Guide for Continuous Improvement,” the Ethical Trading Initiative’s (ETI) base code, or the Global Environmental Management Initiative’s (GEMI) guidance documents, determine what areas to address in your own chain.

Define your standards for labour, social, and environmental impact, then create a list of sustainability qualifications and guidelines for your suppliers to adhere to in a formal code of conduct and communicating your expectations clearly with them. Their compliance means that you’re working at the utmost efficiency (with the highest considerations for all three Ps) at every stage of your supply chain.

Measure & Monitor Performance

Evaluate your suppliers’ performance on sustainability via accredited questionnaires. To streamline reporting and avoid duplication, you can use the Global Reporting Initiative’s (GRI) G4 guidelines and the Carbon Disclosure Project’s (CDP) climate change questionnaire in tandem; these two share data points, so most of the information provided by your suppliers through the G4 can form part of the report for the CDP survey, and vice versa.

Standardized, industry-specific audit frameworks like the Sustainable Apparel Coalition’s (SAC) Higg Index for apparel and footwear companies, the Electronic Industry Citizenship Coalition’s (EICC) validated audit process for electronics makers or buyers, and Together for Sustainability’s (TfS) audit programs for any business dealing with chemicals in their supply chain are excellent monitoring and auditing resources that can help avoid assessment fatigue from repetition.

Training & Development Programs

Often, keeping current suppliers with potential to hit your supply chain sustainability code targets more feasible and ethical than replacing them altogether. Help improve your suppliers’ performance by providing incentives for their increased social and environmental compliance, like UK fairtrade chocolate manufacturers Divine Chocolate who, since its establishment in 1998, has made upwards of £100 million. With an annual turnover of about £8 million, the company is now 45 per cent owned by its cacao farmers in Ghana.

You can also drastically enhance the capabilities of your existing suppliers via intensive training programs. U.S. electronics producer HP’s social and environmental responsibility (SER) capacity building program, tackling issues like worker empowerment, labour rights, women’s health, anti-discrimination, energy efficiency, and financial inclusion, has now trained over 530,000 managers and workers and over 422 sub-tier suppliers since its launch in 2007. In 2014, HP received a 15 per cent boost on Social Accountability International’s Social Fingerprint benchmark, and its supply chain GHG emissions have dropped by over 18 per cent since 2010 levels.

New Trends

Last but not least, just because you have sustainability practices for your supply chain in place, this doesn’t mean you can become complacent. A huge part of sustainability is flexibility and the ability to adapt to new technologies as well as to changing social, environmental, and economic conditions.

Recent findings, for example, show that due to market volatility, sales forecast-based inventories have now given way to demand-driven replenishment, and that stocking by demand improves internal supply flow and increases ends profits overall.

Another reason to stay alert is that more and more data keeps surfacing regarding the environment, climate change, and sustainability, and so to keep your brand on principle, you’ll need to move swiftly in the name of sustainability.

Last modified: November 25, 2020