Just over half (51 percent) of North American supply chain executives say developing a sustainable supply chain is a strategic priority for their company, according to the results of a survey by West Monroe Partners, a business and technology consultancy.
The study of supply chain executives, conducted in partnership with Loyola University’s Supply and Value Chain Center and BearingPoint, also found that 36 percent of the surveyed executives say their companies have plans to incorporate sustainability into their operations, and 22 percent of that group plan to do so in the next one to three years. Of companies which plan to implement sustainability initiatives, the key motivators are to improve competitive advantage and brand image, according to the respondents.
The other side of the coin is that last year, West Monroe conducted a sustainability survey of North American consumers, and found that more than half of them were willing to pay at least five percent higher prices for products ordered online if they’re delivered sustainably, and 76 percent of the consumers would wait at least one extra day for climate-friendly transport.
“It’s telling that more companies aren’t implementing sustainable business practices in their operations given the demands of customers,” says Yves Leclerc, managing director at West Monroe Partners. “Most supply chain teams are struggling to manage the complexities of globalization, the war for talent and increasing demands, so allocating budget and resources toward sustainability doesn’t seem feasible unless companies can put together a business case for the return on the investment.”
West Monroe Partners, Loyola University Chicago and BearingPoint sought to better understand how North American companies are incorporating sustainable business practices into their operations. To further the analysis, the North American survey’s results were compared against a survey conducted by West Monroe’s global alliance partner, BearingPoint. In Europe, 59 percent of the executives surveyed said developing a sustainable supply chain is already a strategic priority for their company.
Like their North American counterparts, European supply chain executives cite brand image improvement as the most important motivator. Innovation was far less important to European respondents than North American respondents (36 percent versus 47 percent). Interestingly, European supply chain executives place the highest importance on the economic impacts of sustainability whereas North American executives prioritize environmental impact.
What’s also interesting is the rate of adoption. Writing in Forbes earlier this year, Steve Banker, service director, supply chain management at ARC Advisory Group, pointed out that 72 percent of the companies included in The S&P 500 Index publish sustainability reports, which is up from just under 20 percent of the companies publishing such reports in 2011. Over time, companies’ sustainability efforts become more mature and corporate sustainability goals filter down and become key supply chain goals as well, which makes sense because they are compatible goals, Banker wrote.
There are numerous challenges when it comes to considering sustainability as a strategic priority. For instance, respondents to the West Monroe survey had differing ideas of sustainability—some consider basic recycling programs sufficient while others look at carbon footprint. So simply defining sustainability can be challenging. Secondly, since there aren’t regulations mandating action, many organizations can’t get the budget they need to take more meaningful action because there isn’t enough perceived value of sustainability initiatives.
What are your thoughts on sustainability? Does your company consider developing a sustainable supply chain to be a strategic priority?