Sustainability in the supply chain | Supply Chain Management

Companies big and small are making more serious commitments to sustainability, quality and the environment.

These companies are not implementing sustainable practices because of legal regulations. Most companies are implementing those practices because they understand that with better care for social and environmental resources comes an improved reputation and increased satisfaction among customers, contractors, investors and other stakeholders.

While organisations can implement policies and practices for their employees, they won’t be able to make a big enough impact until they are able to involve their entire supply chain. A commitment to sustainability, though, creates significant implications for your partners and suppliers. It can be a difficult task to apply those new policies across the board consistently, because of your numerous partners and suppliers throughout all areas of the supply chain.

According to a recent study, implementation and enforcement of sustainable policies are still being done through paper, email and spreadsheets. While this might be fine for a small company (although we don’t recommend it), it can cause problems for large companies. Manual processes can lead to increased risk and non-compliance of sustainability standards, including the lack of standardisation in how employees and contractors are evaluated. Because the processes are manual, each evaluation is based on who performed the assessment and what standards they used. 

Companies with sustainable goals should follow these four steps to improve their chances of success with these new programs. 

Determine and then communicate sustainability expectations

First, your team needs to determine what sustainability goals your company will support. These goals need to be focused on measurable activities rather than hopeful and esoteric ideals. An MIT report suggests three ways to consider what goals you will set, based on the characteristics of your supply chain.

1. Create a value chain map—a process to analyse areas in the supply chain that can provide opportunities for improvement—to determine the economic, environmental and social conditions across the supply chain and determine what each part of the supply chain can do to influence overall goals. 

2. Set science-based goals. Establishing goals that match scientifically important needs will help prioritize those needs and also potentially galvanize the entire supply chain toward a better cause. 

3. Develop context-based indicators in areas such as carbon, water, waste and social metrics. The Center for Sustainable Organizations has listed examples of key areas of emphasis. 

Of course, the communication of your goals is essential. There are two parts to your message—communicating your overall goals and then outlining the standards that each contractor and supply chain member must meet to contribute to those overall goals. 

Audit suppliers regarding sustainability standards

The best way to inject sustainability into your supply chain is to assess, verify and monitor your contractors in the supply chain through audits. There are three ways that this could be achieved. 

1. Implement a configurable questionnaire that enables suppliers to highlight efforts they’ve made toward meeting your sustainability requirements. 

2. Verify that their answers comply with your sustainability requirements with a systematic review of their policies and procedures. 

3. Monitor suppliers’ improvement and compliance by regularly having them demonstrate their ability to implement policies and procedures effectively. 

Train your suppliers on how to meet standards

Once you have communicated sustainability standards and performed the necessary audits, you’ll probably need to close the gaps of deficiencies with some suppliers. Of course, where it’s related to safety compliance, you wouldn’t want an unqualified contractor working for you. However, you could still assist them with safety training and counseling on how to meet your standards. In other areas, you can provide training and guidance to show them how to meet your sustainability goals. There are many resources available to help suppliers implement procedures and improve their processes to achieve a more sustainable business. 

Benefits of a sustainable company and supply chain

The primary benefit of sustainable practices creates a better and more enduring work life for everyone by building a place where not only employees will be proud to work but also suppliers will be delighted to do their part in creating a better future by aligning with you. In addition, a sustainable company improves reputation among customers, suppliers, investors and other stakeholders. 

Finally, companies that implement sustainable practices by qualifying and auditing contractors see improvements in safety and other related areas. On average, we’ve seen companies lower their total recordable incident rate (TRIR) by 58%. Some receive a 30% improvement in health and safety performance. Implementing sustainability in your company will achieve several impactful dividends on your company.

By Richard Parke, Senior Vice President, Supplier Services, Avetta

For more information on all topics for Procurement, Supply Chain & Logistics – please take a look at the latest edition of Supply Chain Digital magazine.

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