Corporate social responsibility and supply chain sustainability are buzz phrases in the industry today, but what do they mean? Sustainability is more than just the icing on the cake; now it has become a necessary part of every business model. Here’s what you need to know about the importance of sustainability and supply chain management, and why you should get on board as soon as possible.
What Is Sustainable Supply Chain Management?
Sustainability is the future, and it is more important than ever that your business’ supply chain establishes a sustainability program. This program will help you understand the level of social, environmental, and economic impact and viability that your suppliers and customers have. There may not be government pressures to push sustainability, but there are already corporate pressures on suppliers and vendors. Sustainability is more than just going green and being environmentally friendly. It also impacts the entire manufacturing process, from where raw materials are obtained, to the processes within the plant, to the use and potential recyclability of the product or service.
Why Is It Important?
Innovation
When manufacturing inventory, the first aspect that will lead your business to a more sustainable future is the supply chain. Manufacturers need to create new ways to manage and track their practices in the supply chain, manufacturing process, and in sales and marketing. Customers are also becoming increasingly active in supporting these measures.
Brand Enhancement
Sustainability does more than improve product quality; it can also improve customer relations. Focusing on cost alone when considering manufacturing inventory won’t cut it. Customers become loyal to brands that they share their values with, which is why you should invest in sustainable practices that reduce waste and use ethically sourced materials. Makeup brands that use plant-based ingredients and recycled packaging, and those labelled as “vegan” and “cruelty-free” quickly build a loyal customer base. Consumers are more aware of the things they buy, and many choose to trust brands that do their best to protect the environment.
Cost Control
When shifting to a sustainable supply chain model, it might be expensive at the start, but it has proven to bring greater efficiency in the long-term. Companies experience a significant decrease in expenses over the long term, which is attractive to both manufacturers and customers. All parties gain something when you move to a sustainable business model.
Tips for Supply Chain Sustainability
Map Your Supply Chain
Many companies do not completely understand how sustainability affects their supply chain. As you prepare to improve, one of the first changes you should make is to the inventory suppliers. Identify the most significant environmental and social challenges they have and then prioritize your efforts with them.
Related: A Comprehensive Guide to Supply Chain Mapping in 2024
Communicate Expectations
By focusing on sustainability within your supply chain, you can effectively communicate corporate values and cultures to your customers and suppliers. By establishing and communicating expectations, you can involve your business relationships in your sustainability efforts. These expectations can be communicated through a supplier code of conduct. There are many resources and tools available to assist companies with developing a supplier code of conduct. These guidelines and tips for writing and adopting a successful supplier code of conduct can be found by doing a little research and using the tools available online.
Develop Training and Capacity Building Programs
Another important step to improve sustainability and drive behavioural change includes training development and capacity building programs. You can transfer knowledge across the supply chain by leveraging the best practices and case studies from your best performing suppliers via online training modules, annual conferences, and capacity building campaigns. As you showcase the success of your best suppliers, you encourage everyone to recognize their efforts and demonstrate the practical benefits of sustainability initiatives. You also establish an incentive for the rest of your suppliers to do better.
Baseline Supplier Performance
Once you have set compliance standards for your target suppliers, you should collect data from them through a simple benchmarking questionnaire or self assessment to understand your starting point. Many organizations have begun to evaluate their supplier performance using surveys and questionnaires. Many organizations also incorporate every area in their code of conduct with special focus on the self assessments related to important areas of their business. Baseline assessment of supplier performance are the starting point for future programs aimed at improving supply chain sustainability and assessing where the greatest need for improvement exists.
Drive Performance Improvement
Once your business has a solid understanding of supplier baseline performance, you can create an audit program to measure performance improvement as time goes on. Although the self assessments are completed by a corporate group, on-site audits can reveal local practices, practical optical opportunities for improvement, and behavioural challenges that are challenging to identify through surveys alone. When your organization implements an audit program, you should be prepared to act on the findings by preparing corrective action plans that include communicating the results and expectations, and if necessary, terminating suppliers if they do not comply. You compare these audit programs with incentive programs that reward suppliers that comply.
Lean Supply Solutions Provides Logistics Management Support
As a business, sustainability in the supply chain allows you to reap countless benefits. Offering a transparent business model to your suppliers, investors, and consumers allows you to demonstrate your commitment to sustainability. This attracts customers who are now becoming more aware of their impact on the environment. To keep up with this competitive environment, you should always strive to move forward and exceed the expectations of your relationships.
Ready to benefit from a sustainable business model? Partner with a third-party logistics provider and start today! Lean Supply Solutions rises to the challenge of meeting our clients’ needs through our services which include product fulfillment, warehousing and distribution, e-commerce fulfillment, warehouse pick and pack, order fulfillment, and more. To learn more about outsourcing to our supply chain management company in Toronto and Vancouver, or to ask any questions about our supply chain services, contact us today.
