A review of the five steps that companies should take to set up a formal sustainability effort throughout the supply chain, as laid out by two analysts from The Hackett Group: associate principal Mélani Flores, and senior director Nic Walden.
Define. First is to consider what the initiative means for the business — how it impacts the organization itself, as well as suppliers, investors, regulators and the public. “Who’s telling you this is important?” says Walden. “What’s the goal going to be?”
Formulate. Next step is to craft a strategy for how the business is going to achieve the goals that it has identified. It’s important that the effort be cross-functional in nature, and that the ultimate strategy define environmental and social objectives that satisfy all stakeholders, Flores says.
Drive. This effort takes on two dimensions: internal and external. In the case of the first, it’s crucial to identify which individuals will be involved. “It’s a very passionate topic,” says Flores. “People are willing to [make] the time and effort.” From an external perspective, the company needs to engage suppliers, taking care to train, support and develop their own sustainability initiatives. “No company can on its own change the world,” she says.
Embed. Walden says it’s essential to incorporate the sustainability effort into standard ways of operating, not create additional work and complicate matters by devising an entirely new department. Sustainability and risk management should be part of everyday activities, and be on the agenda of supplier business review meetings. “Make it as simple as possible,” Walden says.
Measure and report. Companies must be able to measure the ongoing impact of their sustainability initiatives, Flores says. With that intelligence in hand, they can not only ensure that they’re in compliance with regulations, but also quantify benefits such as increased revenue due to sustainability efforts.
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