• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Blogs » Think Tank » The Path to Sustainable Business Is Through the Supply Chain

Think Tank
Think Tank RSS FeedRSS

The Path to Sustainable Business Is Through the Supply Chain

Plastic Waste
Crushed plastic bottles and containers sit bound in a bale ready to be recycled. Photo: Getty.
May 5, 2021
Alex Saric, SCB Contributor

Though the U.S. environmental movement has been going on in earnest for more than 50 years, the use of the term “sustainability” in connection with the natural environment is actually fairly recent, going back only as far as 1987, where it was first used in a report prepared for the United Nations. That’s when the sustainability concept began taking off, engaging both private companies and public sector entities as well as nonprofit groups and individuals in its pursuit. 

But the broad appeal of the sustainability concept has challenges. Like a Christmas tree, the idea has gradually attracted a wish-list of ornaments — primarily social goals — which now hang heavily from its branches, many of which, at least at face value, tend to address the topic and the sustainability movement differently. 

Multiple Agendas

As a result, the idea of sustainability is impacted by the agendas of advocates for an assortment of high-minded causes. One, for example, is the 2018 U.S. Green New Deal, which includes urban renewal, job guarantees and the modernization of mass transit as elements of sustainability. Another, from the U.N. Department of Economic and Social Affairs, goes even further. It lists 17 sustainability goals including the eradication of poverty in all its forms, universal peace, the end of tyranny, and gender equality, among many others.

While these are certainly worthy goals, such a broad definition risks delaying or derailing initiatives with more actionable and concrete objectives. In the context of its original environmental meaning, sustainability remains a high-value pursuit in which private companies, as well as governments, nonprofits and individuals, can make a meaningful difference. Beyond that, the author of a 2014 Harvard Business School paper makes a persuasive case for environmental sustainability as a winning business strategy. But doing so is neither simple nor easy. In the case of manufacturing, for example, there is almost always a lengthy chain of suppliers whose activities contribute heavily to the finished product’s environmental footprint. Yet even finding out about those activities, much less assessing and influencing them, can be a daunting task. 

The Great Pandemic

The onset of the COVID-19 pandemic certainly didn’t help. Even though by 2019, environmental sustainability had become a priority for many businesses, when the economy in sector after sector cratered the following year, those efforts often came to be regarded as luxuries which would have to be postponed if the company were to survive. But with economic recovery now beginning to return, the priority on environmental stewardship needs to return as well. And for many organizations — particularly those dealing in physical goods — the role of procurement becomes central. 

That’s because, when it comes to collaborating with the supplier community in addressing environmental concerns, procurement is the business function with the closest connection to outside vendors. Even so, a company’s visibility into its supply chain — particularly when it comes to Tier 2 and Tier 3 vendors — is often very poor. That includes low-quality or missing data as well as difficulties in collaborating with suppliers further down the chain. Yet supply chains are responsible for 90% of companies’ environmental impact. As a result, no meaningful reductions can take place without the active involvement of those suppliers. 

Even some Tier 1 suppliers, despite being keenly aware of their customers’ sustainability standards, have nevertheless gone on to violate them, much to the chagrin of such high-profile companies as Apple Inc., Dell Technologies Inc., Hewlett Packard Enterprise Co., Adidas AG and Nike Inc. However, the risk is almost always greater among lower-tier suppliers, exposing organizations to a variety of financial, social and environmental risks, while operating where visibility typically ranges from poor to non-existent. Beyond that, the influence of a company on its lower-tier suppliers may be limited by the comparatively modest share of that supplier’s business represented by a single company further up in the value chain, and lack of direct interaction.

Showing Resilience

Even so, many businesses have continued to advance their sustainability efforts. Before the pandemic, corporate executives had been reporting steadily increasing sustainability agendas and their integration into the business — a growth trend that McKinsey & Co. had been tracking through bi-annual surveys. Perhaps surprisingly, because it seems counter-intuitive, one-third of the respondents said that their companies’ top reasons for addressing sustainability included improving operational efficiency and lowering costs. Corporate reputation was the second most frequently cited reason, followed by alignment with the company’s business goals or values, reducing energy use and cutting waste in operations. Ironically though, while 57% said their companies have incorporated sustainability into their strategic planning, supply chain management and related budgeting were the corporate activities cited least often as having become integrated. 

While that’s understandable, it’s also a huge omission. Support for environmentally responsible products and production methods is growing, not shrinking. Some of it is legal, including government-issued licenses and permits to make sure the company is in compliance with environmental regulations. In the U.S., they include the Resource Conservation and Recovery Act, the National Pollutant Discharge Elimination System permits, the Endangered Species Act, the Clean Air Act, a host of regulations from the Food and Drug Administration, the Department of Agriculture, and many other state and federal agencies that also stipulate serious fines and other liabilities for violators. Public awareness and sentiment concerning both environmental protection and responsibly produced goods has also been growing, affecting the markets for products of all types. Accordingly, businesses have responded by revising their own operations and leaning on suppliers to do the same. And there are new tools available to help. 

The Sustainable Toolkit

There are a number of voluntary standards and guidelines that industry associations, including the influential ISO, have been promulgating that concern all aspects of production. Production equipment and methods, affecting essentially every industry, are steadily becoming more efficient and environmentally benign. New technologies and industry best practices are emerging to help narrow visibility gaps into supply chains. Commercial spend management software is now available to provide businesses with a holistic view of suppliers and their sub tiers, along with their sustainability practices. Third-party data and certification sources are becoming widely available to support that visibility and increasingly integrated into spend management platforms to improve accessibility when making decisions. Pressures on businesses to improve their environmental impact are cascading down the supply chain, including the requirement that vendors provide their data as part of any sourcing arrangement. Having that information not only helps to secure more detailed environmental reporting, it can also help companies ensure competitive sourcing of essential supplies and alternatives in the event of an unexpected outage.

Cynics will argue that today’s global economy is marked by cutthroat competition in which success can only be achieved by cutting corners, beating up suppliers and gaslighting any discussions of social responsibility. It is, in that view, a vicious downward cycle of human, product and environmental degradation. 

But there is also another way of looking at it. By raising standards and building constituencies for them, a virtuous cycle of improvement can emerge in each of those same areas, making them not only possible to achieve, but also helping to make sustainability a standard of profitable business operation as well as a pillar of an environmentally better world.

Alex Saric is chief marketing officer at Ivalua.

Business Strategy Alignment Global Supply Chain Management Sustainability & Corporate Social Responsibility

RELATED CONTENT

RELATED VIDEOS

Wake up to live
“Supply Chains in Crisis”
updates and the latest Supply Chain News!

Subscribe to our Daily Newsletter

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • INTERIOR OF A CHICKEN FARM, WITH WHITE CHICKENS AS FAR AS THE EYE CAN SEE

    Worst Avian Flu in U.S. History Is Hitting Poultry

    Food & Beverage
  • TWO FINGERS MANIPULATE WOODEN LETTER BLOCKS TO TURN FROM SHOWING THE WORD RECOVERY TO RESILIENCE

    Five Challenges to Supply Chain Resilience in 2023

    Supply Chain Visibility
  • A PERSON HOLDS UP A TABLET COMPUTER IN A WAREHOUSE, SUPER-IMPOSED BY A GRAPHIC SHOWING A COMPLEX WEB OF SUPPLY CHAIN ELEMENTS

    Three Post-Pandemic Actions for Repairing Global Supply Chains

    Data Management (Big Data/IoT/Blockchain)
  • A MAN IN A SUIT SHAKES HANDS WITH A WOMAN IN A HARD HAT, NEXT TO A STACK OF CONTAINERS

    Three Procurement Technology Evolutions for 2023

    Sourcing/Procurement/SRM
  • The blank stare of a child's eye who is standing behind what appears to be a wooden frame

    The Alarming Continued Rise of Modern Slavery in Supply Chains: How Procurement Can Help Reverse the Trend

    Sourcing/Procurement/SRM

Digital Edition

Scb nov 2022 sm

2022 Supply Chain Innovator of the Year

VIEW THE LATEST ISSUE

Case Studies

  • New Revenue for Cloud-Based TMS that Embeds Orderful’s Modern EDI Platform

  • Convenience Store Client Maximizes Profit and Improves Customer Service

  • A Digitally Native Footwear Brand Finds Rapid Fulfillment

  • Expanding Apparel Brand Scales Seamlessly with E-Commerce Technology

  • How a Global LSP Scaled its Security Program and Won More Business

Visit Our Sponsors

Orderful Yang Ming Alithya
Barcoding Blue Yonder BNSF Logistics
CoEnterprise Data Capture Deposco
E2open GAINSystems Generix
Geodis GEP GreyOrange
Here Honeywell Intelligrated IFM
Infor Inmar Keelvar
Kinaxis Korber Lean Solutions Group 2H
Liberty SBF Locus Robotics Logility
LogistiVIEW Lucas Systems MCA Connect
MPO Nvidia Old Dominion
OpenText ORTEC Overhaul
Parsyl PMMI QIMA
Redwood Logistics Ryder E-commerce by Whiplash Saddle Creek Logistics
Schneider Dedicated Setlog Holding AG Ship4WD
Shipwell Tecsys TGW Systems
Thomson Reuters Tive Trailer Bridge
Vecna Robotics Verity
Verusen
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2023 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing