Supply chain sustainability is the management of different environmental, social and economic factors, and the implementation of good governance practices, throughout the lifecycles of goods and services. The primary aim of supply chain sustainability is to create, protect, and grow long-term environmental, social and economic value for all suppliers and stakeholders involved in ensuring the availability of goods and services in the market. However, before navigating through this complex terrain, let’s understand why supply chain sustainability is important for companies.
Why is Supply Chain Sustainability Important for Companies?
Although, there are numerous reasons that make companies start a supply chain sustainability journey. But the most important one is to ensure compliance with laws and regulations and to adhere to international principles for sustainable business conduct. By implementing supply chain sustainability practices, companies can improve environmental, social and economic performance and good governance throughout supply chains. This blog outlines key steps that companies can take to achieve supply chain sustainability, protect the long term viability of their business, and secure a social license to operate.
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Steps Involved in Developing Supply Chain Sustainability
Step 1: Develop the business case
Many companies today are driven by their corporate value to address sustainable supply chain issues. Their business cases depend on different issues such as industry, supply chain footprint, business strategy, stakeholder expectations, and organizational culture. The sustainable supply chain management process that responds to multiple drivers can add value to the business. Few of the most common drivers for supply chain sustainability are mentioned below.
Risk Management: By integrating Global Compact Principles with compliance programs, companies can protect themselves from potential supply chain disruptions such as delays associated with suppliers’ and move towards more responsible supply chain management.
Improve efficiencies: Increasing the supply chain efficiency can help companies to reduce their supply costs while minimizing the environmental footprint of the supply chain. They can understand key processes in the supply and better manage logistics and manufacturing systems.
Step 2: Benchmarking against peers
Companies need to stretch beyond identifying business drivers. They need to analyze the external landscape along with the approaches of peer companies to develop business partnerships. This will help them to gain a comprehensive understanding of the business value as well as ideas to incorporate into their supply chain sustainability program. The key aspects they need to focus on are:
- Business case for supply chain sustainability.
- Internal structure for managing sustainability in the supply chain.
- Codes of conduct, and the topics included.
- Initiatives for supplier relationships.
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Step 3: Understanding stakeholder expectations
Investing in understanding stakeholder expectations is also crucial for companies. They can seek input from customers and investors and ensure that they create the maximum return for the company. Engaging in the early stage will help companies identify relevant standards and approaches to sustainable supply chain management. They can also take a proactive approach to address emerging risks and opportunities in supply chains.