May 3, 2024
How to Create a World-Class Supply Chain Sustainability Program?

In today's world, customers, investors and regulators are increasingly demanding transparency and ethical practices throughout a product's lifecycle. This means businesses need to prioritise sustainability within their supply chains. But what exactly is supply chain sustainability, and how can you create a world-class program to achieve it?

What is Supply Chain Sustainability?

Supply chain sustainability encompasses all environmental, social, and economic considerations across every stage of your product's journey – from raw material sourcing to production, distribution, and end-of-life management. It aims to minimise negative impacts while maximising positive ones. Here are some key aspects of a sustainable supply chain:

  • Reduced environmental impact: This includes minimising energy and resource consumption, lowering emissions, and promoting responsible waste management.
  • Ethical labour practices: Ensuring fair wages, safe working conditions, and adherence to human rights principles throughout the supply chain.
  • Responsible sourcing: Procuring materials from ethically sourced and sustainable sources that minimise environmental damage and social injustice.

Implementing a world-class supply chain sustainability program demonstrates your commitment to these values and can deliver significant benefits, including:

  • Enhanced brand reputation and customer loyalty: Consumers are drawn to companies that prioritise sustainability. Implementing robust supply chain sustainability programs can also help you boost your Ecovadis score. 
  • Reduced operational costs: Sustainable practices can lead to more efficient resource utilisation and lower energy consumption.
  • Mitigating risks: A proactive approach to sustainability helps manage potential disruptions caused by environmental regulations or resource scarcity.

Devising an Optimal Supply Chain Sustainability Strategy

Building a robust sustainability program necessitates a well-defined strategy. Here's where to begin:

  1. Internal Alignment: Align your supply chain sustainability program with your company's overall sustainability goals and business objectives.
  2. Supplier Code of Conduct: Develop a clear code of conduct outlining your expectations regarding environmental and social responsibility for your suppliers.
  3. Stakeholder Requirements: Incorporate customer demands, regulatory requirements, and industry best practices into your strategy. Research industry benchmarks and voluntary sustainability standards relevant to your sector.

By considering these factors, you establish a comprehensive plan that reflects your company's values while adhering to external expectations.

Selecting the Right Suppliers

Choosing the right suppliers is crucial for building a sustainable supply chain. Here's a two-pronged approach:

  1. Critical Suppliers: Begin by focusing on your critical or raw material suppliers – those who have a significant impact on your operations or contribute heavily to your environmental footprint. Analyse their sustainability practices and prioritise partnering with suppliers who are already committed to sustainable practices.
  2. Non-Critical Suppliers: Once you've engaged critical suppliers, expand your focus to include non-critical ones. Implement a tiered approach based on risk and impact.

Developing Supplier Knowledge

Sustainable practices often require changes in supplier operations. To facilitate this, invest in educating your suppliers.

  • Conduct training sessions on your sustainability expectations, best practices, and compliance requirements.
  • Provide resources and access to information that can help them improve their sustainability performance.

This empowers your suppliers to become partners in your sustainability journey.

Utilising a Platform for Program Execution and Data Assessment

Managing a large-scale supply chain sustainability program requires efficient tools and data management. Consider using a platform like Oren Sustainability Hub (OSH) for several reasons:

  • Industry-Specific Modules: OSH offers customisable modules tailored to different industries. This ensures you only assess the most relevant material topics and corresponding sustainability parameters for your suppliers.
  • Scalability: OSH offers both comprehensive and scaled-down program options, allowing you to adapt the program based on your needs and supplier base. OSH gives you the flexibility to start small with a subset of your suppliers and over the years, scale your program up to all the other suppliers. 
  • Dedicated Supplier Support: The platform provides a dedicated support team for your suppliers, assisting them in navigating the assessment process. 
  • Streamlined Data Collection: Suppliers simply enter activity data, and the platform automatically calculates their sustainability performance metrics. They don’t need to be technical experts on sustainability to use the platform. 

This simplifies the program for your suppliers, minimises data entry errors, and gives you access to a clear, standardised set of data to analyse their sustainability performance.

Engaging with Suppliers on Improvement

Once you receive the assessment responses from your suppliers, analyse the data to identify improvement areas. Open a dialogue with each supplier to discuss their strengths and weaknesses. Try not to have an us versus them approach, partner with your suppliers to help them improve their performance.

  • Develop collaborative action plans to address identified gaps. Sometimes making your better performing suppliers take training sessions for the other suppliers becomes useful as they are able to articulate the low-hanging fruits for improvement better. 
  • Offer ongoing support and resources to help them implement these plans. This could be in the form of policies such as Human Rights, Business Ethics etc. and guide them on how they can adapt it to their context.

Through collaborative communication and support, you can empower your suppliers to continuously improve their sustainability performance.

By following these steps and leveraging platforms like OSH, you can create a world-class supply chain sustainability program that empowers your suppliers, minimizes your environmental footprint, and enhances your brand reputation. Remember, sustainability is a journey, not a destination. Continuous improvement is key to maintaining a responsible and resilient supply chain in today's world.

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