Many companies spend a lot of time and money ensuring that their top-tier suppliers operate sustainably and have an ethical approach to their operations. However, many of the issues lie lower down in the supply chain.
While many multinational enterprises have been pledging to work with suppliers that meet specific environmental and social standards, they typically do not ask their suppliers to adhere to the same expectations. In an ideal world, top-tier suppliers would hold their suppliers accountable for their ethical and social approach to business. However, the world is far from perfect, so they will come up short of these expectations all too often.
In recent years, there have been many scandals from top-tier suppliers neglecting their social responsibilities. This exposes companies to a litany of financial, social and environmental risks. Read on to learn about sustainable supply chain management, the benefits this brings and how to address supply chain issues.
Where Supply Chain Problems Stem From
Research across various industries has demonstrated problematic supply chain management in multiple countries. The supply networks in question were described as “sustainability leaders” by the multinational corporations relying on their services. However, this is far from the truth. Both top-tier and lower-tier suppliers in these networks were found to violate the standards set out by the corporations.
The primary issue is that the companies setting standards for their suppliers rely on a cascade effect throughout the supply network. This is wishful thinking, and in reality, this occurs infrequently.
This is indicative of systemic failings throughout supply chains globally. All of these suppliers were working with model organisations with robust corporate social responsibility (CSR) strategies. If these exemplary firms fail to establish sustainable supply chains, then others with less developed CSR practices are likely to be far worse.
Ultimately, this reliance on a cascade of social responsibility throughout the supply chain stemming from the end corporation doesn’t seem to work. This indicates that there is still much work to be done in establishing supply networks that meet the standards companies and consumers expect.
Why Sustainable Supply Chains Are Important
Socially and ecologically sustainable business practices have the obvious tangible benefit of improving the current situation on a local and global scale. Many businesses predominantly focus on the societal impact of their own operations. However, it is challenging to argue that they operate responsibly without adequate consideration of where materials, supplies, and products are being manufactured or transported.
The most apparent benefit of truly sustainable supply chains is the reduced environmental impact they have. This is good for everyone in terms of negating climate change, but it can also benefit companies financially. Many assume that reducing the environmental impact of a business must come at a cost. However, this is not necessarily true. In reality, strategies for limiting environmental damage often result in significant savings. Reducing waste and enhancing the efficiency of buildings and machinery across a supply network can quickly result in substantially lower expenditure.
Another benefit of sustainable supply networks is an improved continuity of supply. Diversification of a supply chain is a strategy businesses often use to enhance sustainability. Many problems come from an over-reliance on a single supplier, leading to them cutting corners to meet demands. Having multiple suppliers across different regions can reduce overexertion from smaller suppliers, meaning costly downtime and reputation damage are less likely for the end company.
There are various financial benefits associated with sustainable business practices. For example, robust CSR strategies help companies to stand out from the crowd over their competition. Sustainable businesses are much more likely to develop a loyal customer base as consumers will often choose brands that reflect their stance on societal issues. Most customers are even willing to spend more on a product or service if they see evidence of compassionate business practices. Therefore, companies can improve brand loyalty by developing a sustainable supply network and generally perform better financially.
This thought process also applies to external investment in businesses. Investors are becoming more aware of the importance of CSR and use sustainable strategies to judge the accountability and reliability of companies. As a result, many investors use CSR metrics to inform their investments, so sustainable practices can help organisations attract more investment.
It is also important to mention that failing to promote sustainability in supply chains brings significant risks. For example, companies that do not act ethically regarding their supply network risk damaging their reputation. Thanks to modern technology, nearly everyone has access to a vast amount of information, so companies that fail to promote sustainability throughout their operation cannot keep it under wraps for long. Many companies have significantly damaged their reputation by neglecting safeguards within their supply network, which can be disastrous for business.
What Can Be Done to Tackle Supply Chain Issues?
It’s all well and good to identify societal and environmental shortcomings in global supply networks, but what can be done to ameliorate the situation?
Various approaches are being implemented by businesses to change their systems of supply chain management. For example, many now set long-term sustainability goals and expect their first-tier suppliers to do the same. There is also a growing trend of including lower-tier suppliers in the sustainability conversation and overall strategy.
Another approach that is gaining traction is to take supply chain management short courses. Online supply chain training is an excellent way to improve knowledge and business practices regarding sustainability in the supply chain and receive a supply chain management certificate. If you are looking for ways to enhance CSR throughout the supply chain, you should consider a Sustainable Supply Chain Management online short course with the Cambridge Institute for Sustainability Leadership.
In doing so, you will learn how to build robust, sustainable supply chains, develop your understanding of changing existing supply chains and enhance your technical knowledge of green supply chain management. This knowledge is massively beneficial across the operations of a business. Increased knowledge about supply chain management can improve the lives of those working within the supply network, reduce your operations’ environmental impact, and ultimately improve the business’ bottom line.
Ultimately, understanding where the issues lie, as well as robust and considered strategies for eliminating injustices throughout the supply chain are now essential. Supply chain courses are an excellent way to improve knowledge and awareness of the issue throughout your organisation. Setting long-term goals and expecting the same from your top-tier suppliers is another great way of promoting sustainable practices throughout a supply network.
On the whole, research suggests that there is still a lot to be done when it comes to developing sustainable supply chains. Many businesses focus on their local impacts and the direct consequences of their operations. However, they shouldn’t neglect the social and environmental effects of their supply network.
Many corporations are now developing strategies to improve their supply chain management, but there is still a long way to go before they can be considered sustainable. Ultimately, improving knowledge and working practices through logistics courses online and considered goal-setting will be essential for improving supply networks globally.