Supply Chain Sustainability as a Competitive Advantage - Procurement News

Procurement News | by Lucy Harding on 28/05/2016 12:47 | 0 comments

Industry leaders understand that supply chain sustainability can be a competitive advantage. Utilised effectively, it brings a wealth of opportunities.

Sustainability Competitive Advantage

Read the first part of this article here.

Global brewing giant SABMiller embraces the idea that water is strategic. It cut its water consumption by 28 per cent, now only using 3.3 litres to make 1 litre of beer. It is on track to achieve its objective of 3 litres by 2020. Iconic sports brand Nike has adopted 3D printing to eliminate waste.

Companies not focusing their supply chain efforts on differentiation are at risk of falling behind. Innovation can also involve changing consumer behaviour. Here again, collaboration is key between different functions, from R&D to marketing and procurement and supply chain.

One of the three pillars of Unilever’s Sustainable Living Plan is to halve the environmental footprint of their products by 2020. They have developed a purpose-driven strategy to double their revenues, while still having a positive social impact. Their business model has put supply chain sustainability at the heart of strategy, and they use innovation to embrace it.

Cost of Sustainability

A common misbelief is that sustainable solutions cost more. In most cases, they are more profitable, with a faster return on investment. Business and sustainability go hand in hand, and better solutions have emerged, both for businesses and the planet.

True, there are more expensive examples. Traceable palm oil, which ensures zero deforestation during production, is one of these. However, renewable energy solutions, such as windmills and solar panels, can be profitable immediately.

Many companies also put a lot of effort in reducing transportation, with the objective to decrease gas emissions, as well as the transportation cost itself. From a labour perspective, the overall cost could be diminished by improving productivity and respecting minimum wage.

When companies take the long-term approach that sustainability requires,
 initiatives can be cost neutral or 
better. Some companies have increased their revenue by as much as 20 per cent, while reducing supply chain costs by up to 16 per cent. According to the World Economic Forum report written with Accenture, this has been done by implementing sustainable supply chain practices.

Best practices have been identified to support companies achieve a “triple supply chain competitive advantage” of increased revenue, reduction in supply chain cost and added brand value. The result is improved competitiveness and reduced operational risk.

Employee Engagement Key to Sustainable Success

46 per cent of CEOs reported that employees would be among the most influential groups in guiding their action on sustainability over the next five years – second only to consumers.

When it comes to employee engagement, it is important to communicate internally to all levels of the organisation. Best practice should come from within, and companies should ensure that their external actions on sustainability are also reflected internally.

Taking care of the workforce, engaging them in implementing a corporate commitment to sustainability, will drive greater productivity, and thus greater profitability.

Giving employees a purpose and empowering them to have ideas and find solutions at a local level could make a real difference in supply chain sustainability. It is more challenging to have sustainable operations in some global regions than in others. Leading supply chain executives encourage their teams to go beyond their own boundaries, inspiring, guiding and supporting them.

Companies who are leveraging supply chain sustainability as a competitive advantage are outperforming their less sustainable peers. Many studies show that these sustainability leaders have higher, faster-growing stock value, better financial results, lower risks, and more engaged workforces.

Aligning employees’ engagement with supply chain sustainability strategy is key to building an innovative, environmentally responsible, and socially conscious business. Workers on the front line are often in the best position to identify inefficiencies and propose solutions.

The best companies integrate their sustainability strategies into their employees’ day jobs. This is done by incorporating sustainability targets into the employee’s annual objectives, and incentivising them.

Shared Responsibility

Sustainability is the responsibility of everybody, but especially those involved in the supply chain who are in a position to act.

Communication and training are important factors in generating awareness across the workforce. To attract talent, particularly millennials and future generations, companies behind on the subject will lose in this battle too.

Many multinational organisations have set sustainability targets to be reached by 2020. Winning companies will master the balance between commercial gains and “it is simply the right thing to do”. They will embrace internal and external collaboration and will drive supplier and consumer behaviour.

In a world where social conscience is fed by social media, and fear of the speed and scale at which information can disseminate globally, it is crucial to behave responsibly. Those organisations which do not act now on supply chain sustainability face the risk of long term brand and reputational damage.


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