When it comes to managing sustainability in their supply chains and evaluating how mature they are in their approach, 50 percent of the respondents to a recent survey rated their employers as beginners at managing sustainability.
More than 1,400 professionals from Europe, Asia and America responded to the survey, conducted by quality assurance and risk management firm DNV GL, with support from research and analytics firm GFK Eurisko and Supplier Ethical Data Exchange, a not-for-profit organization which operates a collaborative platform for sharing responsible sourcing data on supply chains. The survey identifies a set of front-running companies, defined as “Leaders,” which have a more structured approach to sustainability in their supply chain than their counterparts. These companies, mainly large, international companies, “stand out as they are managing their supply chain with a strategic approach, penetrating all tiers of their value chains with a holistic and structured approach,” the resulting report explains.
For example, these leading companies involve third parties to a much higher extent than other companies when auditing suppliers against their own protocols or recognized methodologies, and 30 percent of them say they provide suppliers with dedicated training, the report explains. By implementing sustainability in their supply chain, they say they have gained brand reputation (cited by 65 percent of the leading respondents), improved their ability to meet customer needs (cited by 58 percent) and increased market share (32 percent).
“Building sustainable supply chains is no longer a voluntary initiative based on unstructured attempts,” says Luca Crisciotti, CEO of DNV GL–Business Assurance. “Companies which have experienced positive effects from their actions have adopted a more systematic approach. Those able to tackle it in a strategic and holistic way can manage their risks better and reap benefits, while responding to legislative, stakeholder and global demands.”
Overall, 86 percent of the survey respondents said their company experiences greater pressure to show it has a sustainable supply chain today, than in 2014. Interestingly, 76 percent of the respondents said customers are the main driver influencing sustainable supply chain management. Nevertheless, pressure also comes from multiple direct and indirect stakeholders. Indeed, respondents said companies today are expected to proactively manage all tiers of their supply chain—and to do so in a way that contributes to the world’s sustainability goals.
I was also interested to read that while 81 percent of the respondents said their company has taken at least one action to improve supply chain sustainability, those actions were mainly self-conducted and limited to “Tier 1” suppliers—and fewer actions were taken further out in the value chain. Furthermore, 39 percent of the respondents said their company has conducted a direct audit of some suppliers, 36 percent have required suppliers to provide information, and 32 percent have either had a dialogue with suppliers to address the challenges or implemented a sustainability policy. Perhaps not surprisingly, only seven percent of the survey respondents said their company has have reached out to all tiers of its supply chain.
“Managing risks across the entire supply chain can be challenging and requires the collection of supplier performance data to efficiently create visibility further down the value chain,” says Crisciotti. “However, companies can leverage advancements in big data analytics, data sharing platforms and blockchain technology to help collect and measure supplier performance in a structured and reliable way.”
What are your thoughts on managing sustainability? Has your company taken actions to improve sustainability within the supply chain?