Planning for Risk and Uncertainty in the Supply Chain: 5 Strategies
With the advent of the internet and other technologies, the improvement of transportation infrastructures, and significant developments in trade, the world has gotten much, much smaller in recent decades. In fact, globalization has affected most facets of our lives, including politics, economics, education, health, employment, and culture. It is no surprise that globalization has also greatly affected supply chain management (SCM).
In the past, supply chain management has valued efficiency, accuracy, and economy over all else. However, in recent years, sustainability has gained an increasing amount of importance to a growing number of supply chain players and stakeholders, evolving some of the fundamental processes and philosophies that have been in place in the industry for decades.
In this post, we will take a closer look at why sustainability in the supply chain is a goal worth striving for as well as the five steps that managers and companies can take toward achieving sustainability.
Why Achieve Sustainability in the Supply Chain?
Working sustainability into the supply chain without disturbing already-complex processes may seem like a mammoth task, but the rewards of doing so are significant–not to mention that sustainable practices will likely be required more and more in the future whether or not changes are made now. Why is sustainability in the supply chain worth the effort?
* To align practices with the goals and wishes of stakeholders. Sustainability is a growing concern of investors, shareholders, manufactures, retailers, and customers alike. Engaging in sustainable practices improves relationships and welcomes business opportunities.
* To follow current regulations and to keep ahead of the regulatory curve. Supply chain management involves following rules, regulations, laws, and guidelines provided from a number of diverse governing bodies. As the world turns its focus toward preventing global warming, limiting emissions, promoting social justice, and conserving resources, supply chain regulations reflect that.
* To make improvements to processes, products, and overall business. In many cases, there are real advantages that are being uncovered by making sustainability a priority. Specifically, many businesses have improved their processes, discovered innovations, saved resources, and ultimately saved money through focusing on sustainability.
* To protect and sustain the environment. Although there are many reasons to consider sustainability, the central and root reason should never be forgotten: to preserve the environment and its resources to the best of our abilities, for the good of the earth and its inhabitants.
Creating A More Sustainable Supply Chain
In many ways, deciding to make sustainability an important aspect of the supply chain is the easy part. In fact, while many companies have recognized the importance of sustainability in recent years, recent reports show that while sustainability is of growing importance to corporations, implementing change can be a slow, convoluted, and difficult process. Below, we have outlined five big steps toward establishing sustainability in the supply chain.
1. Understand the environmental impact of your supply chain. The first step in any solution should be to fully understand your problem. Take an inventory of your suppliers, identifying their major issues with sustainability as well as any opportunities for improvements. During this step, many corporations have found that reducing the number of suppliers makes it easier to track and understand the issues related to the sustainability of their supply chain.
2.Have clear objectives and goals. Having a vision and establishing the importance of sustainability is one thing. Outlining clear expectations, plans, and goals is another. Not only will hard-and-fast goals give individuals along the supply chain specific tasks and action items to focus on, it will also make it much easier to analyze and evaluate progress over time. Goal-setting should be a collaborative process that ensures that sustainability goals do not conflict with other business goals. Each goal should then be translated into actions that are assigned to various managers and suppliers.
3. Make sustainability part of the culture, at all levels. Sustainability shouldn’t just be a list of goals, it should be integrated into the corporate culture and seen as a company value. One of the best ways to engender this value is to create a supplier code of conduct that clearly outlines expectations, current guidelines, and all measures that should be taken to limit environmental and social harm. This code of conduct should be created with the assistance of key managers across teams and keep in mind the challenges, circumstances, and sizes of your suppliers.
4. Monitor improvements and encourage transparency. Tracking and analyzing performance data is vital to creating a successful sustainability program. To do this, you must first encourage an unprecedented amount of transparency which may be a challenge or at least an adjustment for many suppliers. Getting valid data both from supply chain managers as well as from suppliers can be the biggest challenge on the road to sustainability.
5. Collaborate and partner. Sustainability of the supply chain is impossible without increased communication, collaboration, and transparency. No only is sustained cooperation needed between corporations and suppliers, but also on an industry-wide level. Companies can and must work together to share best practices, innovations, and strategies that can help all achieve a more environmentally-friendly, socially just, and healthier supply chain.
What are your thoughts? Do you work in supply chain management? How do you think the supply chain could be made more sustainable?
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15 Ways Big Data Analytics can help improve the Supply Chain and 3 potential barriers
Last week we wrote about 3 of the ways the supply chain has changed in the last 20 years. This week we continue this article series with a further 3 ways and consider what supply chain management will look like in the future.
The basic tenants of supply chain management have remained static throughout time and will not change in the foreseeable future: it will always involve the flow of goods, services, and information from the supplier all the way to the consumer. It will always rely on analysis to increase efficiency and quality. It will always thrive on innovation, logic, and logistics.