3. 0000004473 00000 n November 13, 2020 Shelley Vinyard. A sustainable supply chain is about far more than the environment, though that’s where consumers might focus their attention. Enterprises can take action today — and live up to buyer expectations — by creating a more sustainable supply chain. 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. 0000014331 00000 n •    Encourage innovation. Suppliers are classified into four groups of environmental performance, with each incorporating specific key performance indicators (KPIs). 0000025955 00000 n These collaborations help prevent audit fatigue, training redundancy and mountains of paperwork for suppliers working to meet similar requirements from their customers. Working in a pre-competitive environment, peer companies that share similar supply chains can set common standards and best practices for sustainability performance and allow suppliers to be evaluated on the same metrics. Establishing and communicating expectations through a supplier code of conduct is a critical step in involving suppliers in your sustainability efforts. 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. Jigsaw image by billdayone via Shutterstock. Our client work shows that more companies are aligning the content of their assessments with the GRI guidelines and CDP questionnaires. • There is a strong business case for developing sustainable ways of working throughout a company and its supply chain: saving resources is a more … That means incorporating a sustainable design mindset in the supply chain to produce ingredients more efficiently and prevent waste in processing. 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 “best” practice. Some criteria that may be helpful for prioritizing suppliers include level of spending, importance to business continuity, and geography as a proxy for risk. How P&G Can Create a More Sustainable, Ethical Supply Chain. This is an important step in improving sustainability and driving behavioral changes throughout your supply chain. 0000016077 00000 n To meet these expectations, companies must enact significant changes that ensure environmental stewardship, decreased damage, and sustainable sourcing, manufacturing and product distribution. They have established long-term sustainability goals. 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. 164 23 Also reducing packaging weight and complexity can reduce LTL charges and volume and weight will be slightly reduced. Develop training and capacity building programs. How a More Sustainable Supply Chain Reduces Cost, Time, & Risk 1. 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. An early step is to inventory suppliers, identify the most significant environmental and social challenges they have, and prioritize efforts with suppliers. However, a responsible supply chain is not necessarily sustainable. While more companies expand their sustainability programs to include suppliers, they struggle with implementation. We seek to apply these commitments across all Schlumberger business activities and supply chain, including suppliers, contractors and labor agents. Reduce Cost. 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. 0000006932 00000 n This is easier said than done, though. indispensable part of a business’s sustainability program 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. 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. 164 0 obj <> endobj xref 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. 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. wmO|%4��V~l6W�B�B�DhvE�ќ0F����Lқ� 6��"��ܩ� J(�*4l)t��H�f��$��>�(BM�J(/����ri�:V䄪Gi�K��n�ݗ����~Hg=_hho���ݝ�(���0C�O1Ҳ���Ӳ�^�ZSL���K6:���>a��.�Y����%���5;Q��~�Ӷ�N�7�"�W��z�]*��� �C rb�1%����!g��gf5�w��ۮ�o�j�. But don't get caught by the biggest risk of all: not acting. These are all beneficial measures that other companies shoul… Many resources and tools have been created to assist companies with the development of a supplier code of conduct. The recently launched Global Reporting Initiative (GRI) G4 Guidelines also requires an increased focus on sustainability throughout the supply chain. We set aspirational goals to achieve 100% renewable energy, zero waste and a more sustainable supply chain for people and the planet. In recent years a rising number of multinational corporations have pledged to work only with suppliers that adhere to social and environmental standards. However, they are not yet supporting expectations with concrete actions that drive sustainability performance in their supply chain. Stakeholder pressure from investors, shareholders, customers and nonprofits to push sustainability into the supply chain has significantly increased in recent years, with a record number of shareholder resolutions on supply chains issued during the past two proxy seasons. •    Integrate supply chain sustainability criteria into the procurement process ^��,�M (������+�[Z�/P�[�s^S���hr�`�2�À��`�/XR�E�$�E�f�Tc%�r�7C6�Ԝ�: 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. You can create a sustainable supply chain that allows you to maximize your profits by following several simple steps. While slow-steaming container ships can be effective at reducing both emissions and expenses, organizations may find it difficult to achieve sustainability internationally — across many global suppliers — when cost drives many supply-related … Encouraging transparency and selecting or awarding more business to suppliers with stronger sustainability performance can be very effective in driving improvement. 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. “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 … In an effort to avoid audit fatigue and to provide a common framework for evaluation, some industries have developed common auditing and assessment tools. 0000006327 00000 n The company reduced its footwear supply chain by 65 percent and is focused on forming strong, positive partnerships with its suppliers. 0000000756 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. 0000010077 00000 n But by leveraging the IoT, supply-chain managers can reduce that complexity and streamline processes, all while becoming more sustainable. 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. Disruptions are costly and can delay the time your products are available to sell on the market. A sustainable supply chain must avoid compromising both the environment and the business itself. •    Create a shift towards supply chain sustainability by leveraging your buying power and influence Sustainability is a confluence of social, ecological and economic environments. 0000019848 00000 n Others suggest that greater collaboration among value chain members are required to create a more resilient supply chain. Working with your industry peers is a great way to share knowledge about the sustainability performance of your suppliers. First, there are supply chains that operate within legal limits and comply with agreed-upon contractual requirements. ��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 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. 0000001433 00000 n 0000022497 00000 n 4. They expect organizations to meet a certain set of ethical standards, and supply chains aren’t exempt from scrutiny. Once supplier baseline performance is understood, an audit program can measure performance improvement over time. 0000007923 00000 n Citing Literature. 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. 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. Assessments and audits paired with incentive programs that reward sustainability efforts have a greater ability to drive sustainability performance. 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.. 1. Many external resources are available to support these efforts and some are tailored to specific sector needs. 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. For example, IBM’s Food Trust, founded in 2017, addresses the need for smarter, safer and more sustainable food supply systems by connecting an ecosystem of producers, suppliers, manufacturers, retailers, and other stakeholders. MIT’s hierarchical supply chain codification shows that operating legally, ethically, and/or responsibly does not equate to sustainable. 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. 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. Incidents such as the factory collapse and fires in Bangladesh last year highlight the need for increased and urgent actions in this area. trailer <]/Prev 1252672>> startxref 0 %%EOF 186 0 obj <>stream What is a sustainable supply chain? Incorporating sustainability into a company's supply chain is complex but the failure to act may be the biggest risk of all. Challenges in Adopting Sustainable Practices. 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. 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. These strategies are hierarchical. 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. Figure 1 identifies four broad strategies for supply chain management: legal, ethical, responsible, and sustainable. 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. Many companies recognize that complex supply chain challenges cannot be solved by individual efforts and that industrywide collaboration is required. December 14, 2020. 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 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. There is an alarming rate of more than 90 percent of the damage caused to the environment by consumer-packaged goods (CPG) producers. 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. 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. 4. Of course, the main obstacle to implementing these changes is the associated cost. 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. 0000007363 00000 n 0000002458 00000 n 0000001383 00000 n Whichever stage you’re at includes the prior stages, but not the subsequent ones. 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. 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. New Balance Athletic Shoe Inc. reduced the number of suppliers it does business with, in part based on performance against sustainability criteria. •    Expand your sustainability goals beyond your direct operations across your supply chain Common among them is the use of technology such as AI and blockchain-based technologies which may help supply chains become more resilient. But cost efficiency and sustainability aren’t mutually exclusive. A responsible supply chain, for example, must also be legal and ethical. Focusing on sustainability within your supply chain is a great way to communicate corporate values and culture to your suppliers and customers. For example, the United Nations Global Compact publication, "Supply Chain Sustainability — A Practical Guide for Continuous Improvement"  [PDF], has guidelines and tips for writing and adopting a successful supplier code of conduct. Consumers are more conscientious about their purchases than ever before. 0000027905 00000 n After covering the basics, your business will quickly start growing. 0000006420 00000 n Fifteen years ago, Walmart started on our journey to become a more sustainable company. In this section. Every journey begins for a reason. 0000018015 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. 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. 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� 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. 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. The three MNCs in our study have taken a number of steps to promote suppliers’ social and environmental responsibility: 1. 5 Strategies for a More Sustainable Supply Chain 1. They include lower-tier suppliers in the overall sustainability strategy. Since 2010, CH2M HILL has identified suppliers with strategic or preferred status based on volume and business impact. 0000002572 00000 n All partners in these supply chains must follow, for example, established legal, building, and environmental … Source: MIT Sloan Management Review. We believe three approaches can help consumer companies make their supply chains more sustainable. But all MNCs have more work to do to develop sustainable supply networks. Research shows the business case for supply chain sustainability is growing. Create a Business Plan. They task a point person on staff with extending the firm’s sustainability program to first- and lower-tier suppliers. 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. For example, HP has established supplier- and peer educator-run programs that have provided training to a large number of workers. 2. 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. Consulting activities are an important part of the company’s sales strategy. For example, the Sustainable Apparel Coalition developed the Higg Index, a performance assessment tool for the apparel and footwear industries. A more sustainable supply chain. 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