During May of this year, I provided the keynote address at an international sustainable development conference held in Dubai, discussing the challenges around supply chain sustainability and maintaining commercial value.
Incredibly, whilst supply chain is a key part of the sustainable issues we face globally today, the potential impact of commercial decisions made both upstream and downstream and how it flows into the whole supply chain, is still not always fully understood or managed.
To understand the importance of sustainable supply chain management, we don’t need to look further than Australia’s Hepatitis A outbreak affecting consumer health during March 2015 due to contaminated frozen agricultural goods, or global supply chain controversies around its duty of care in supplier management, human exploitation, or operational impact on immediate surroundings.
What makes sustainable approaches to supply chain critical?
When we think about supply chains, they are incredibly complex and diverse with many variations and interactions both upstream and down stream along the whole supply chain, from manufacturing right through to post-consumption. With many of these interactions crossing over into sustainable principles of human and material ethics, environmental and social aspects, making it a key macro-economic trend in sustainable development.
As well as their complexity, particularly when it comes to multi-national corporations and their global networks, supply chains have depth that are not always easily managed or visible, making it quite the insidious beast. Couple this together with the increasing power and voice of consumers and stakeholder groups, and we have a strong mix of duty of care with consumer and stakeholder touch points where decisive sustainable actions need to happen, and with full engagement.
It’s easy to see why, what can be operating on the surface for many years without any problems, can have a seemly smaller problem just below the surface that can go unnoticed for some time. Gradually over time, it develops into a far greater problem remaining unnoticed. Unfortunately by the time the problem is recognised, it has developed into a significant or catastrophic human and / or environmental event.
How to integrate supply chain into sustainability strategy?
As discussed, sustainable issues are critical to the longevity of an organisation and its activities. So how do we go about integrating sustainable strategies to the supply chain?
The key is to ensure the linkage between organisational strategy and operations, whilst engaging, managing and integrating external factors of stakeholders and sustainable principles. http://lvpconsulting.com/innovation-and-investment-value-through-sustainability/
Going back to the beginning, when we consider the recent Australian supply chain example, or the significant examples of global supply chain catastrophes, ultimately the commercial need to achieve key drivers of productivity by reducing costs, would have been behind the decision making.
However, there was an ultimate price to pay in human impact, product recall and long-term reputation damage for all organisations involved.
Can supply chain and sustainable principles happily co-exist? Absolutely.
It takes a delicate balance of the supply chain variables – driving productivity, managing risk, and engagement of buyers and sellers. All three come together to provide the delivery of responsible products and services across the whole supply chain.
Some of the decision-making required within the supply chain variables includes:
- Balancing productivity factors with product stewardship and lifecycle management
- Managing decisions in supplier choice, material use and supply chain conduct, combined together with, risk mitigation against:
- Ethical conduct
- Climate change/ environmental issues
- Duty of care towards all factors of end consumption, environment, manufacturing, supply chain suppliers and buyers, etc
- Encouraging and engaging collaboration across Buyers and Sellers to create sustainable supply chain value.
Sustainable Supply Chain Value
Ultimately how organisations go about ensuring collaboration across buyers and sellers, whilst balancing the supply chain variables, is one of the keys to successful sustainable supply chain value, actively creating transparent and responsible practices. Doing so opens up business opportunities across the supply chain through creating and ensuring:
- Material and sustainable outcomes
- Seamless end-to-end supply
- Strengthening of compliance
When we consider the factors of supply chain complexity, it is at times insidious to manage. Combined with the increase in macro economic factors and stakeholder power and voice, means it is increasingly critical to link reputation and risk management to sustainable principles and strategy.
Organisations can take an active approach towards demonstrative supply chain leadership, by integrating sustainable principles and strategic decision making across:
Productivity + Risk + Collaboration = Better and more informed decisions
By doing so, businesses are able to protect their reputation, reduce risk, and evolve business opportunities through demonstrable transparency, engagement and collaboration, creating sustainable supply chain leadership and value.
Tagged Business Leaders, Collaboration, Corporate Social Responsibility, Duty of care, Environmental Social Sustainability, Ethical conduct, Leadership, Stakeholders, supply chain, supply chain value, Sustainability, sustainable supply chains, Transparency