Sustainability in the supply chain
These companies are not implementing sustai...
Companies big and small are making more serious commitments to sustainability, quality and the environment.
These companies are not implementing sustainable practices because of legal regulations. Most companies are implementing those practices because they understand that with better care for social and environmental resources comes an improved reputation and increased satisfaction among customers, contractors, investors and other stakeholders.
While organisations can implement policies and practices for their employees, they won’t be able to make a big enough impact until they are able to involve their entire supply chain. A commitment to sustainability, though, creates significant implications for your partners and suppliers. It can be a difficult task to apply those new policies across the board consistently, because of your numerous partners and suppliers throughout all areas of the supply chain.
According to a recent study, implementation and enforcement of sustainable policies are still being done through paper, email and spreadsheets. While this might be fine for a small company (although we don’t recommend it), it can cause problems for large companies. Manual processes can lead to increased risk and non-compliance of sustainability standards, including the lack of standardisation in how employees and contractors are evaluated. Because the processes are manual, each evaluation is based on who performed the assessment and what standards they used.
Companies with sustainable goals should follow these four steps to improve their chances of success with these new programs.
Determine and then communicate sustainability expectations
First, your team needs to determine what sustainability goals your company will support. These goals need to be focused on measurable activities rather than hopeful and esoteric ideals. An MIT report suggests three ways to consider what goals you will set, based on the characteristics of your supply chain.
Create a value chain map—a process to analyse areas in the supply chain that can provide opportunities for improvement—to determine the economic, environmental and social conditions across the supply chain and determine what each part of the supply chain can do to influence overall goals.
Set science-based goals. Establishing goals that match scientifically important needs will help prioritize those needs and also potentially galvanize the entire supply chain toward a better cause.
Develop context-based indicators in areas such as carbon, water, waste and social metrics. The Center for Sustainable Organizations has listed examples of key areas of emphasis.
Of course, the communication of your goals is essential. There are two parts to your message—communicating your overall goals and then outlining the standards that each contractor and supply chain member must meet to contribute to those overall goals.
Audit suppliers regarding sustainability standards
The best way to inject sustainability into your supply chain is to assess, verify and monitor your contractors in the supply chain through audits. There are three ways that this could be achieved.
Implement a configurable questionnaire that enables suppliers to highlight efforts they’ve made toward meeting your sustainability requirements.
Verify that their answers comply with your sustainability requirements with a systematic review of their policies and procedures.
Monitor suppliers’ improvement and compliance by regularly having them demonstrate their ability to implement policies and procedures effectively.
Train your suppliers on how to meet standards
Once you have communicated sustainability standards and performed the necessary audits, you’ll probably need to close the gaps of deficiencies with some suppliers. Of course, where it’s related to safety compliance, you wouldn’t want an unqualified contractor working for you. However, you could still assist them with safety training and counseling on how to meet your standards. In other areas, you can provide training and guidance to show them how to meet your sustainability goals. There are many resources available to help suppliers implement procedures and improve their processes to achieve a more sustainable business.
Benefits of a sustainable company and supply chain
The primary benefit of sustainable practices creates a better and more enduring work life for everyone by building a place where not only employees will be proud to work but also suppliers will be delighted to do their part in creating a better future by aligning with you. In addition, a sustainable company improves reputation among customers, suppliers, investors and other stakeholders.
Finally, companies that implement sustainable practices by qualifying and auditing contractors see improvements in safety and other related areas. On average, we’ve seen companies lower their total recordable incident rate (TRIR) by 58%. Some receive a 30% improvement in health and safety performance. Implementing sustainability in your company will achieve several impactful dividends on your company.
By Richard Parke, Senior Vice President, Supplier Services, Avetta
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Pandora and IBM digitise jewellery supply chain
Pandora has overhauled its global supply chain in partnership with IBM amid an ecommerce sales boom for its hand-finished jewellery.
The company found international success offering customisable charm bracelets and other personalised jewellery though its chain of bricks and mortar retail destinations. But in 2020, as the COVID-19 outbreak forced physical stores to close, Pandora strengthened its omnichannel operations and doubled online sales.
A focus on customer experience included deploying IBM’s Sterling Order Management, increasing supply chain resiliency and safeguarding against disruption across the global value chain.
Pandora leverages IBM Sterling Order Management as the backbone it its omnichannel fulfilment, with Salesforce Commerce Cloud powering its ecommerce. Greater automation across its channels has boosted the jeweller’s sustainability credentials, IBM said, streamlining processes for more efficient delivery. It has also given in-store staff and virtual customer service representatives superior end-to-end visibility to better meet consumer needs.
Jim Cruickshank, VP of Digital Development & Retail Technology, Pandora, said the digital transformation journey has brought “digital and store technology closer together and closer to the customer”, highlighting how important the customer journey remains, even during unprecedented disruption.
"Our mission is about creating a personal experience and we've instituted massive platform changes with IBM Sterling and Salesforce to enable new digital-first capabilities that are much more individualised, localised and connected across channels and markets,” he added.
Pandora’s pivot to digital
The pandemic forced the doors closed at most of Pandora’s 2,700 retail locations. To remain competitive, it pivoted to online retail. Virtual queuing for stores and virtual product trials via augmented reality (AR) technology went someway to emulating the in-store experience and retail theatre that is the brand’s hallmark. Meanwhile digital investments in supply chain efficiency was central to delivering on consumer demand.
“Consumer behaviour has significantly shifted and will continue to evolve with businesses needing to quickly adapt to new preferences and needs,” said Kareem Yusuf, General Manager, AI Applications and Blockchain, IBM. “To address this shift, leading retailers like Pandora rely on innovation to increase their business agility by enabling and scaling sustainable supply chain operations using AI and cloud.”
Yusuf said Pandora’s success was indicative of how to remain competitive by “finding new ways to create differentiated customer experiences that protect their enterprises from disruptions to help mitigate risk and accelerate growth”.