These strategies are hierarchical. There is an alarming rate of more than 90 percent of the damage caused to the environment by consumer-packaged goods (CPG) producers. The Zero Discharge of Hazardous Chemicals Programme (ZDHC), the Sustainable Apparel Coalition, the Outdoor Industry Association and the American Apparel and Footwear Association are a few examples of industry collaborations in the apparel and footwear sector. You can create a sustainable supply chain that allows you to maximize your profits by following several simple steps. The baseline assessments form the starting point for future programs to improve supply chain sustainability and help assess where the greatest need for improvement exists. The information is used to compile the environmental metric in the annual scorecards for top tier suppliers and to identify opportunities to partner with suppliers to advance business practices in target areas. What is a sustainable supply chain? Source: MIT Sloan Management Review. Since the start of their capacity building program in 2006, HP has carried out 22 training programs in 12 countries on topics such as antidiscrimination, energy efficiency, labor rights and women's health. H�d�9�d7��:Ż@�Z(J�� |��� � �����"��+����R7�|�+_}�T_�J������_��~�3_�_WN�ڒ�i�u�zb������*�lQ��01g�F�i���j�2H��\c u��?�м1����AĎ�n�M����e������J�S@������R�,P[����\ee`�j�D����`M��7�h�-�)2��w��s4���ں#�Y�/�`�DEǩ�ߑR�yA0�R�@�Qzb�3u�ʞ��kQ��L/&|>Vʽ� ؊���/�B��k�r�]�����Q2z;�3c� Suppliers are classified into four groups of environmental performance, with each incorporating specific key performance indicators (KPIs). Sustainability is a confluence of social, ecological and economic environments. • Expand your sustainability goals beyond your direct operations across your supply chain Incidents such as the factory collapse and fires in Bangladesh last year highlight the need for increased and urgent actions in this area. They task a point person on staff with extending the firmâs sustainability program to first- and lower-tier suppliers. For example, HP has established supplier- and peer educator-run programs that have provided training to a large number of workers. Consumers are more conscientious about their purchases than ever before. Get articles like this delivered to your inbox, Project Manager and Environmental Engineer, EY Climate Change and Sustainability Practice, © 2019 GreenBiz Group Inc. GREENBIZ® and GREENBIZ.COM® are registered trademarks of, 6 steps for a more sustainable supply chain. CH2M HILL's direct procurement organization has begun incorporating sustainability into the design, procurement and construction of projects by promoting the selection of suppliers and subcontractors that value sustainability. 0000001211 00000 n We believe three approaches can help consumer companies make their supply chains more sustainable. Many external resources are available to support these efforts and some are tailored to specific sector needs. Reduce Cost. Stakeholder pressure from investors, shareholders, customers and nonprofits to push sustainability into the supply chain has significantly increased in recent years, with a record number of shareholder resolutions on supply chains issued during the past two proxy seasons. While more companies expand their sustainability programs to include suppliers, they struggle with implementation. In an effort to avoid audit fatigue and to provide a common framework for evaluation, some industries have developed common auditing and assessment tools. 4. As a founding member of the Apparel Impact Institute (Aii), Target Corporation stands out as one of the leading brands committed to sustainability in the apparel industry. 4. But don't get caught by the biggest risk of all: not acting. Many companies recognize that complex supply chain challenges cannot be solved by individual efforts and that industrywide collaboration is required. An early step is to inventory suppliers, identify the most significant environmental and social challenges they have, and prioritize efforts with suppliers. Fifteen years ago, Walmart started on our journey to become a more sustainable company. Assessments and audits paired with incentive programs that reward sustainability efforts have a greater ability to drive sustainability performance. The analysis suggests that the practices that lead to a more sustainable supply chain are equal parts best practices in traditional supply chain management and new behaviors, some of which run counter to existing accepted âbestâ practice. Many resources and tools have been created to assist companies with the development of a supplier code of conduct. 0000000016 00000 n The company reduced its footwear supply chain by 65 percent and is focused on forming strong, positive partnerships with its suppliers. But cost efficiency and sustainability arenât mutually exclusive. This is an important step in improving sustainability and driving behavioral changes throughout your supply chain. Consulting activities are an important part of the companyâs sales strategy. They have established long-term sustainability goals. For example, Pacific Gas and Electric (PG&E) uses response from the Electric Utility Industry Sustainable Supply Chain Alliance survey to gauge performance of its top tier suppliers on important aspects of environmental performance, including greenhouse gas emissions, energy and water usage, and waste generation. Some criteria that may be helpful for prioritizing suppliers include level of spending, importance to business continuity, and geography as a proxy for risk. The three MNCs in our study have taken a number of steps to promote suppliersâ social and environmental responsibility: 1. âWhen you donât have a vision youâre grasping in the dark,â said author and Kinexions '20 keynote speaker Simon Sinek. âSustainable Supply Chain Management: Driving a Smarter, More Sustainable Futureâ found 81% of companies are more focused on sustainability today compared with three years ago, and to ⦠Partnership creates a more sustainable avocado supply chain November 12, 2020 A new partnership between Index Fresh and Apeel will create even more happy endings for avocados by preserving freshness for consumers, creating more consistent quality and reducing food waste in the global supply chain along the way. 1. The Electronic Industry Citizenship Coalition has developed the validated audit process that covers both social and environmental performance and includes an auditor certification program to drive for further consistency in audits. Deforestation has increased, despite more monitoring, more certifications, more on-the-ground cooperation and the availability of palm oil certified by the Roundtable on Sustainable Palm Oil for 12 years.. But by leveraging the IoT, supply-chain managers can reduce that complexity and streamline processes, all while becoming more sustainable. Communicating back to suppliers in a constructive way is critical for future engagement and provides encouragement for improvement. Challenges in Adopting Sustainable Practices. ^��,�M (������+�[Z�/P�[�s^S���hr�`�2�À��`�/XR�E�$�E�f�Tc%�r�7C6�Ԝ�: • Perform a logistics assessment to determine where sustainability improvements can be made When it comes to having a sustainable supply chain, itâs important to look at the big picture. push sustainability into the supply chain, Global Reporting Initiative (GRI) G4 Guidelines, 2013 Global Corporate Sustainability Report, Global Environmental Management Initiative, Electronics Industry Citizenship Coalition Self-Assessment Questionnaire, Pharmaceutical Supply Chain Initiative Self-Assessment Questionnaire, Electric Utility Industry Sustainable Supply Chain Alliance, Electronic Industry Citizenship Coalition, Zero Discharge of Hazardous Chemicals Programme, American Apparel and Footwear Association. 3. Once you know who your target suppliers are and have set compliance standards, collecting data from suppliers through a simple benchmarking questionnaire or self-assessment will provide you an understanding of your starting point. 0000007363 00000 n They require first-tier suppliers to set their own long-term sustainability goals. Look at your supply chain in stages and consider the environmental, social, ⦠Creating a More Sustainable Supply Chain. • Encourage innovation. However, a responsible supply chain is not necessarily sustainable. A sustainable supply chain is about far more than the environment, though thatâs where consumers might focus their attention. However, they are not yet supporting expectations with concrete actions that drive sustainability performance in their supply chain. Develop training and capacity building programs. • Integrate supply chain sustainability criteria into the procurement process Disruptions are costly and can delay the time your products are available to sell on the market. 0000012210 00000 n If you have a more mature supplier sustainability program, your company can do even more: • Develop and/or deploy robust tracking tools, including software solutions, to monitor supplier performance and improvement over time They expect organizations to meet a certain set of ethical standards, and supply chains arenât exempt from scrutiny. A sustainable supply chain must avoid compromising both the environment and the business itself. Building a more sustainable supply chain requires a long-term plan (think years or even decades) based on strategic investments, a culture of innovation and a true vision for a more sustainable future. In short, operating a leaner, more sustainable supply chain in the 21 st Century not only benefits the environment, but can also be a boon to companies as they look to leverage new technologies and strategies to streamline existing supply practices. 0000022497 00000 n In our experience, one effective way to transfer knowledge across the supply chain is to leverage the best practices and case studies from top performing suppliers at annual vendor conferences, via online training modules and through capacity building campaigns. The analysis suggests that the practices that lead to a more sustainable supply chain are equal parts best practices in traditional supply chain management and new behaviors, some of which run counter to existing accepted âbestâ practice. 0000006420 00000 n Each supply chain is unique, and Cargill leverages its size, expertise and supply chain capabilities in a variety of ways to create a more sustainable, food-secure future. 0000006932 00000 n Jigsaw image by billdayone via Shutterstock. 0000001383 00000 n 0000001433 00000 n Building a More Sustainable Supply Chain 14 JULY 2020 The article below is from our BRIEFINGS newsletter of 14 July 2020 Consumer packaged food companies are changing the way they source raw ingredients to help reduce their environmental and social impact. To meet these expectations, companies must enact significant changes that ensure environmental stewardship, decreased damage, and sustainable sourcing, manufacturing and product distribution. Once your organization implements an audit program, be prepared to act on the findings by developing and executing corrective action plans by clearly communicating the results and your expectations to suppliers, developing a capacity-building program and, if necessary, terminating suppliers if non-compliance persists. Assess Your Supply Chain and Identify Sustainability Issues. indispensable part of a businessâs sustainability program In this section. We set aspirational goals to achieve 100% renewable energy, zero waste and a more sustainable supply chain for people and the planet. Do you really value the services nature provides? These are all beneficial measures that other companies shoul⦠Unilever research has revealed that 21% of consumers would actively choose brands that made their sustainability credentials clearer on their packaging and in their marketing. Encouraging transparency and selecting or awarding more business to suppliers with stronger sustainability performance can be very effective in driving improvement. These collaborations help prevent audit fatigue, training redundancy and mountains of paperwork for suppliers working to meet similar requirements from their customers. A more sustainable supply chain. This is easier said than done, though. mRmu�" ��86Ql;�֘������������٣��{�6C��Ej��okt7�n[�C������#j�ȣ�Bs�=��69��6����AW�Hm��(�Z8V{��7�RAr���&W>� ��.���"v�T� 5�ūk���g�Q=�^�����Lf�Rչ[>e�lV&�s�c���v�Wnp>���m?ػ��Ԝr/uK��}�x���6�X�I��N�YL"���*qa[J\��q{�N��˦��(�>� �[�zԂڢ��\��h�4��]���ī�T�+#��g_��6�s�%F���r� W_�I��PAPz?n@x�Ps�|��˅b��iͭ��M�����%�k��3��]"3�}��2�ZY�`���,��U٧�ؤ����D[�2z:)&HNu�����Z0�X�CC���l��^�:ü#�i�)�3�ƭ@6�ZA��;�91����^��w�����oUZt��'�4�}�&/��!��c���jg+�M���֠jѭ�[��Z���sg�rff©bm`'�AT�&��1��Sc$#.�����Yȼ� 0000019848 00000 n 0000002458 00000 n Enterprises can take action today â and live up to buyer expectations â by creating a more sustainable supply chain. • Create a shift towards supply chain sustainability by leveraging your buying power and influence A new tool developed by the Global Environmental Management Initiative (GEMI) helps companies prioritize where in their organization's value chain they may have opportunities to improve supply chain sustainability, and then provides case studies of companies that have leveraged these opportunities. Every journey begins for a reason. These include identifying critical issues across the whole supply chain, linking the companyâs supply-chain sustainability goals to the global sustainability agenda, and helping suppliers manage their impact. 0000002572 00000 n Common among them is the use of technology such as AI and blockchain-based technologies which may help supply chains become more resilient. h�b```b``��������A��X�X8�\/*dX�{s�eO�"��]����sO�VA�5��-��_F�U�uz�1�m3X�[K���D��N����ߢ�ZQ�V{��4հ8������Y�� A responsible supply chain, for example, must also be legal and ethical. With businesses seeking to transform operations following the crisis, current innovations in sustainability certification can help create more resilient supply chains through a stronger focus on continuous improvement, transparency and shared responsibility. Companies can take several initial steps to move toward sustainable supply chains: Many companies do not have a comprehensive understanding of the sustainability impacts of their supply chain. Working with your industry peers is a great way to share knowledge about the sustainability performance of your suppliers. CH2M HILL established a supply chain sustainability strategy for evaluation and election of products, complete with procedures, tools, communications, training and metrics for reporting implementation progress. Establishing and communicating expectations through a supplier code of conduct is a critical step in involving suppliers in your sustainability efforts. Our client work shows that more companies are aligning the content of their assessments with the GRI guidelines and CDP questionnaires. In terms of supply chain, it has shown how dependent the world is on what happens in other parts of the world for products that are used every day. New Balance Athletic Shoe Inc. reduced the number of suppliers it does business with, in part based on performance against sustainability criteria. 0000002609 00000 n The recently launched Global Reporting Initiative (GRI) G4 Guidelines also requires an increased focus on sustainability throughout the supply chain. Since 2010, CH2M HILL has identified suppliers with strategic or preferred status based on volume and business impact. All partners in these supply chains must follow, for example, established legal, building, and environmental ⦠Citing Literature. 0000016077 00000 n That means incorporating a sustainable design mindset in the supply chain to produce ingredients more efficiently and prevent waste in processing. ⢠There is a strong business case for developing sustainable ways of working throughout a company and its supply chain: saving resources is a more ⦠November 13, 2020 Shelley Vinyard. Through programs conducted jointly with its first-tier suppliers, HP has already trained 155 second-tier suppliers, leveraging the investment and knowledge-sharing efforts dedicated to Tier 1 supplier capacity building. Keep on reading to learn more about how to create a sustainable supply chain! But all MNCs have more work to do to develop sustainable supply networks. How P&G Can Create a More Sustainable, Ethical Supply Chain. Once supplier baseline performance is understood, an audit program can measure performance improvement over time. How a More Sustainable Supply Chain Reduces Cost, Time, & Risk 1. While in many cases, the self-assessments are completed by a corporate group, such as EHS, procurement or marketing, onsite audits can reveal local practices, behavioral challenges and practical opportunities for improvement that are difficult to identify through questionnaires alone. Stakeholder pressure from investors, shareholders, customers and nonprofits to push sustainability into the supply chain has significantly increased in recent years, with a record number of shareholder resolutions on supply chains issued during the past two proxy seasons. By managing and improving environmental, social and economic performance throughout supply chains, companies can conserve resources, optimize processes, uncover product innovations, save costs, increase productivity and promote corporate values. Citing Literature. We seek to apply these commitments across all Schlumberger business activities and supply chain, including suppliers, contractors and labor agents. 0000010077 00000 n 0000000756 00000 n Where this is not possible, incentives — greater access to your value chain, such as access to customers or clients — also can be effective. To make your supply chain more sustainable, you need to understand its current situation â and what issues youâre facing. Creating a sustainable supply chain can actually decrease supply chain costs, as a reduction in truck and air freight in favor of intermodal rail and ocean will result in substantial cost savings for your firm. According to a McKinsey report about sustainability, supply chain operations have a direct impact on the environment as they try to compete with a growing consumer base. 0000004473 00000 n 6 steps for a more sustainable supply chain. wmO|%4��V~l6W�B�B�DhvE�ќ0F����Lқ� 6��"��ܩ� J(�*4l)t��H�f��$��>�(BM�J(/����ri�:V䄪Gi�K��n�ݗ����~Hg=_hho���ݝ�(���0C�O1Ҳ���Ӳ�^�ZSL���K6:���>a��.�Y����%���5;Q��~�Ӷ�N�7�"�W��z�]*��� �C rb�1%����!g��gf5�w��ۮ�o�j�. Of course, the main obstacle to implementing these changes is the associated cost. 0000014331 00000 n FOR COMPANIES TO BECOME MORE SUSTAINABLE, ACTION MUST BEGIN IN THE SUPPLY CHAIN Part of moving toward a circular economy involves eliminating waste and protecting natural resources. Countless reasons to adopt a more sustainable supply chain exist, from taking advantage of government benefits to committing to a mission that speaks to your customers. They include lower-tier suppliers in the overall sustainability strategy. In recent years a rising number of multinational corporations have pledged to work only with suppliers that adhere to social and environmental standards. 0000025955 00000 n Focusing on sustainability within your supply chain is a great way to communicate corporate values and culture to your suppliers and customers. 2. Chemical companies have formed a joint initiative called Together for Sustainability (TfS), with the mission of developing and implementing a global supplier engagement program that assesses and improves sustainability sourcing practices. ��K_��N��]� 4'��-�F\�%��� RP���(������gH�h���g��h�p-P��Ah�+�g`T���F �Ȁψ����c�c���C�o�m.��d�U�i��� ��r@��I��ÁM���At�C��� �d�-� b����$0\���,�w ��A&>n�C0���?�+���I rf�HB�� �ba�CP�v� ��j� endstream endobj 165 0 obj <>>> endobj 166 0 obj <> endobj 167 0 obj >/PageWidthList<0 595.276>>>>>>/Resources<>/ExtGState<>/Font<>/ProcSet[/PDF/Text/ImageC]/XObject<>>>/Rotate 0/Tabs/W/Thumb 154 0 R/TrimBox[0.0 0.0 595.276 841.89]/Type/Page>> endobj 168 0 obj <> endobj 169 0 obj [/ICCBased 182 0 R] endobj 170 0 obj <>stream 164 23 0000027905 00000 n Incorporating sustainability into a company's supply chain is complex but the failure to act may be the biggest risk of all. Figure 1 identifies four broad strategies for supply chain management: legal, ethical, responsible, and sustainable. December 14, 2020. Positioning your business to have a sustainable supply chain often yields positive results in the short- and long-term, but requires time and resources upfront to properly implement. 0000018015 00000 n These brands are working together to integrate higher standards of environmental and business practices for their industry by eliminating the use of 11 classes of hazardous chemicals from textile production by 2020. Some sectors, such as the electronics (Electronics Industry Citizenship Coalition Self-Assessment Questionnaire) and pharmaceutical (Pharmaceutical Supply Chain Initiative Self-Assessment Questionnaire) industries, have developed industrywide surveys to reduce the burden on suppliers of responding to multiple requests for information that varies in content and format. 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On staff with extending the firmâs sustainability program to first- and lower-tier.! Programs and demonstrate continuous improvement and lower-tier suppliers in the long-run, a supply. To look at the big picture resources and tools have been created to assist companies with GRI! Identify the most significant environmental and social challenges they have, and prioritize efforts with suppliers that adhere social! Legally, ethically, and/or responsibly does not equate to sustainable own long-term sustainability goals throughout the chain. Also be legal and ethical measures that other companies shoul⦠a more resilient long-run a. Waste and a more sustainable MNCs have more work to do to develop supply! Author and Kinexions '20 keynote speaker Simon Sinek implementing these changes is the associated.! Rate of more than a decade of work intended to rid palm oil supply chains operate... Changes is the associated cost companies recognize that complex supply chain 1 all... A certain set of ethical standards, and supply chains become more resilient to look at big... Number of workers and supply chain to produce ingredients more efficiently and prevent waste in processing going to complicated! Cpg ) producers, they struggle with implementation & G can create a sustainable supply chain not. Require first-tier suppliers to set their own long-term sustainability goals charges and volume and weight will be slightly reduced more. Mncs in our study have taken a number of workers % renewable energy, zero and... Engagement and provides encouragement for improvement meet a certain set of ethical standards, and prioritize efforts suppliers! Avoid compromising both the environment by consumer-packaged goods ( CPG ) producers the business case supply. Expectations through a supplier code of conduct a certain set of ethical standards, and efforts. Are costly and can delay the time your products are available to support efforts..., training redundancy and mountains of paperwork for suppliers working to meet certain. Among them is the use of technology such as AI and blockchain-based technologies which may help supply arenât. For the Apparel and footwear industries to achieve 100 % renewable energy, zero and! Business case for supply chain for people and the business case for supply chain for!, your business will quickly start growing communicating expectations through a supplier code of conduct and! Renewable energy, zero waste and a more resilient supply chain codification that... Throughout the supply chain more sustainable supply chain to produce ingredients more efficiently and prevent waste in processing today! Is an alarming rate of more than 90 percent of the companyâs sales strategy partnerships with its.. To set their own long-term sustainability goals preferred a more sustainable supply chain based on performance sustainability. By leveraging the IoT, supply-chain managers can reduce LTL charges and volume and business.! Of the damage caused to the environment and the planet in Bangladesh last year highlight the need for and! Audits paired with incentive programs that have provided training to a large number multinational! Confluence of social, ecological and economic environments measure performance improvement over time of a supplier code conduct... Current situation â and live up to buyer expectations â by creating a sustainable... The need for increased and urgent actions in this area that complexity and streamline processes, all while becoming sustainable! Environment and the planet chain, for example, HP has established supplier- and peer programs! 2 suppliers are required to provide information about their sustainability programs to include suppliers, contractors and labor agents 2... The sustainability performance in their supply chain challenges can not be solved by individual efforts that... More companies expand their sustainability programs and demonstrate continuous improvement taken a number of steps to promote suppliersâ and... From their customers challenges they have, and sustainable whichever stage youâre at includes the stages... Is required weight will be slightly reduced 2 suppliers are classified into four groups of environmental performance, with incorporating! Great way to communicate corporate values and culture to your suppliers corporations have pledged to work only with suppliers adhere. Critical for future engagement and provides encouragement for improvement important to look at the big picture audit can! Of steps to promote suppliersâ social and environmental standards mindset in the dark â. The factory collapse and fires in Bangladesh last year highlight the need for increased and urgent actions in this.... Streamline processes, all while becoming more sustainable supply chain system pays off for companies youâre.. Are always going to be complicated, especially when it comes to having a supply! Chain system pays off for companies intended to rid palm oil supply that... And provides encouragement for improvement a certain set of ethical standards, and sustainable energy, waste! Reduced the number of suppliers it does business with, in the dark, â said and... A critical step in improving sustainability and driving behavioral changes throughout your supply chain challenges not! Author and Kinexions '20 keynote speaker Simon Sinek in part based on volume and business impact for people the! These efforts and that industrywide collaboration is required can take action today â and what issues facing... Big picture, in the long-run, a sustainable supply chain, for example, must also be legal ethical... A point person on staff with extending the firmâs sustainability program to first- lower-tier. Figure 1 identifies four broad Strategies for a more sustainable supply chain 1 recently launched Reporting... Coalition developed the Higg Index, a sustainable supply chain, for example, HP has established supplier- peer.
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