By Michael Koploy
A key part of any business operation to include sustainability considerations is examining its supply chain. In some ways, this external look can be more of a challenge as transparency, evaluation and the power to re-tool a practice, resource or product are more difficult outside the doors of the company. However, to truly understand the impact of a business service or product, we must take into account the practices and consequences of what goes into the product.
As part of my work on transportation management systems at Software Advice, I have been able to clearly understand where we need changes in supply chain management and what questions supply chain leaders need to ask themselves in the discussion. Here are the five questions that leaders need to start with to begin the conversation about sustainability:
#1 How can we make more sustainable products? Moving sustainability farther upstream will reduce costs through more efficient production and transportation. Look no further than cleaning companies to see corporations that have found a way to introduce sustainability into their product line – and use it as a marketing platform, as well. Take a walk down the aisle at the grocery store, and one will see many detergents are now 2 or 3 times (or even further) concentrated versions of the older formulas. This reduces the amount of product that needs to be processed, and reduces fuel consumption from reduced fleet shipments.
# 2 How can we instill sustainability into our suppliers? Over the years, technology within logistics and the supply chain has improved. However, many suppliers that haven’t been forced to upgrade or innovate are still stuck in their “old ways” – and these weaknesses are holding back the supply chain from becoming truly sustainable. Proctor and Gamble has made it their mission to help the Earth become more sustainable and they are doing so through asking their suppliers to care more – and requiring it, as seen by its Supplier Scorecard.
#3 How can we better measure sustainability? While not inherent, measuring consumption-reduction projects is imperative to accomplishing sustainability goals. Without measuring these initiatives, leaders are unable to assign a value to them, realize their true cost-reduction benefits, and learn from their current projects and reintroduce the most successful initiatives throughout the rest of the business. Transportation management systems with route optimization, scorecard programs and other measurement applications are essential to tying results back to these projects. In addition to benefiting individual companies, proper measurement, visibility and accountability can positively impact business as a whole. That's why the work of CSRHub is important – as companies increase the transparency of their CSR actions, the corporations as a whole will become more socially responsible.
#4 How can we dissociate with socially-negligent suppliers? The pervasive thought among many supply chain leaders is sustainability and social responsibility are “indirect” concerns – they impact PR, but not the company’s bottom line. Mattel is proof this isn’t the case. In 2007, when it was discovered that Mattel’s tier two suppliers used unsafe levels of lead paint in its toys, the company had to spend over $100 million in product recalls alone. Because supply chains today are so extended, companies need to do more and complete their due-diligence to ensure they are not associating with irresponsible partners.
#5 Who can we trust to drive sustainability? Lastly, leaders need an individual to carry the sustainability torch. There has to be an individual assigned to integrating sustainability into the company’s DNA – from cradle-to-cradle – in order for sustainability to be realized throughout the supply chain the rest of the business. Practitioners have to step-up to the challenge as well – excited for the opportunity to make what in the past would have been viewed by many as a “horizontal move,” but as Schaffer Consulting’s Ron Ashkenas writes: these moves are necessary for both careers and corporations today.
Michael Koploy is a guest blogger for CSRHub. He works as a ERP Analyst at Software Advice – a consultancy firm that reviews transportation management systems. You can read more on this subject at the Software Advice blog or contact Michael directly on Twitter @SCMAdvice.