These best practices will help make supply chain sustainability part of your operations and culture.
- Sustainable supply chains are a must for businesses that want to attract and retain customers
- Start by mapping out your supply chain
- Set sustainability criteria for all tiers of your supply chain
- Create an environment that allows suppliers to consistently follow sustainability criteria
- Optimize your supply chain network with sustainability in mind
- Invest in supply chain solutions that increase visibility and transparency
Sustainable supply chain best practices help the environment and the people of the world, but they also make your supply chain more agile, efficient, and resilient. Sustainability initiatives reduce operating costs and strengthen your brand image. They also improve long-term access to resources for the entire enterprise by helping you to avoid unplanned supply chain disruptions caused by legislation or climate change.
1. Map out your supply chain
Even today, many businesses don’t have a clear sense of the source of their inputs, particularly in relation to second- or third-tier suppliers. To understand the sustainability impact of your business, you need to map out your supply chain.
Work with your suppliers to get a sense of their environmental and social challenges, then help them identify sustainable supply chain best practices that they can implement.
Consider only having relationships with suppliers who meet sustainability criteria. But don’t just think about environmental and social concerns. When evaluating suppliers, also consider their significance to your business continuity and how their location impacts their risk.
2. Monitor lower-tier suppliers as well as top-tier suppliers
Traditionally, businesses set and monitor criteria for their top-tier suppliers, and they expect these suppliers to enforce standards for their suppliers. Unfortunately, this setup doesn’t work. You need the ability to trace all of your inputs and ensure all of the players in your supply chain meet your sustainability standards.
When you understand what your suppliers’ suppliers are doing, you’re in a stronger position to avoid disruptions due to legislation. For example, in December 2021, imports from China’s Xinjiang region were banned as part of the Uyghur Forced Labor Prevention Act. Businesses that weren’t tracing their suppliers’ actions or didn’t have a sense of what was happening in that area were more likely to be affected by this legislation.
3. Set realistic expectations with suppliers
Unfortunately, multinational companies often inadvertently create the very issues they’re trying to avoid by setting unrealistic deadlines or placing orders that exceed their suppliers’ capacity. Your sustainability policies should not just pay lip service to these ideals. You need to ensure that your operations also support your commitment to sustainability.
When researchers from the Harvard Business Review interviewed top- and lower-tier suppliers of multi-national companies, they discovered many suppliers who had dangerous working conditions and poor environmental practices. These suppliers claimed that their clients were setting production standards they couldn’t meet without violating sustainability criteria such as a 60-hour workweek limit. Afraid of losing business to the competitors, the suppliers violated sustainability best practices rather than telling their clients they couldn’t meet their needs.
For the most part, lower-tier suppliers aren’t concerned about their brand image or reputation. Public scandals don’t convince these companies to change their policies in the same way they do with consumer-facing organizations. Instead, these suppliers are only likely to change when their clients put pressure on them.
To put it simply, you need to know your suppliers and impose sustainability guidelines on them. But at the same time, you also have to create an environment that allows your suppliers to act sustainably.
4. Start from the top
To instill a sense of corporate social responsibility throughout your organization, your commitment to sustainable supply chain best practices needs to start at the C-level. If leaders are on board, team members will be more likely to follow suit.
Draft a sustainability policy for your enterprise. Outline what is important to your organization and find actionable ways to carry out your convictions.
In some cases, you may want to make broad changes, such as redesigning products or re-engineering your entire supply chain. In other cases, you may need to embrace incremental changes or test sustainability initiatives on a small section of your supply chain before rolling them out permanently across the board.
When looking at the cost of implementing sustainable practices, don’t just consider the expense. Think about how it affects your bottom line in terms of your brand image and long-term value. Now is the time for sustainability — even if the upfront cost outweighs the immediate financial advantages.
5. Invest in supply chain solutions that increase true end-to-end visibility
Improving supply chain sustainability can be a complex process. To truly optimize your supply chain, you need the right technology. You need solutions fueled by machine learning (ML) and artificial intelligence (AI) that can improve the visibility and data management of your supply chain, from sourcing and procurement through to planning and execution.
You need the ability to sense demand, analyze prices, plan out the life cycle of your products, and oversee other aspects of your supply chain. This allows you to ensure that your sustainability efforts are translating to profits while also enhancing your image and protecting the environment.
If you want your enterprise to be more sustainable, start by identifying the basic stakes. What should you be doing to stay competitive in your industry and to meet the demands of your consumer base? Then, set goals and outline the actions you need to take to reach them. Don’t be afraid to embrace big changes, and when that’s not possible, make changes slowly. To optimize your efforts, work with supply chain experts who can help with the process.
Contact Logility to Improve the Sustainability of Your Supply Chain
To implement sustainable best practices, you need to understand what’s happening in your supply chain. You need visibility into all tiers of your supplier base, and we can provide that to you.
At Logility, we create supply chain solutions that help our clients become more sustainable and more competitive. We believe in being stewards of the land, but we also believe in supporting the long-term growth and value of our clients’ organizations. Our solutions make both possible.
Vice President, Product Marketing
Lachelle Buchanan is the vice president of product marketing at Logility, where she leverages over 15 years of experience in unifying the expertise of product development teams with the market insight of sales teams for successful new product introductions. After spending half her career in marketing and the other half in supply chain, Lachelle is most passionate about bringing teams together to solve complex supply chain challenges and delivering value for customers. Owing to a passion for advanced Sales & Operations Planning, Lachelle has Oliver Wight certifications in Integrated Business Planning (Advanced S&OP), Demand Management, Integrated Supply Chain Management and Product & Portfolio Management.