Making the Case for a Sustainable Supply Chain: Why Now?

Anyone who’s been paying attention to global business trends has probably noticed the growing shift toward sustainability. Historically, sustainability has been defined solely by environmental and social impact as well as “green” products, with little visibility into how sustainability can enhance the supply chain.  Now companies are focusing on proactively embedding sustainability across their value chains.

A sustainable supply chain is fundamentally about minimizing “bad” inputs and outputs, while maximizing the “good” across networks of companies and geographies. The good and bad are viewed via five major elements of sustainability:  environmental impact of waste, air emissions (with a major focus on greenhouse gases), energy use, fundamental human rights and, increasingly, water. To achieve improved performance, more and more companies are applying systematic approaches to ensure their supply chains are sustainable.

While the path for driving growth via sustainable supply chains may be different depending on the industry, individual company and geography, there are best practices that apply across a number of elements:

Risk Management: From compliance with varied regulatory requirements around the world to comprehensively assessing and managing risk across the supply chain, risk management is now a competitive requirement. Dealing with catastrophic events like the 2010 Icelandic volcano eruption and the combined earthquake, tidal wave and nuclear disaster in Japan last year needs to be an active part of the supply chain management process. Being able to identify where a risk is probable and develop mitigation approaches fits well within the realm of sustainability. Ultimately, the goal is to develop resilient supply chains that can profitably respond to dynamic changes.

Cost Savings: The recognition of cost savings from focusing on sustainability is often the hook to invest for many companies. From lower energy use to lower operating costs―and the reduced carbon that goes with it―cost savings are a direct benefit. DuPont has saved over 6.5% of our energy costs in the last nine years, while production volume has increased by 40%. Most of this change resulted from small incremental projects and a focus on reducing peak and “wasted” energy use.

People and Communities: Creating a sustainable supply chain means leveraging the supply chain to ensure fair treatment of people as well as taking a broad view that everyone along the supply chain is a stakeholder in sustainability. When Hurricane Katrina wiped out one of DuPont’s key facilities in 2005, we immediately began working on helping the community recover through efforts targeted at individual employees and the community at large. DuPont continued to pay employees while they focused on their families and community; built a temporary community near the plant to house employees and families; and contributed donations and volunteers to surrounding areas.

Products: Direct investment in products based on sustainability pays off. DuPont has invested almost $700 million in R&D for products that reduce environmental impact and we generate $7.7 billion from products made from renewable resources.

Utilizing Your Supplier Networks: Suppliers are a major source of opportunity both in leveraging performance across the supply chain and as a source of innovation. The supply network offers a huge opportunity to businesses: from undertaking major initiatives like those coming from Walmart, P&G and Unilever that drive sustainability performance deep into their supply chains to instituting awareness, measurement and compliance programs on human rights. Your suppliers have a different vantage point of your business and your products, but also of the supply chain, the regulatory environment and the market. Partnering with them can provide unparalleled value across the supply chain and the entire business.

Has your business undertaken any sustainability efforts related to its supply chain? My next post will detail a real-world example of how DuPont created a sustainable supply chain in our biofuels business.

To learn more about the benefits of a sustainable supply chain, please join us for the upcoming Sustainable Business Forum webinar: Leveraging Your Supply Chain for Competitive Advantage. The webinar will take place on Wednesday, January 25 at 1pm ET.

Source / Fuente: sustainablebusinessforum.com

Author / Autor: Peter Murray

Date / Fecha: 17/01/12

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