What is a Sustainable Supply-chain?
No business is an island. Every organisation, no matter how small, engages with other businesses as they take their product to market, both directly and indirectly. These supply-chains are fundamental to the business model, but what makes a supply-chain sustainable?
Put simply, a sustainable supply-chain is one which promotes positive environmental, economic and social impact. The term is also used to refer to the supply-chain of a business which has refined the processes within its business model to minimise the impact in these areas and that are conscientious in their supply-chain choices.
The UN defines supply-chain sustainability as, “The management of environmental, social and economic impacts, and the encouragement of good governance practices, throughout the lifecycles of goods and services.” Consideration of the full lifecycle of the product offers insight into the extent to which a business with the goal of designing a truly sustainable supply-chain should define its responsibilities, taking into consideration the full footprint of its activities. It is estimated an average 10% of a company’s ethical responsibility can be weighted to their supply-chain choices (source: orsAR).
The potential impact supplier relationships can have on their imprint is not a responsibility many organisations can afford to negate. In addition to the clear social benefits sustainable supply-chains bring to the communities and industries they operate within, there are significant benefits for a business with a supply-chain which operates sustainably.
Keys examples of business benefits include:
- Protecting organisational values
The organisational values of your business and its strategy, such as transparency, leadership, staff development or quality, are specific choices intrinsic to its success. Ensuring these cornerstone values are adhered to throughout your supply-chain with the same care you give them at the core of your organisation protects those business decisions and their positive returns across your operation.
- Risk mitigation
Business continuity is important for any business, and the sustainability of your suppliers directly affects the consistency of costs, growth and market value. Upholding sustainability benchmarks when developing your supply-chain promotes lower risk for your organisation being affected by the poor standards of another.
Over the past decade, innovation has moved from the responsibility of the R&D department to part of top-level strategy (Source: Deloitte). Investing in identifying and building a supply-chain which is proactive in refining the sustainability of its business practices demonstrates a commitment to pursuing positive change, driving value and innovating to be at the cutting-edge of competition.
Businesses promoting and adhering to sustainable practices invest in understanding their social and environmental impact; information which can be shared. This insight can be used to develop your own understanding of your businesses impact, as well as promoting accountability within your supply-chain.
Sustainable business practices are a growing priority for governments, regulators and corporations, reflected in increasingly strict legal requirements, industry codes of practice and supplier terms and conditions. Developing a sustainable supply-chain today protects your organisation’s compliance into the future.
Essential for any organisation working to be truly sustainable is accountability for the full impact of its operations. Closely managing and upholding standards within your supply-chain is an essential part of this, representing not just a social responsibility but also an opportunity your businesses to get ahead of the competition.