Cost Effective Sustainability Through The Value Chain

Being a green enterprise is not a cheap undertaking, but lots of companies and NGOs are looking for ways to make their value chain (supply chain, distributors, partner org’s, etc.) more sustainable. And according to a recent Forbes article, the businesses supply chain is where the ROI on sustainability shows its benefits in triple digits.

In an effort to understand in-depth what makes a value chain sustainable, Forbes.com partnered with ASQ, The Institute for Supply Management, and Deloitte on a multi-year research study aimed at identifying demonstrated management practices and cost saving approaches. Although there have already been a number of similar studies, two things differentiate this undertaking:

1. This study covers the entire value chain – rather than focusing on a company’s suppliers. It followed the product from the moment it came out of the ground until its put back into the ground.

2. It looked at the actions that most effectively increase supply chain sustainability – showing organizations where to put their time, energy, and resources to maximize their benefits

In the first phase, a survey was administered to 1,000 supply chain execs; their responses identified 10 management practices that can significantly improve the financial and sustainable effectiveness of a value chain; as well as 5 management practices that reduce operating costs.

(Survey Results)

10 Management Practices for a Sustainable and Financially Sound Value Chain

1. Engages with suppliers (any tier)

2. Sustainability is embedded in the culture

3. Has worked with supplier and others (example: distributors) as a part of quality programs in the past

4. Engages with or talks about sustainability with value chain members

5. Rewards suppliers for sharing expertise and knowledge around sustainability

6. Publishes and enforces supplier codes of conduct for all tiers

7. Provides tools, policies, or processes to suppliers and value chain partners

8. Provides suppliers with increased chance to be selected for future works for sharing expertise and knowledge around sustainability

9. Has a specific functional area responsible for sustainability efforts related to the value chain

10. Works to highlight organization’s sustainability efforts to attract and retain employees

5 Management Practices to Reduce Your Operating Costs

1. Engages with suppliers (any tier)

2. Provides suppliers with monetary awards for sharing expertise and knowledge around sustainability

3. Provides tools, policies, or processes to suppliers and value chain partners

4. Educates and creates awareness about sustainability among suppliers and others in the value chain by hosting or promoting sustainability-related events

5. Engaged a third party with specialists in value chain sustainability for assistance in improving the sustainability of the value chain

Let us know how your business is engaging in creating a sustainable value chain management and if you’re using any of these 15 management processes!