How can sustainable supply chains be driven throughout an organisation? This year, a group of LBS students came together to explore this topic in more detail (read more about us here ). We have brought together the insights we gleaned from our networks, the LBS student and alumni community, the guidance of faculty and staff, and our own research in a series of posts that we hope drive further conversation and engagement in supply chain sustainability. Following our posts about what sustainable supply chains are , how we can measure their impact and the latest trends in this space, we now highlight the various levers available for business leaders to drive supply chain sustainability, no matter their title.
Champions of change come in many forms and work at many different companies. Since our passion lies at the intersection of sustainability and supply chain operations, we want to highlight areas where you can increase the sustainability of your supply chain operations, no matter your role and no matter your company. We also emphasize some of the characteristics of companies who do this well. Research from a recent SAP survey illustrates the impact that can be driven across an organisation into the supply chain – showing that companies with stronger strategies for customer-centricity, visibility, sustainability, and the application of intelligent technologies are seeing results in supply chain effectiveness, resiliency, and overall financial performance.[1]
Levers available to you
We have identified two different ways in which one can view their impact. One is using a lens of sustainability to impact the way that a job is approached. The other is more specific to each function within the company.
First, when considering any function in an organisation, some critical questioning of the role and the scope of impact could lead to more sustainable outcomes. Questions such as:
- Can you reach beyond the realm of your organisation?
For example, can you extend your leadership to a system or network of organisations to share best practices or influence decisions? Can the standards and processes that you utilise support others in your value chain?[2],[3]
- Are you formally incorporating sustainability considerations into trade-off decisions?
For instance, if you increase the speed of delivery to customers, what is the environmental and social impact of changes required to source, package, and transport goods?
- Do you really, truly know the problem you are facing before trying to solve it?
Driving change, such as intelligent technology applications, support customer-centric and sustainable operations when they are applied based on organizational issues and insights, not just chasing the latest buzzwords. As Ms. Lopez of Unilever notes, “You have to fall in love with the problem you have, not with the technology”.[1]
- How are you enabling the goals and requirements that you set?
As you embark on new initiatives or seek to increase sustainability for your organisation and your suppliers or partners, do you understand the barriers to change that the various players are facing? Have you provided mechanisms to help overcome them?
Second, there are multiple ways to impact the supply chain from your own area within a company. Those working in the supply chain function can help to drive any of these initiatives in conjunction with the relevant functions in the organisation.
| Function | Applicable sustainability action |
|---|---|
| Customer Care | – Ensure sustainability-based improvements to packaging and delivery methods are accounted for in the customer experience – Develop an understanding of the sustainability impacts of product maintenance and care (e.g. waste created during repairs, carbon footprint of maintenance operations), as well as the end-of-life journey |
| Diversity & Inclusion | – Incorporate diversity requirementsinto sourcing decisions (e.g. including diversity considerations in supplier selection criteria, setting diversity targets amongst a supply base) |
| Engineering / Research & Development | – Include component sustainability as criteria for material / supplier selection – Collaborate with suppliers on sustainability initiatives to develop new innovations – Search for sources of new, sustainable materials as a part of R&D efforts – Design for end of life (i.e. circular economy) |
| Environmental, Health & Safety | – Include suppliers in environmental, health, and safety trainings – Seek input from others in the value chain about potential barriers or challenges to meeting EHS standards |
| Finance | – Offer incentives to suppliers that implement relevant sustainability practices – Develop formal process to incorporate increased resource efficiencies and sustainability cost savings into business cases for company initiatives – Seek preferential credit terms for those implementing sustainability programmes along the value chain |
| Human Resources | – Enable extension of sustainability related trainings and development programmes to key suppliers – Support peer-to-peer learning about sustainability – Promote a culture of employee idea generation, empowerment to launch sustainability initiatives, and incorporation of sustainability tradeoffs into decision making tools |
| Legal & Compliance | – Ensure that supply chain risk is appropriately monitored for sustainability impacts and risk reduction mechanisms are prioritised |
| Public Relations / Marketing | – Use proactive sensing and predictive trends to illustrate future customer needs related to sustainability.Understand that translating this into a reality will have a long lead time, but should be built into future roadmaps accordingly – Seek out collaborations with suppliers or other industry players to develop and share sustainable supply chain standards – Clearly communicate future goals, continuous progress, and pitfalls to ensure stakeholders are aligned with the entire sustainability journey |
| Technology | – Build real time data collection mechanisms into company infrastructure to allow for better and faster reactions to customer and supplier feedback, suggestions, and disruptions that could improve product or service environmental or social sustainability – Align the use of advanced technology to streamline processes, improve product design, and reduce time to meet customer demand in sustainable ways |
*Compilation of potential levers derived from the works of BSR[4], HBR[2], Journal of Cleaner Production[3], OECD[5], and SAP[1]
Assessing company-wide characteristics
When evaluating companies overall – as potential places to work, as potential partners, or understanding the potential in your own organisation – there are key elements to a company’s culture and structure that will impact any sustainability initiative’s success.
First, is the company maturity in terms of responsibility. Does it just seek to mitigate risk? Has it evolved towards engagement in finding a better way to operate? Or does it fully provide transparency towards sustainability goals and progress?[4] Having the context of which of these three buckets the company fits in will help you understand the receptiveness of the culture towards your ideas before you even begin.
Next is the organisational structure. Are sustainability team members integrated into various departments? How big are the sustainability teams? How siloed is the organisation overall?[4] Where the sustainability or CSR teams sit within the company reveals the level of influence available purely through direct reporting lines. Additionally, the level of inter-team projects and teamwork will indicate the receptiveness to collaborative efforts to drive positive change.
Finally, is the company’s attitude towards supply chain capabilities. Is the supply chain seen as a competitive differentiator? Are supply chain executives integrated into setting the overall competitive strategy? According to the same SAP study, leading organisations overwhelmingly put supply chain front and center of their company and outperform their peers when they have more supply chain executives involved in setting overall company strategy.[1]
We appreciated Accenture’s article that illustrates the varying methods of organising a company’s sustainability team in relation to the remaining organisation functions and SustainAbility’s resources that help guide leaders through the integration process.
Put into action:
We are excited to share our experience and what we have learned about making an impact in the sustainable supply chain throughout an organisation with you. Check out our other posts on the importance of supply chain sustainability, measurement, and recent trends to be in the know as you make your moves within their company. We hope you find this information and recommendations useful and inspiring, and you start contributing towards sustainability, regardless of your role or from wherever you sit. And continue the conversation here – we would love to hear your reactions or new ideas.
[1] “Surviving and Thriving: How Supply Chain Leaders Can Minimize Risk and Maximize Opportunities.” SAP, Oxford Economics, 2020, https://www.sap.com/documents/2020/03/f40dfe2a-8e7d-0010-87a3-c30de2ffd8ff.html#page=13
[2] Villena and Dennis A. Gioia, Verónica H, and Dennis A Gioia. “A More Sustainable Supply Chain.” Harvard Business Review, 19 Feb. 2020, https://hbr.org/2020/03/a-more-sustainable-supply-chain
[3] Gosling, Jonathan, et al. “The Role of Supply Chain Leadership in the Learning of Sustainable Practice: toward an Integrated Framework.” Journal of Cleaner Production, vol. 137, 20 Nov. 2016, pp. 1458–1469., doi:10.1016/j.jclepro.2014.10.029.
[4] Norton, Tara, et al. The Supply Chain Leadership Ladder 2.0. BSR, May 2019,www.bsr.org/reports/BSR_Report_Supply_Chain_Leadership_Ladder_2.0.pdf
[5] OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct
The Wheeler Institute is seeking to understand, illuminate and offer solutions to the challenges faced by the developing world, with an aim to identify the role of business in addressing these challenges and a focus on the implications and actions for those in developing countries. In support of our students, we approach this blog section as a reflective platform and a space where individuals can generate debate as long term agents of positive change.
The Sustainable Supply Chain Cohort was an initiative of the Student-led Learning team which creates experiential learning opportunities through student leadership, in addition to their other initiatives such as the Student Leadership Incubator and Project Aasha. Contact the Student-led Learning team for more information about student leadership roles within the LBS community.