Abe Eshkenazi, CSCP, CPA, CAE, CEO
Association for Supply Chain Management
Supply chains have a profound impact on society and the environment. Therefore, as businesses of all kinds continue to pursue their goals for growth and prosperity, it is essential that their efforts uphold and encourage responsible practices.
One clear and proven strategy is ensuring your commitments to corporate social responsibility flow throughout your entire network. A recent CDP report revealed that a company’s supply chain produces about 5.5 times as many greenhouse gas emissions as its own operations.
This underlines the importance of working together to set clear goals and also share in the value that is achieved from sustainable supply chain management. Cost savings, greater energy and resource efficiency, attracting new customers, and heightened resiliency are just some of the possibilities.
“There is power in procurement,” the report states. “The decisions [companies] make when purchasing goods and services, and the way they influence their suppliers, offers a far greater opportunity for positive change than could be achieved through acting only on areas within their direct operational control.”
Going beyond profit
A second opportunity involves the very concept of why we do business. After years of focusing on the bottom line and wealth generation, more and more supply chain leaders are realizing that their organizations must go beyond goals of mere profit generation.
Nearly 200 CEOs make up the Business Roundtable, representing companies like Amazon, Apple, General Motors, Pepsi, Target, UPS, and Walmart. These leading organizations have declared that businesses must uphold a fundamental commitment to all stakeholders — not just shareholders — by giving employees fair compensation, benefits, training, and education; fostering diversity and inclusion; dealing ethically with suppliers; working only with businesses that align with the company mission; supporting local communities; protecting the environment; and generating long-term value by exceeding customer expectations, and driving innovation and ongoing transparency.
Reconsidering the philosophy of business addresses consumer cynicism and skepticism. Whether income inequality and unfair labor practices, climate change, or dangerous products, shoppers are seeking out those companies that pioneer real, systemic change.
Yet consumer buying decisions are only part of the issue. According to McKinsey & Company, poor sustainability performance can significantly slow an organization’s growth, even putting the entire business at risk. As such, the third facet of sustainable supply chains lies in finding ways to make and sell goods using affordable and reliable supplies of energy and natural resources.
“Companies can no longer take those enabling factors for granted,” McKinsey’s Anne-Titia Bové and Steven Swartz write. “[They must] greatly reduce the natural and social costs of their products and services in order to capitalize on rising demand for them without taxing the environment or human welfare.”
Blaze a trail to responsible business
Creating a sustainable supply chain can be difficult, largely because the initiative has dimensions that are both social (labor standards, human rights) and environmental (greenhouse gas emissions, water usage, waste). Furthermore, each of these areas touches several organizational functions. Nevertheless, supply chain professionals must take the lead with no fear.
To help you along the way, the Association for Supply Chain Management (ASCM) has developed the first corporate supply chain designation that measures ethical responsibility, economic sustainability, and ecological stewardship. The certification, built on the foundation of the supply chain operations reference model, enables organizations to benchmark their supply chain on the three dimensions — economic, ecological, and ethical practices. Each is critical to sustainable supply chain management.
ASCM is providing the certification standards to leadership teams free of charge because we believe so strongly in the importance of sustainable supply chains. As Bové and Swartz say, “Companies that manage their supply-chain impact may well be best positioned to gain from the boom in consumer spending that is expected to take place over the next decade and beyond.”
It’s time we all start viewing sustainable supply chain not as an inconvenience or a responsibility, but as a precious opportunity.