Analyst Insight: Businesses are under growing pressure to increase the sustainability of their supply chains due to regulatory requirements, consumer consciousness, and heightened expectations fueled by executive communications around sustainability targets.  Despite this pressure, the value potential for supply chain sustainability remains unclear, and there is limited buy-in and ownership for solutions. To overcome these challenges, companies can embed new actions in their approach to supply chain sustainability.  

What Scuppers Sustainability in Supply chains?

Developing strategies to effectively address sustainability within supply chains first relies on understanding the challenges which are restricting current efforts. These include:

• Visibility. Large and complex supply chains span different countries, making it difficult to track and manage the sustainability performance of all suppliers.
• Data. Lack of access to data, or data that is often incomplete or inaccurate, hampers efforts to assess the sustainability performance of suppliers.
• Standards. An absence of universal standards for measuring and reporting on sustainability performance makes it difficult to compare the sustainability performance of suppliers, and to set targets for improvement.
• Regulation. Changing sustainability policies, and an increasingly stringent regulation landscape are pushing companies to further drive sustainability across their supply chains.
• Commitment. Some suppliers may not be aware of the importance of sustainability, or may not be committed to improving their sustainability performance.
• Costs. Implementing sustainability measures can be costly for suppliers, particularly smaller suppliers, who may not have the resources to invest in more sustainable practices, approaches, or equipment.  

Actions to Unlock Sustainability within Supply Chains

As companies look to address sustainability challenges, they can take a number of key actions.

Create a sustainable, value-driven supply chain strategy that aligns to the organization’s sustainability goals. This strategy will deliver on the company’s vision with a value-add focus, because supply chains are key enablers for delivering real impact for a sustainable future. This strategy will be most successful when created with an understanding of the real make-up of the supply chain, the governance of materials in the supply chain, and how these materials move through supply chain nodes. 

Redesign procurement for sustainability. By redesigning the sourcing process and supplier management, procurement organizations can contribute to the delivery of corporate sustainability. It’s vital to involve design and R&D functions to ensure products and supply chains are created with the full life cycle in mind, in order to generate value and savings while further driving sustainable goals. It’s also important to collaborate with suppliers to innovate, and develop products and services that deliver sustainable value.   

Use data and technology as a springboard to deliver on sustainability goals. Data and technology can be a key enabler in unlocking supply chain sustainability goals. It can be harnessed to integrate the end-to-end supply chain and provide visibility to sustainability challenges, requirements, and results. Digital technology can also improve both yields and quality with fewer inputs, reducing resource intensity, costs, and carbon footprint. Another technology innovation — digital twins — can help to identify opportunities for improvements in performance, waste minimization, and more efficient distribution. 

Outlook: Sustainability will continue to be a focus for organizations as customer demands and regulatory requirements intensify. To overcome the challenges which have held back sustainability efforts, companies can employ new actions and approaches to improve results. Companies that embed sustainability in overall supply chain strategy, redesign procurement with sustainability in mind, and use data and technology now will enhance their sustainable credentials and reap the rewards of lower costs and higher stakeholder engagement. 

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