What ingredients are needed for a compelling online event? A hot topic; smart, articulate panelists – I recuse myself – with relevant experience; and a moderator who keeps the event on track yet understands that the audience is there to hear the panelists. A recent Reuters webcast on how meaningful supplier collaboration supports sustainability efforts most certainly delivered on all fronts.
To follow are some key discussion points and conclusions.
What does supplier collaboration mean, and more importantly what outcomes can we expect?
The panelists agreed that the value of consistent, thorough supplier collaboration is readily apparent during major disruptions, but that value can run deeper and last longer. Matt Smith noted that collaboration fosters transparency and therefore trust – a “long-term play” that cements a relationship, not just a way to get stuck containers moving.
Furthermore, the panel agreed that collaboration opens the door to innovation. Angie Slaughter pointed to Anheuser-Busch’s Eclipse Activate initiative that helps its suppliers reduce greenhouse gases. Finally, all agreed that big benefits can result from creating a common point of view and measurement standards, then driving slight changes across many organizations.
Why is visibility important for sustainability?
Aside from my view that visibility enables all three pillars of sustainability – governance, environmental, social – the discussion here was eminently practical. Slaughter noted that Anheuser-Busch’s own sustainability goals require supplier cooperation; 80% of harmful emissions come from Anheuser-Busch’s supply chain. Without visibility, there is no way to measure and therefore no opportunity to quantify improvements.
Smith said that Westrock’s supply chain is characterized by very fragmented production. Farmers have historically been invisible but addressing sustainability issues means working at the origin. Tracking must reach to the farmer, and a resilient supply network requires a full communication loop.
Where should businesses start?
Herbalife’s Mark Schissel recommends starting with your biggest and fastest-growing suppliers. Digitally map your supply chain and automate the updating of that map so changes are reflected in real time. Smith argued for moving accountability from Marketing to Operations, saying that sustainability can’t be a feel-good play and noting that sustainability efforts really explode, in an effective way, when they become part of corporate strategy. My key takeaway here was: create a program, not just a project.
What technology is critical?
Rather than naming existing technologies by category and brand, the panel focused on supplier-related business problems that technology must address. All agreed that enabling technology for sustainable supply chains creates visibility and supplier collaboration so that companies can verify they are meeting corporate social responsibility (CSR) goals. And the consensus was clear: you can’t do it the old way!
I highlighted the importance of a digital twin for your entire ecosystem and the need for blockchain to validate transactions using a trusted, universal platform. Smith pointed out that track/trace technologies are critical for understanding the barriers that suppliers face when presented with top-down sustainability goals. Too often, consuming countries try to force their goals down the supply chain without understanding barriers on the ground. Traceability reveals that one size does not fit all.
Slaughter noted a move from just-in-time (JIT) to just-in-case, a classic conservative response to volatility. In addition, she advocated increased focus on supplier risk and scenario planning. She also called out the need for fleet management technologies that support the reduction of empty miles and help suppliers pivot quickly in the face of shifting demand.
Schissel commented that since COVID-19 hit, corporate leaders have developed a new appreciation for supply chain professionals as contributors to top-line growth rather than just cost-cutters, that it takes different skills to succeed in supply chain now, and unfortunately these people are hard to find. I added that ‘data is the new oil’, and all companies need to focus on data governance and reduce latency. Slaughter believes that if you’re challenged by “too many priorities,” you need leadership to weigh in early and often. Similarly, Schissel pointed out that Herbalife’s board created an environmental, social and governance (ESG) committee to signal the company’s commitment. All agreed that sustainability objectives need to be part of everyone’s job description.
What does the future hold?
All the panelists expect that achieving sustainability goals would yield far-reaching business benefits. Smith anticipates more emphasis on shared risk, longer term contracts, and an end to the fool’s errand of changing vendors every six months to chase the lowest price. Schissel believes we will see an era of better-quality products, increased trust, and mutually beneficial SLAs.
At Logility, we’re seeing more customers base decisions on an algorithm that includes sustainability in addition to the traditional factors of cost and margin. I agree with Mark Schissel’s closing comment that ethics and profit are always positively linked.
Senior Vice President, Product Innovation
As senior vice president of product innovation, Mark is responsible for all product development and technology strategies for the Logility® Digital Supply Chain Platform. His leadership and creativity are crucial to driving innovation in Logility’s cloud strategy, product architecture, advanced analytics, and mobility. Mark has more than 30 years of experience in development, implementation and support of supply chain software solutions. Mark holds a Bachelor of Science degree in Mathematics from The University of the South (Sewanee) and a Master of Science degree in Operations Research from the Georgia Institute of Technology. He is a frequent guest lecturer for the supply chain management graduate program at the Georgia Institute of Technology.