Sustainable supply chain: An overview
A sustainable supply chain makes a strong impact on a company's total carbon footprint.
Thu, Oct 28 2010 at 12:25 PM
JUMP IN: Large companies like Walmart are jumping on the sustainable supply chain train. (Photo: mjb84/Flickr)
There are countless ways companies can go green, but small steps will only get them so far — it takes a sustainable supply chain to make the strongest impact.
In this age of increasing corporate social responsibility, many businesses are taking a hard look at every aspect of their operations, implementing more sustainable processes and technology and often finding that doing so makes financial sense.
According to a study by Accenture, high-performance businesses tend to be 'masters' of the supply chain, lowering their carbon emissions and lightening their environmental footprint while simultaneously balancing costs and keeping customers happy. How do they achieve this? By ensuring the sustainability in the companies that provide them with the services or raw materials they need to make their goods and taking responsibility for where their products end up.
Today's CEOs must be mindful not only of corporate values and increasing demands from sustainability-minded consumers, but of improving their companies' efficiency, cutting costs and meeting current and future environment-related legislation.
A truly sustainable supply chain is no easy feat; it requires collaboration between suppliers and sharing a common goal toward a business model that not only meets the demands of modern consumers but also takes a healthy environment into consideration. Getting on this track starts with internal changes like responsible management of resources and waste, but progress picks up speed when organizations institute a code of conduct with their suppliers that identifies key areas of improvement, and then implement accountability.
That means taking charge of emissions, efficiency, soil and water contamination, working conditions, waste management, distribution, the product's life cycle, packaging, energy usage of the product itself, recycling and take-back programs – just for a start.
For example, apparel manufacturer PUMA made headlines in 2010 for its project 'Transparency in the Supply Chain', which expanded its commitment to sustainability and social responsibility with two-thirds of its suppliers across the globe receiving Global Reporting Initiative-certified training in sustainability performance reporting. One of PUMA's key suppliers, Impahla Clothing, is not only South Africa's first carbon neutral garment manufacturer but has been lauded for paying its staff higher than the national average and maintaining strict labor ethics standards among its own sub-contractors and suppliers.
Even huge companies like Walmart and McDonalds are boarding the sustainable supply chain train. While controversial among sustainability-minded consumers, Walmart received praise for its recently announced sustainable agriculture goals, which seek to empower small and medium-sized farms to both increase their revenues and reduce their farms' environmental impact.
While they've got a long way to go, McDonalds has laid out a roadmap to a sustainable supply chain, acknowledging challenges and identifying its top global priorities. McDonalds defines its vision with “the three E's”: ethical responsibility, environmental responsibility and economic responsibility. The fast food giant envisions everything from humane treatment of animals in its supply chain to limiting the spread of agricultural diseases.
The focus on a sustainable supply chain will likely spread to more companies in the near future as chief executives decide that sustainability is critical to their success, according to a 2010 joint study on corporate sustainability trends by Accenture and the UN Global Compact. In a survey of 766 corporate CEOs of companies around the world, 93 percent said that they saw sustainability as a vital aspect of doing business and believe that sustainability will be fully meshed with core business within a decade.
“Achieving greater environmental and social sustainability takes time, effort and a sincere leadership commitment,” Georg Kell, Executive Director of the UN Global Compact, told MHIA.org. “Two-thirds of the CEOs we surveyed are looking to the Global Compact as a forum for sharing best practices and emerging ideas on sustainability, and we look forward to helping guide their efforts to develop effective policies and tangible practices.”
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