Solutions to Five Top Supply Chain Sustainability Challenges
Sustainability transparency is transforming the business practices of the world’s customers and supply partners. It’s now common for leadership companies to measure environmental impact along the supply chain, to integrate sustainability into the product design process, and to require suppliers to commit to performance improvements.
That said, supply chain sustainability remains a complex journey. What are the best ways to make the business case for supply chain sustainability, to overcome communication barriers, or to align your suppliers with your own goals? Here are five of the most common challenges, along with practical solutions from companies who are leading the way.
1. Sustainability is still an emerging concept for many suppliers
Because companies with high brand recognition are usually the most visible part of the supply chain, they are often the ones to suffer from the negative public relations when a sustainability-related product issue arises. That being the case, some suppliers may still be in the early stages of program development or even assigning resources to manage EHS&S issues.
The solution: Create a solid business case for cooperation. If persuasion, collaboration and communication are the tools of the trade for sustainability professionals, this is doubly true for those who are integrating sustainability into supply chain practices.
- Explain your own business needs. One of the most effective strategies is to share the business case for your own programs, in terms of customer expectations, investor interest and overall market trends.
- Provide clear expectations. Having explicit expectations not only benefits customers, but can help make the business case to suppliers that don’t yet have formal sustainability programs or dedicated staff.
- Make it worth their while: Another strategy to strengthen the business case is to provide financial incentives to suppliers that agree to partner with you on sustainability.
2. Supply chain sustainability is a global challenge
Sustainability has permeated industries around the world in vastly different ways where its definition and implementation varies from region to region, between states, countries and continents, not to mention between divisions and business units.
The solution: Dedicate resources to look at the big picture. In other words, you’ll want dedicated EHS&S staff that can focus on regional or even global issues.
- One company established a global sustainability department within the corporate legal function. This department is now the entire company’s single source for regulation and requirement interpretation and implementation, which improves consistency and helps pave the way for consistent compliance.
- Another variation of this staffing strategy is to embed an EHS&S resource within the global procurement group — having a seat at the table makes it a lot easier to standardize processes.
3. Suppliers are reluctant to disclose proprietary information
For customers who need detailed product information, it may feel like a straightforward request, but for chemical suppliers, the very expectation of disclosure may be at odds with their business interests.
The solution: Ask for only what you need.
- Set achievable baselines. At the outset of a new engagement, leaders advise focusing your efforts by limiting the amount of information you require. One way to do this is to start with the disclosures that are required by law.
- Protect your supplier’s intellectual property by providing assurance that the information will only be used by the sustainability team to evaluate a product’s environmental performance.
4. Suppliers might not be able to deliver on sustainability expectations
Despite the best intentions, suppliers sometimes don’t have the time, staff, management systems or software required to meet customer expectations around sustainability.
The solution: Invest in their success. Integrating sustainability into the supply chain requires trust, frequent communication and an investment in collaboration. Many of those who have built successful supply chain sustainability programs see their supply base as business partners, and as such, are investing their own resources to help these businesses succeed.
- Prepare to collaborate in new ways. The return on the investment in suppliers today comes in the form of stronger cooperation and better performance tomorrow.
- Leverage existing industry collaboration. Another key to integrating sustainability into the supply chain is working with industry consortiums such as the Sustainable Apparel Coalition, Sedex and the Responsible Business Alliance (RBA), which offers resources to help both customers and suppliers efficiently achieve their goals.
- Take a long-term view of success. As customers develop stronger relationships with their suppliers, those companies are able to evaluate today’s sustainability performance in terms of what they’d like to achieve over the longer term.
5. Your product contains chemicals of concern
While the focus of supply chain sustainability is currently on supplier performance and transparency, sometimes the solutions are upstream in the product design itself. “Whether we’re buying paints, powder, coats, plastic or wood products…we realized that what we bought or what we specified for our products ultimately dictates many of the environmental impacts associated with our products,” one leader said.
The solution: Co-create ingredient alternatives or design them out of your products altogether. As programs mature and sustainability leaders have a seat at the design table, there are more opportunities to influence the upfront material choice. According to those who have had success in working with suppliers on more sustainable choices, the key is to prioritize your efforts. This can also mean investing in alternatives; strengthening trust between customers and suppliers can result in new opportunities for both companies.
Over time, supply chain sustainability success begets success, as those with long-standing programs attest.
For in-depth details on these supply chain sustainability challenges and their practical solutions, download the full report.