Sustainable Supply Chains

sustainable+supply+chain+3 Sustainable Supply Chains

Sustainable supply chains are an integral part of arapidly growing trend that is transforming businesses around the world.Supply chains are critical links that connect an organisation’s inputsto its outputs. The increasing environmental costs of these networks and growing consumer pressure for eco-friendly products has led manyorganisations to look at supply chain sustainability as a new measure of profitable logistics management.

Approximately 70 percent of all surveyed top executives consider sustainability efforts essential tolong-term profitability. For firms’ purchasing strategies, purchasingheads rank environmental efforts as most important among sustainabilityinitiatives.

In response to overwhelming demand for sustainablesupply chain expertise, educational facilities like the W. P. CareySchool of Business at Arizona State University are building green supply chains into their curriculums.

The level of an organizationsinvolvement can be catagorized into one of three general groupssometimes referred to as the three tiers of sustainability.

Tier 1) The Basics: This is the base level where companies employ simplemeasures such as switching lights and PCs off when left idle, recyclingpaper, and using greener forms of travel with the purpose of reducingthe day-to-day carbon footprint. Some companies also employ self-service technologies such as centralised procurement and teleconferencing.

Tier 2) Thinking Sustainably: This is the second level, where companiesbegin to realise the need to embed sustainability into supply chainoperations. Companies tend to achieve this level when they assess theirimpact across a local range of operations. In terms of the supply chain, this could involve supplier management, product design, manufacturingrationalisation, and distribution optimisation.

Tier 3) TheScience of Sustainability: The third tier of supply chain sustainability uses detailed auditing and benchmarks to provide a framework forgoverning sustainable supply chain operations. This clarifies theenvironmental impact of adjustments to supply chain agility,flexibility, and cost in the supply chain network. Moving towards thislevel means being driven by the current climate as well as pushingemerging regulations and standards at both an industry and governmentallevel.

An October 2009 GTM report, titled Greening the Supply Chain: Benchmarking Sustainability Practices and Trends, indicates that green supply chain leaders are benefiting from reducedcosts, increased revenue and recognition.

The report includescase studies and interviews with supply chain executives andsustainability officers. Although energy reduction in the supply chainhas received a lot of attention, there are other efforts including moreefficient product designs.

According to David Schatsky, one ofthe report’s authors, "The supply chain represents a big opportunity for firms to realize the financial, operational and strategic benefits ofsustainable business practices."

Despite its growing prominence,sustainability is not at the core of most companies’ strategic planningand although involvement is increasing, it is not the prime driver ofsupply chain agendas.

While there are many benefits to greeningthe supply chain, there are also impediments. Many companies cannotfully evaluate their suppliers and customers, making it difficult toassess the true environmental costs. However, as the basic standards ofsustainability reporting become increasingly common it will be easier to make more accurate assessments.

Sustainable supply chain efforts are a defining feature of a serious environmental commitment. Overallthe research indicates that firms that take sustainability seriouslyshow major competitive advantages, especially with regard to productionefficiency, supplier management skills and employee morale.