Understand that international, national and local supply chains need to be managed in a way that ensures products and services are produced responsibly and meet all regulations in your marketplace. Increasing transparency is key to making an impact on the products and services produced. Sharing information with the supply chain and inviting them to be a part of the solidtion increases impacts and drives sustainability
- Did you know more than half of consumers are willing to pay at least 5% more for products delivered sustainably, and 76% would wait at least one extra day for climate-friendly delivery of their purchase? Right now, and despite customer demand, many companies still don't incorporate sustainability into their supply chain operations. This means that they're missing out on a major source of increased revenue. A study by the World Economic Forum identified revenue increases of up to 20%, cost reductions of up to 16%, and as much as a 30% boost in brand value among companies engaging in sustainable supply chain initiatives.
For most companies, the supply chain represents the biggest opportunity for creating a more sustainable business. What's interesting, is that even for companies manufacturing non-energy using products, close to 70% of their environmental footprint can be in the supply chain. This means that a high percentage of your company's sustainability issues, and money saving opportunities are found in your supply chain. So, how can you more sustainably manage your supply chain? I'll give you a few good places to start.
Ask, or request your suppliers to perform basic water and energy audits. Improve and measure recycling and waste reclamation efforts, and transition to less toxic materials and inputs. Let's look a little closer at what each might look like. Start talking with your primary, tier one suppliers. Set expectations, and clearly communicate them, whether that's in the form of a code of conduct, or a supplier questionnaire.
Assessing supplier sustainability performance leads to improvement opportunities, and highlights which suppliers are succeeding, as well as which might be falling short of expectations. Assessing supplier sustainability practices extends to asking them information on their own recycling and waste management practices. Again, it's important here that you send a clear message that you're committed to reducing your environmental impact throughout your supply chain. Invite them to be a part of the solution.
This can send an important signal that you're in this together, and want their help in creating better practices all around. You can tie this communication into the fact that you're committed to reducing the environmental burden of products by using less toxic inputs, as well. By discovering and introducing less toxic, less wasteful practices together, your key suppliers benefit from gains in their own efficiency, and differentiate themselves as a leader in your industry.
Let's discuss some key steps toward building a more sustainable supply chain. Start with your major suppliers, build on the performance metrics and engagements you already have with these companies. Integrate sustainability metrics for water, energy, toxics reductions, et cetera. Turn data into decision-making information, capture sustainability-related data, and act on it. Identify and eliminate the worst suppliers, preferably before they ever enter your supply chain.
Retain the best suppliers, by factoring in their sustainability practices into performance evaluations. Build sustainability improvement requirements and incentives into new, and existing supplier contracts. For a free road map on how to identify and apply other supply chain responsibility practices, see the guide to supply chain sustainability on the UN Global Compact Site. You can also access sustainability information exchanges, such as the Fair Factories Clearinghouse, and Supplier Ethical Data Exchange.
These are information sharing communities that focus on certain aspects of sustainability, or on specific industries. At the end of the day, transparency is key. By increasing transparency, and sharing environmental data throughout the supply chain, businesses can see beyond the tip of the iceberg to the true impact the products and services that they produce. Only with this transparency can you make educated purchasing decisions, work with suppliers to minimize their impacts, and ultimately drive sustainability.
Last, he helps you figure out where to find resources to help track key metrics, assess your company's carbon footprint, and improve your environmental, social, and governance (ESG) practices.
Lynda.com is a PMI Registered Education Provider. This course qualifies for professional development units (PDUs). To view the activity and PDU details for this course, click here.
The PMI Registered Education Provider logo is a registered mark of the Project Management Institute, Inc.
- Learn how to build a reputation as a company focused on sustainability.
- Discover how to manage supply chains more responsibly and effectively.
- Identify meaningful goals.
- Identify the distinctions between supply chains and value chains.