10 Steps to Sustainable Supply Chain Management
A plan for achieving truly sustainable supply chain management — from the capabilities you’ll need, to the policies you should put in place, to the systems that will help you achieve it.
There are enough benefits — economic, social, and environmental — to convince any forward-thinking supply chain leader to take the route towards sustainable supply chain management. But you may be wondering how to start. Here are 10 steps towards sustainability to guide your efforts:
1. Construct the business case for a sustainable supply chain
There are many moral, social, and environmental benefits that accrue for companies that adopt a sustainable supply chain. But as a business, none of these may be enough to spur the required investment and resource mobilization for the task ahead. The C-suite will require a compelling business case for adopting a sustainable supply chain in order to get behind the initiative with the conviction needed for success.
The economic benefits of a sustainable supply chain must be clearly communicated to all stakeholders, particularly the skeptics. After that, you can introduce other benefits, such as improved brand reputation and reduced risk to bolster your case even further.
2. Secure commitment at all levels — especially the top
Supply chain sustainability is a company-wide effort that must also include your partners, customers, and other third-party actors. There is very little chance of maintaining a sustainable supply chain without buy-in and commitment from all these stakeholders, especially from those at the highest levels of administration.
Many resources and investments are required to tackle the rigors of supply chain sustainability. Only full backing from the entire organization, its customers, and its supplier network will ensure success.
3. Adopt or develop a code of conduct to guide your sustainable supply chain
A critical part of sustainability is the mindset and value driving it, and these are expressed in the way stakeholders behave at all levels of operation. You don’t have to reinvent the wheel, however. You could simply adopt existing guidelines to establish a code of conduct that supports the values you want to see in a socially responsible supply chain.
On the flip side, if no existing scheme satisfies your requirements, you could develop your own standards to measure all actors along the supply chain.
4. Invite input from critics of your company’s sustainability efforts for added perspective
Whether your company is just starting out or has already faced criticism about its sustainability practices, you would benefit by inviting the input of your critics. Sustainability experts and watchdogs, like human rights organizations and NGOs, can help you identify initiatives that will really make a difference and publicly recognize your company for following them.
Nothing speaks louder of your commitment to the cause than when you bring in objective critics to participate in building the sustainable supply chain. They bring an outside perspective, highlight existing and future trends, and can indicate the minimum standards your company ought to meet in order to remain compliant.
5. Develop metrics against which supply chain stakeholders can judge their performance
Once everyone is on board with your sustainability intentions, ensure that your goals are measurable. Vague ideas about what is expected are not enough to guide suppliers and employees on what counts as compliance and what doesn’t. Clearly defined metrics or scorecards are thus a crucial component of any endeavor towards better performance. They can also help with documentation, acting as proof of your efforts if auditors come knocking.
6. Insist on vetting and certifying third-party actors and suppliers going forward
Sustainability demands accountability, and this is only possible if your company can account for all that goes on along the value chain. A great way to do this is to invite outside auditors to measure the compliance of third-party actors and identify areas for improvement. In addition to that, you can decide to avoid any third-party actor that doesn’t meet the accepted standard.
Data is key to this process. The right digital tools will ensure that information regarding the status and operations of third parties is always within reach to ease or automate decision-making and planning.
7. Forge synergy by collaborating with other companies in your industry
There’s no need to recreate the wheel when sustainable supply chain standards already exist. By committing to the industry standard, companies can leverage existing frameworks and regulations and hold each other accountable.
There are many ways this can happen. For example, you can demand your vendors source their products according to existing regulations and work only with suppliers and producers who have industry-recognized certifications.
8. Make an ongoing commitment to replace suppliers who don’t meet your compliance demands
After securing buy-in from actors in the supply chain, make known the consequences for those who fail to meet these new standards. Unless there is public proof that companies are not meeting your standards and that this comes with consequences, nobody is going to take your supply chain management efforts seriously. Showing teeth and a willingness to bite in this regard could also be a good public relations opportunity.
9. Invest in capacity-building programs for your suppliers to promote compliance
While you bare your teeth, you can avoid having to ever use them by investing in capacity-building programs to facilitate compliance and improve performance. Gathering data about the performance levels and compliance of employees and third parties could easily show you where improvement is needed and inform subsequent decision-making.
10. Embrace transparency
Transparency is one of the major pillars of sustainable supply chain management. Without it, neither regulators nor customers would believe your claim of being committed to sustainability.
Transparency requires that you have the visibility to trace every aspect of your operations across the supply chain, from sourcing to disposal after purchase. The commitment of your company to corporate social responsibility (CSR) should remain visible to all those with an interest in its operations and products — particularly customers, who now routinely place a premium on brands that exhibit CSR.
Logility offers the data and visibility needed to build sustainable supply chains
Embarking on the 10 steps outlined above will lead your company towards a supply chain that adds to your reputation, aligns with your values, and puts you on the right side of regulations.
Sustainability is the way of the future, and any company looking to maintain their social license would do well to show their commitment today.
Logility helps businesses adopt a sustainable digital supply chain to increase their capacity to seize new opportunities and better respond to the ever-changing dynamics in the global marketplace. The Logility® Digital Supply Chain Platform offers AI capabilities and advanced analytics to help you plan, build, and maintain your company’s supply chain faster, more accurately, and sustainably. Contact us to learn more.