Friday, May 11, 2012

Five Elements of a Sustainable Supply Chain

A sustainable supply chain is composed of five basic elements: Measurement, suppliers, design, partners and leadership.  Here is a breakdown of these five elements by Michael Koploy from an article published in Corporate Social Responsibility. Koploy is an ERP Analyst at Software Advice and manager of Warehouse Management Systems Guide. He reports on news and trends within supply chain software and technology.

1. Sustainability Measurement – Measurement of sustainability initiatives is crucial for two reasons: (1) It proves value (i.e.,: cost reduction) in sustainability; and (2) It creates an opportunity for analysts to find other opportunities to reduce consumption throughout the supply chain.

2. Sustainable Suppliers – Buyers should take the initiative–and provide an olive branch–to suppliers by asking how to improve processes and reduce consumption. Pressure from large companies can result in real change that trickles down throughout the supply chain, reduces costs, and improves our Earth.

3. Responsible Design – Businesses should also take a closer look at themselves and the products they produce and review how they can reduce consumption. An example of businesses doing this can be seen with detergent companies producing products in highly-concentrated formulas. This reduces the amount of water necessary to transport via fleet, and can greatly reduce fuel consumption.

4. Socially-Responsible Partners – Nike found child slave labor in its supply chain in the late 1990s. Mattel had to recall millions of products and spend $110 million in 2007 when it found Tier 2 Suppliers using lead paint in its toys. From a social responsibility and risk mitigation standpoint, corporations need to take a close look at their suppliers and ensure they have the appropriate levels of oversight to find harmful actions before they impact consumers.

5. Sustainability Leadership – Who will lead the charge for sustainability? It’s easy to talk about reducing fuel consumption and increasing transparency–it’s much harder to accomplish. For the supply chain to become synonymous with cost reduction and social responsibility, it will take leadership to carry the torch.

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