Three key steps towards a more sustainable supply chain
With the consumer class predicted to swell to around 1.8bn people by 2025, consumer goods companies are faced with a combined opportunity and challenge. While the number of people with increasing amounts of money to spend on consumer goods is on the rise, so is the environmental impact of humanity as a whole. Making supply chains and the procure-to-pay process more sustainable needs to be a top priority for companies that expect to capitalise on a world that is still inhabitable in 2050.
According to supply chain experts Mckinsey, consumer packaged goods companies with poor environmental and social sustainability performance can expect to experience slowed growth. “To make and sell goods, consumer businesses need affordable, reliable supplies of energy and natural resources, as well as permission from consumers, investors, and regulators to do business. But companies can no longer take those enabling factors for granted. Indeed, scientific consensus, along with pledges by governments and business leaders.”
Dramatic sustainability improvements are needed.
One: Develop the business case
Most businesses are driven by their corporate values to address supply chain issues. Their business cases are based on industry, business strategy, stakeholder expectations, and supply chain footprint. Risk management and supply chain efficiency are a few of the most common drivers for supply chain sustainability. By integrating Global Compact Principles with compliance programs, companies can better address supply chain disruptions and improve supply chain efficiency.
Two: Benchmark against your peers
Analysing the external landscape is as important as identifying business drivers. Companies need to understand their competitors' strategies and develop business partnerships accordingly. They must focus on the internal structure and business cases for supply chain sustainability. Also, codes of conduct and initiatives for supplier relationships should be incorporated into the supply chain sustainability program.
Three: Understand stakeholder expectations
Understanding stakeholders' expectations is imperative for companies. This includes inputs from both customers and investors. Companies can identify relevant standards to sustainable supply chain management, take proactive measures to address emerging risks, and identify opportunities in the supply chain.