Sunday, September 8, 2013

Sustainability in supply chain make a good business sense

Chief procurement officers in companies across different sectors have begun to recognize the need to integrate sustainability in their supply chains. Recently I came across the study, The business case for sustainability in Supply Chain conducted by BSR consulting firm. The study is about how sustainability in supply chain makes a business sense.
BSR defines a sustainable supply as a Supply Chain that creates, protects, and grows long-term environmental, social and economic value for all stakeholders involved in bringing products and services to market.
In the study they identified four key values that sustainability brings to  a business;
      Managing Risks:  Avoids any kind of business disruptions that may result because of labor issues or environmental problems. This is done by collaborating with suppliers to improve management practices like minimum recruitment age, minimum wage, improving working conditions etc. or to reduce the risk of any sort of production disruptions.

2.      Realizing efficiencies: Sustainability brings down the cost of material inputs, energy, transportation etc. It increases labor productivity and in the process company also develops strategic supplier relationship s for optimization.
3.      Creating Sustainable Products: Sustainability drives company to innovate to meet evolving customer and business partner requirement. Innovative sustainable products gives a competitive advantage and enables entry into the new market

4.      Building a Culture of Responsibility: There is high probability that this kind of approach will attract and retain engaged employees for long. This would strengthen the relationship with external stakeholders and would help the company in gaining better access to capital, financing and insurance.

But if you are a Chief Sustainability Officer who is trying hard to have his management buy the sustainability idea but have not succeeded so far then this may be a good time to revisit your approach. You may consider the following tips:

(1)   Present a successful case study to the board

(2)  Develop a business model without losing perspective of your company’s existing priorities

(3)  Quantify benefits that new business model will accrue to the Company, stakeholders and Customers.

(4)  Don’t forget to acquaint the board of the long term consequences of not integrating sustainability into the supply chain.  

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