MHI Solutions Improving Supply Chain Performance
Until recently, large corporations have published annual sustainability reports that focused pri-marily on their own operations. But now, in an effort to create more transparent operations, those companies are reaching out to suppliers and requesting data on their sustainability ef-forts as well. These new reporting requirements are presenting challenges for suppliers, but also creating new opportunities for collaboration.
Several factors are dictating the creation of a more transparent, more sustainable supply chain. More consumers today are looking to buy products produced using sustainable practices, and many institutional investors are considering companies’ sustainability records before committing their funds. Some companies, looking to the future, simply see the need to operate in a more sustainable way.
Economics is a major factor. “First and foremost, sustainability in the supply chain is a risk play,” said Dave R. Meyer, senior consultant at EORM, an environmental, health, safety and sustainability consulting firm. “When you have large companies, especially those that rely on a global supply chain, there are environmental risks and hazards and laws and requirements that are increasingly driving corporate behavior. They want to make sure that any organization that feeds their supply chain is doing the right thing as well. In one sense it is somewhat altruistic—while it is the right thing to do, suppliers’ actions must fit into the larger companies’ vision for corporate responsibility—but at the end of the day it is really a risk management play.”
“Historically, supply chain sustainability was perceived as a cost driven by corporate social responsibility, but that mindset has changed. Now companies are looking at how they can monetize it,” said Aditya Sharma, operational director of global sustainable supply chain services at Accenture. By incorporating sustainable practices into their core business strategies, companies can mitigate risk; find ways to do more with less; engage external stakeholders and retain internal talent; and find new opportunities for revenue growth.
Getting suppliers actively involved in sustainability reporting can increase revenue opportunities, Sharma said. A study conducted by Accenture and the Carbon Data Project (CDP) found that when companies collaborate with suppliers on carbon reduction measures they are twice as likely to realize a financial benefit from their efforts.
In addition, corporations see sustainability as a competitive advantage. “They want to reduce their sustainability risk and capitalize on their opportunity for differentiating themselves,” Sharma said. “At the same time, suppliers are also seeing this as an opportunity to differentiate themselves the marketplace.”
By Mary Lou Jay