Is Sustainability Important in Supply Chain?

Corporate Social Responsibility (CSR) has become a significant market differentiator for businesses as more end-users now look to buy products from firms that act responsibly. Hence, significant efforts are underway to implement sustainability with supply chains. With the rise of social media, one can easily identify companies and their suppliers that do not act sustainably. Hence, firms are now seeking ethical sourcing services and supply chain leaders as they focus on sustainability. It lets them optimize costs and reduce waste.

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The Importance of Responsible Sourcing

Supply chain leaders must make sustainability a non-negotiable element if they have to adopt responsible sourcing. It will then impact how sourcing teams are evaluated. Sourcing companies’ leaders often get performance recognition based on cost reduction. However, a bit of the savings obtained through sustainability will be realized outside unit price. For instance, modifying material specifications for better recycling results may not alter the unit price but will still lead to savings based on its total ownership cost.

Experts suggest that sourcing leadership teams must encourage the implementation of sustainability objectives into the performance metrics and balance it with other financial goals. They must train their team members on CSR and its importance to an organization. The sourcing teams must explain to suppliers why CSR impact assessment is now a vital aspect in sourcing decisions.

Implement CSR in Supplier Relationship Management Programs

When a brand incorporates sustainability, it also affects the definition of what comprises a valuable supplier for the firm. Suppliers that carry out CSR impact assessments and adopt CSR showcase their ability to embrace a long-term vision. It is a vital element in developing strategic relationships. Hence, supply chain leaders must revisit their segmentation strategies and reevaluate their strategic suppliers’ selection through their Supplier Relationship Management (SRM) program.

Experts say that the leaders must communicate the significance of sustainability to strategic suppliers. They must know what is expected from them, how sustainability performance will be measured, and what is the timeline for complying with the minimum expectations. Additionally, they must get the requisite support for a seamless transition.

Seek Existing Sources for Support

To integrate CSR into the strategic sourcing process, sourcing services and supply chain leaders must identify and use data from genuine sources and service providers. There are several social impact consulting firms available that will help the leaders outline a responsible sourcing strategy. Check them out below.

● Competitor Activity

See what your competitors are doing when it comes to responsible sourcing. Also, look at what procurement areas they have incorporated sustainability criteria.

● Non-Governmental Organisations (NGOs) and Industry Associations

You can use their data, vital performance indicators, and solutions.

● ISO 20400

ISO 20400 is the first international standard for sustainable procurement. It guides organizations on ways to implement sustainability within procurement.

Sourcing companies and supply chain leaders must remember these while implementing sustainability in the supply chain for better results. Today, every business must incorporate it to improve consumers’ perception of them and attain the desired business results.