0000025955 00000 n 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. 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�� You can create a sustainable supply chain that allows you to maximize your profits by following several simple steps. 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. First, there are supply chains that operate within legal limits and comply with agreed-upon contractual requirements. Communicating back to suppliers in a constructive way is critical for future engagement and provides encouragement for improvement. MIT’s hierarchical supply chain codification shows that operating legally, ethically, and/or responsibly does not equate to sustainable. All partners in these supply chains must follow, for example, established legal, building, and environmental … 0000016077 00000 n Assessments and audits paired with incentive programs that reward sustainability efforts have a greater ability to drive sustainability performance. December 14, 2020. This is easier said than done, though. 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. The recently launched Global Reporting Initiative (GRI) G4 Guidelines also requires an increased focus on sustainability throughout the supply chain. Consulting activities are an important part of the company’s sales strategy. Others suggest that greater collaboration among value chain members are required to create a more resilient supply chain. 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. After more than a decade of work intended to rid palm oil supply chains of deforestation, the results don’t match the effort. indispensable part of a business’s sustainability program Incidents such as the factory collapse and fires in Bangladesh last year highlight the need for increased and urgent actions in this area. They include lower-tier suppliers in the overall sustainability strategy. 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. 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. 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. Increasingly, organizations incorporate all areas included in their code of conduct with special focus and weight in the self-assessments related to areas that are important to their business. But cost efficiency and sustainability aren’t mutually exclusive. Incorporating sustainability into a company's supply chain is complex but the failure to act may be the biggest risk of all. •    Create a shift towards supply chain sustainability by leveraging your buying power and influence •    Integrate supply chain sustainability criteria into the procurement process 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. Where this is not possible, incentives — greater access to your value chain, such as access to customers or clients — also can be effective. Disruptions are costly and can delay the time your products are available to sell on the market. Once supplier baseline performance is understood, an audit program can measure performance improvement over time. 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. 0000006420 00000 n 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. Supply chains are always going to be complicated, especially when it comes to tracking expensive equipment like RIP. The UN Global Compact's 2013 Global Corporate Sustainability Report finds that companies are increasingly talking about supply chain sustainability and making solid progress on setting expectations for suppliers. Working with your industry peers is a great way to share knowledge about the sustainability performance of your suppliers. 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�. 4. To make your supply chain more sustainable, you need to understand its current situation — and what issues you’re facing. Reduce Cost. Establishing and communicating expectations through a supplier code of conduct is a critical step in involving suppliers in your sustainability efforts. Citing Literature. 5 Strategies for a More Sustainable Supply Chain 1. 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.. 0000006932 00000 n Research shows the business case for supply chain sustainability is growing. In this section. Our client work shows that more companies are aligning the content of their assessments with the GRI guidelines and CDP questionnaires. Citing Literature. 0000019848 00000 n They task a point person on staff with extending the firm’s sustainability program to first- and lower-tier suppliers. 0000014331 00000 n In an effort to avoid audit fatigue and to provide a common framework for evaluation, some industries have developed common auditing and assessment tools. They expect organizations to meet a certain set of ethical standards, and supply chains aren’t exempt from scrutiny. 0000002609 00000 n ��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 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. However, a responsible supply chain is not necessarily sustainable. %PDF-1.7 %���� 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� 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. How P&G Can Create a More Sustainable, Ethical Supply Chain. 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. Common among them is the use of technology such as AI and blockchain-based technologies which may help supply chains become more resilient. CH2M HILL is the program manager for the highly ambitious ZDHC Joint Roadmap, which has grown from six founding brands (adidas Group, C&A, H&M, LiNing, Nike Inc., and Puma SE) into a coalition that includes Esprit, G-Star Raw, Gap Inc., Inditex, Jack Wolfskin, Levi Strauss & Co., Limited Brands, Li Ning, M&S, New Balance Athletic Shoe, Inc., PVH Corp. and United Colors of Benetton. 0000000016 00000 n 6 steps for a more sustainable supply chain. 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. •    Perform a logistics assessment to determine where sustainability improvements can be made We believe three approaches can help consumer companies make their supply chains more sustainable. Source: MIT Sloan Management Review. 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. An early step is to inventory suppliers, identify the most significant environmental and social challenges they have, and prioritize efforts with suppliers. Of course, the main obstacle to implementing these changes is the associated cost. 164 23 By showcasing the success stories of selected suppliers, companies not only recognize their efforts but also demonstrate the practical benefits of sustainability initiatives to others in the supply chain. But don't get caught by the biggest risk of all: not acting. The company reduced its footwear supply chain by 65 percent and is focused on forming strong, positive partnerships with its suppliers. 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. 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. A sustainable supply chain is about far more than the environment, though that’s where consumers might focus their attention. 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 “Sustainable Supply Chain Management: Driving a Smarter, More Sustainable Future” found 81% of companies are more focused on sustainability today compared with three years ago, and to … 0000018015 00000 n 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. When it comes to having a sustainable supply chain, it’s important to look at the big picture. Develop training and capacity building programs. 0000001433 00000 n For example, HP has established supplier- and peer educator-run programs that have provided training to a large number of workers. Create a Business Plan. After covering the basics, your business will quickly start growing. Sustainability is a confluence of social, ecological and economic environments. In recent years a rising number of multinational corporations have pledged to work only with suppliers that adhere to social and environmental standards. Enterprises can take action today — and live up to buyer expectations — by creating a more sustainable supply chain. Many external resources are available to support these efforts and some are tailored to specific sector needs. This is an important step in improving sustainability and driving behavioral changes throughout your supply chain. “When you don’t have a vision you’re grasping in the dark,” said author and Kinexions '20 keynote speaker Simon Sinek. Many organizations, such as retailers, major brands and the U.S. Federal Government, have started evaluating the performance of their suppliers through questionnaires and surveys. Do you really value the services nature provides? Encouraging transparency and selecting or awarding more business to suppliers with stronger sustainability performance can be very effective in driving improvement. Look at your supply chain in stages and consider the environmental, social, … These strategies are hierarchical. Also reducing packaging weight and complexity can reduce LTL charges and volume and weight will be slightly reduced. Some criteria that may be helpful for prioritizing suppliers include level of spending, importance to business continuity, and geography as a proxy for risk. 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. ^��,�M (������+�[Z�/P�[�s^S���hr�`�2�À��`�/XR�E�$�E�f�Tc%�r�7C6�Ԝ�: 0000027905 00000 n Tier 1 and Tier 2 suppliers are required to provide information about their sustainability programs and demonstrate continuous improvement. Many resources and tools have been created to assist companies with the development of a supplier code of conduct. To meet these expectations, companies must enact significant changes that ensure environmental stewardship, decreased damage, and sustainable sourcing, manufacturing and product distribution. These include identifying critical issues across the whole supply chain, linking the company’s supply-chain sustainability goals to the global sustainability agenda, and helping suppliers manage their impact. 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