The Importance of Supply Chain Sustainability
Supply chain sustainability practices seek to align a business’s procurement policies with environmentally and socially responsible behaviors. Supply chain management professionals are often tasked with identifying and implementing sustainable procurement practices. Companies that pursue supply chain sustainability programs may be motivated by several factors, including the opportunity to cut costs, reduce pollution and waste, and improve their reputations among customers.
Supply chain sustainability isn’t just about companies creating best practices for themselves; some of these initiatives can have a cascading effect throughout the global supply chain, often compelling suppliers to adopt responsible practices for business reasons, as well.
Top Sustainability Issues
Supply chain sustainability encompasses several areas of concern, each with its own risks and mitigation strategies. Among the most prevalent supply chain sustainability issues tackled by procurement professionals are:
- Pollution & Waste
- Resource Security
- Ethical Labor Practices
Pollution & Waste
Every business has an environmental footprint. And whether it includes carbon pollution, consuming raw materials and water, or producing industrial waste, there’s a price attached beyond the environmental impact itself. Fuel and raw materials cost money, as does the proper disposal of waste products. Fines for non-compliance can be stiff, providing businesses with multiple reasons to adopt environmentally sound policies.
Many companies have found innovative ways to cut back on pollution and waste, while saving money at the same time. For example savvy logistics professionals send delivery vans on the most fuel-efficient routes to their destinations, conserving fuel and reducing pollution. And some engineers are finding less resource-intensive methods of manufacturing goods, such as designing water bottles that use less plastic.
In the end, businesses, the environment, and the general public can benefit from adopting solutions that curb pollution and waste.
Conserving the use of raw materials is about more than saving money. Many companies, especially those involved in agriculture and food production, are reliant on access to plants and animals in order to stay in business.
For example, overfishing poses an existential threat to seafood companies. Various environmental stewardship programs and international agreements exist to help manage fish populations and ensure their survival.
Procurement professionals must also consider factors that might negatively affect their ability to access resources, even if they aren’t in short supply. Environmental regulations or cost fluctuations might make it difficult to continue using a certain material. Buyers interested in maintaining consistent resources try to anticipate and plan for these risks before the situation becomes urgent.
Ethical Labor Practices
Ensuring ethical labor practices throughout the supply chain helps protect a fundamental resource – workers. A company’s labor resources and risks aren’t limited to its own employees: The conditions affecting upstream workers can also have consequences.
No reputable business wants to discover that forced labor has played a part in its supply chain. Aside from being morally reprehensible, working with suppliers that are guilty of illegal labor practices can expose companies to harsh penalties from governments around the world.
In addition, the public often shuns businesses that fail to maintain labor standards, and it can become difficult to attract new employees when a company’s corporate reputation is in tatters. Adopting sustainable labor practices is essential to avoiding these consequences.
Businesses can mitigate labor risks by performing comprehensive due diligence across the global supply chain, identifying where raw materials originate and whether a product traveled through a high-risk area on its journey to the consumer. Many applications exist to help identify labor risks, including Dun & Bradstreet’s Human Trafficking Risk Index.
Supply chain sustainability is likely to grow in importance as the public gains more transparency into how products are sourced. Adopting responsible procurement policies can help companies contribute to the social good, meet customer expectations, and reduce costs.