Sustainability: Your role as a supply chain leader
Narendra Mulani -- Logistics Management, 5/1/2009
Here are two things that every company should know about sustainability:
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A high percentage of sustainability imperatives fall into the laps of supply chain decision makers. Sustainability is also an IT issue, an HR issue, and a sales and service issue. But first and foremost, sustainability programs live in the supply chain—from eco-friendly design and manufacturing; to low-carbon strategies for sourcing, storing, and shipping; to smart reverse logistics policies and low-waste end-of-life disposal.
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Sustainability is not a fad: It will not diminish in importance or intensity. Thus, it is generally unwise for companies to postpone or curtail their sustainability programs, even during uncertain economic times.
Following is a closer look at the above two realities, followed by the sustainability messages that forward-thinking supply chain leaders must carry to skeptical top executives.
Sustainability’s Power Train
The rising importance of sustainability has brought about an interesting shift. At many companies, the brand promise has become as important to the supply chain officer as it is to the chief marketing officer.
At one time, “brand” was more or less about product image. But as more governments, companies, and customers queue up in support of environmental and social responsibility, brand becomes a function not just of the product you deliver, but how the product is made, who its component suppliers are, and how it is delivered.
However, fulfillment of brand promise is only one way that supply chain management is intertwined with sustainability. The reality is that few operational processes have broader potential influence on sustainability than supply chain management
A Template For Sustainability
Because so much of sustainability’s activities and benefits reside in the supply chain, the supply chain executive could be the best person to carry sustainability’s message to the C-suite. The core of that message is simple: Sustainable business practices—anchored by sustainable supply chains—make good business sense. A recent Accenture study concluded that sustainable businesses actually outperform peers by as much as 7 percent.
Even if sustainability programs make “good business sense,” corporate decision makers may still need to be persuaded during rough economic times. Your message to the C-suite should include:
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Consumers want to buy from companies that contribute to environmental solutions rather than to its problems. Companies need sustainability credentials to attract and keep these customers. Research shows that 59 percent of consumers will pay more for products that help reduce carbon emissions.
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Most natural resources will never again be practical or abundant. Expensive, politically-charged energy forms are dinosaurs. Forward-thinking companies cannot delay their search for products, services, and manufacturing and logistics processes that depend less heavily on the consumption of scarce and costly fuels.
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Employees have acute and influential sustainability concerns. More and more people want to work for companies that “do well by doing good.”
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Suppliers influence sustainability in numerous ways. Take carbon footprint or disposability issues, or the fact that one irresponsible supplier (anti-green, anti-worker, etc.) can seriously undermine its customers’ branding and reputation-building efforts.
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Environmental standards and regulations are becoming higher-profile parts of the business landscape. Among the hundreds of examples are Europe’s WEEE (Waste Electrical and Electronic Equipment) initiative and ISEAL (an international non-profit organization that codifies social and environmental best practices). Just recently, the EPA’s “endangerment finding” referenced the possibility that “almost anything that emits carbon dioxide and other greenhouse gases could be regulated under the Clean Air Act.”
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Capital markets are developing more social responsibility indices and working sustainability factors into their valuations. Investors clearly consider sustainability a wise investment option.
The time is now: Critical mass in sustainability has been reached, and it’s largely up to supply chain decision makers to carry the weight.
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