Misconceptions of business sustainability as a passing trend are quickly falling by the wayside. Larger organizations, traditionally mistaken as burdened with a primary responsibility as change agents in the water, carbon, environment and climate change solutions are now shifting the burden to include suppliers.
Seen as the savior for many organizations over the last few years, the procurement function is taking on a new roll in a recovering economy. The days of drastic cost reduction will likely be replaced with actions to rebuild and strengthen the supply chain.
Replacing cost reduction with sustainable supply chain management as a strategic function within the company has proven to be both a value opportunity and in some cases, a requirement for doing business. 2010 marked new rules in the supply chain field with IBM, Proctor & Gamble, Wal-Mart, and other larger organizations now requiring suppliers to capture data on their energy use, greenhouse gas emissions and waste and recycling.
What does this mean to unprepared organizations? The business risks of carbon, water, and climate change disclosure takes many forms:
- • Potential increase in operating cost
- • Potential increase in supply costs
- • Potential disruptions to supply or loss of supplier relationships
- • Potential loss of revenue or market share
- • Potential to business reputation
- • Potential inability to secure investment dollars or capital
Creating supply chain management alignment through increased eco awareness, cooperative business relationships, and applied sustainability concepts can have immediate business impacts and reduce business sustainability risk. Incorporating sustainability concepts into business relationships creates, at a minimum, line of sight across the value chain. This visibility provides a path to the greater value of alignment and engagement.
The sustainability concept of ‘Alignment’ and its impact on the supply chain is well documented. Creating alignment across the value chain can improve operational efficiency, reduce cost, and add value. Examples include:
- • Internal Business Processes: Corporate goals focused on the process improvements which promote and enable a sustainable supply chain.
- • Employee Engagement: Individual and organizational performance metrics which support corporate business sustainability goals
- • Customer Expectations: Sustainable product expectations clearly communicated down the supply chain.
- • Supplier Integration: Creating integrated processes with supplier to improve communication, increase efficiency, and ensure common sustainable processes.
- • Learning and Growth: Create working relationships that promote change, innovation, and growth across the supply chain. Customers and suppliers grow and develop with your business.
- • Financial Balance: Allowing all partners the ability to succeed financially creates a stable business environment and an aligned business sustainability direction.
Each business has its own unique relationship with its supply chain. Some relationships are stronger than others; therefore, the drivers to implement change can be quite different from one organization to the next.
However, 2010 sparked an increased drive to incorporate sustainability into Supply Chain Management and has inspired companies to reexamine their internal and external processes. Progressive organizations are evaluating their procurement, sourcing and supplier management from a new perspective to create additional value and explore resulting business sustainability risk that will continue well into 2011.
Editor's note: The role of supply chain and procurement is constantly highlighted in discussions on career paths in CSR and sustainability. Coca-Cola's VP for Supply Chain Rich Frazier, at a Net Impact talk on job hunting in CSR touched upon the crucial need for professionals with supply chain expertise, emphasizing that if a sustainability job is on your radar for 2011, looking at these roles must be high on your list.
And with Wal-mart's Sustainability Consortium, thousands of companies are gearing up to green their procurement process. To do so effectively, they are in turn, either training current staff on sustainability principles or hiring candidates with expertise in the field. Are you ready to take advantage of these opportunities in 2011?
--By Julie Urlaub
Sustainability expert, Julie Urlaub is the founder and managing partner of Taiga Company. She writes, speaks, blogs and consults on how changing the way you look at something can change your results and your world. She's a superstar green blogger, 2010 Shorty Award Runner Up on Twitter in the Green category (with over 15,000 followers), and works with companies to address the green/sustainability pressures in a way that strengthens them—capitalizing on the opportunities and mitigating the risk.
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