Sustainable Business Model
Companies must meet the growing expectations to take responsibility for their supplier’s environmental, social and ethical practices. These expectations are coming from lots of different directions including customers, investors, employees, communities, trade associations, unions and governments.
The ultimate goal of sustainable sourcing is to build strong, long-term relationships with suppliers. Using your ‘buyer power’ to improve their performance on environmental, social and ethical issues is becoming a significant part of the supply chain management process.
The driver is not just ‘doing the right thing’. We believe that most people will not sustain a solely ethical approach , and that business benefit is needed to make changes in approach stick for all parties. Effective supply chain management can foster and build competitive advantage for companies especially in sectors where production is mainly outsourced.
Add value, not cost
There is a common misconception that reducing the environmental impact of supply chain costs. Done poorly it can, many who have done it well make serious savings. By reducing waste and increasing efficiency. A haulage business reduced its logistics costs by £650k through supply chain driver training. We love the example of Sainsbury’s partnering with vets to support its dairy farmers. By focusing on finding and eliminating common health problems, each of the 55,000 cows ended up producing 140 litres of milk more than the national average. Happier cows, healthier cows, less cows need to meet demand and therefore less CO2.
Risks and gains
Some of the supply chain gains ring true with the COVID experience of many. Resilience and continuity of supply have come into sharp focus. Diversification of supply chains to avoid single points of failure like a whole country import block will hopefully be the braces to your belt, but if you don’t have significant local stocks, this strategy could be mission critical.
Supply chains are increasingly scrutinised to see if they ensure fair and safe working conditions, pay and minimise environmental impact. As large corporates complete these exercises, the questions cascade through economies. When they can achieve adequate competitive supply from those able to evidence an ethical approach, those that don’t will exit stage left. The flip side of this coin is that if you are ahead of the curve your Sustainability credentials will likely align with the values of some high performing brands. New business opportunities with a common agenda to start engaging with.
If your business reviews its supply chain and does find opportunities, the rewards can be plentiful. And you will X your social, economic and environmental impacts at the same time.