Most companies these days are pursuing some sort of strategy to make sure that
they're being more socially responsible or being more sustainable, but how can
you be truly responsible if your suppliers (the raw material producers, the
component providers, the transportation and logistic services that make up your
supply chain) if they aren't. Today's companies have hundreds of suppliers and
the supply chain can typically account for between 50 and 70 percent of both total
expenses and greenhouse gas emissions for most manufacturing operations. Supply
chains are therefore critical to ensuring greater organizational
sustainability. Let's talk about how organizations can turbocharge their
sustainability performance by focusing more on responsible and sustainable
supply chains.
When we talk about supply chain sustainability we're talking primarily
about the management of environmental social and economic impacts and the
encouragement of good governance practices throughout the lifecycle of
the goods and services. In today's world outsourcing business operations is
becoming more and more common, but this doesn't mean that we can outsource the
responsibility of our risks just because it's in our supply chain. Most companies
recognize that a sustainable supply chain is not just an optional
"nice-to-have". It's a business imperative which is critical to the success of the
organization as a whole. In a recent study the UN Global Compact recorded
that 96 percent of CEOs asserted that sustainability should be integrated into
all aspects of strategy and operations and 88 percent of them singled out the
supply chain as an area of specific importance. It's not very surprising then
that companies are investing more resources in these areas and developing
specific supplier codes of conduct to govern their relationships with their
global suppliers in order to mitigate any risks and enhance their own social
responsibility performance. While the challenges of implementing a sustainable
supply chain management process can seem a bit daunting at first, companies that
have allocated appropriate time and resources to these activities have
reported a number of business benefits. These benefits include
realizing greater efficiencies (mostly related to reducing costs of material
inputs) and increasing labour productivity - also those of managing
business risks more effectively such as those related to business disruption and
mitigating possible reputational damage and also that of harnessing their
supply chains ability to to innovate and work more collaboratively with each
other in order to create more sustainable products. If these benefits
aren't sufficiently convincing, there's also the fact that regulatory pressures
around supply chains continue to increase. Increasing
the regulatory and compliance risks for companies with threats of
sanctions and fines for non-compliant companies. The emerging regulatory
framework related to environmental social and governance issues in the
supply chains includes among others: The California Transparency and Supply
Chains Act of 2010 the US Federal Acquisition Regulations on Combating
Trafficking in Persons, the Customs Trade Partnership Against Terrorism the UK and
Australian Modern Slavery Act, the US Trade Facilitation and Trade Enforcement
Act the EU Financial Disclosure Act France's most recent Corporate Duty of
Vigilance law as well as Conflict Minerals regulation in the EU, the
Dodd-Frank act in the US and national regulatory frameworks for reducing GHG
emissions and supply chains and of course anti-bribery legislation around
the world like the FCPA and the UK Bribery Act which extend also to
the company's supply chain. So it's clear. There's a real push to focus more on
supply chain sustainability, and indeed some of you may have already begun to
implement a program for your organization and just want to find out
how to improve upon it. If this describes your organization, I'd encourage you to
use our free online assessment tool available on our website. This diagnostic
tool that we've created is based on a number of recognized standards and
international best practice as well as our own experience and it'll help you
determine just how sustainable your supply chain currently is - and perhaps
more importantly - what you can do to improve it further. I'll also put a link
to the tool at the end of this video in the description box so you can access it
there. For others who are may just be starting out or are looking to how they
can move their approach from maybe a more ad hoc approach to one that's a
little bit more systematic, we've created another video to complement this one in
which I'll share with you some practical steps of how to get started and maintain
a sustainable supply chain management system for your organization.
And you can access that video by clicking on the card
above. While more and more companies are seeking to expand their sustainability
programs to include suppliers, they sometimes struggle with
implementation. Hopefully these resources will be useful for you and your
organization and help it move towards a more sustainable supply chain. If you
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for your organization.