Dive Brief:
- A UN Global Compact and EY report found companies can be categorized into five stages of sustainability policies: basic, improving, established, mature and leading.
- The first three levels reflect a minimum level of sustainability levels from suppliers, while the latter levels reflect a proactive assessment and communication of expectations to ensure compliance with sustainability policies throughout the entire chain.
- Supply chain risks range from geopolitics to weather disasters, which can cause labor- or capital-induced shortages; as risks increase, companies look toward sustainability to prevent future shortages. Technology, shared commitments, collaboration, transparency and accountability are among the key strategies being implemented to improve sustainability.
Dive Insight
Business is notoriously risk averse, and sustainable supply chains aim to minimize the long-term risks faced by companies through responsible procurement practices.
As a result, the trend toward sustainability has progressively transformed from a buzzword-induced fad to a desirable skill set for supply chain managers. Such is the case that the new APICS Certification for Logistics, Transportation and Distribution includes a module on sustainability practices.
A separate report from the UN Global Compact and BSR suggests communication is key to develop sustainable supply chains. That is, supply chain managers must be able to establish clear expectations, determine the scope of their supply chain, be willing to engage consistently with suppliers through various channels of communication, align internal roles and responsibilities, create multi-stakeholder partnerships and track the goals they establish.
In addition to sustainability, however, the report emphasizes resiliency as a tool for mitigating risk. Resilient supply chains can adapt to — as opposed to just resisting — various external challenges in order to maintain supply chain continuity during extreme circumstances. While sustainability policies provide long-term cost benefits, resiliency policies have the capacity of providing short-term benefits during supply chain disruptions.
