As we prepare to commence a new year, let's consider some of the opportunities around your supply chains and what you need to be doing in 2017.
It’s easiest to group these opportunities into three areas: knowledge, direction and communication.
Firstly, you need to be aware of what you know and don’t know about your supply chains. Many organisations know the large companies they deal with most frequently but that’s about it; they have little idea about the smaller companies that supply to those larger ones. So it’s time to start finding out what’s in your control and what isn’t. From there, you can maximise improvements over the things within your control and maximise influence over the things outside your control.
Many organisations already have supplier questionnaires, which are undertaken annually, that ask a range of questions from basic (‘Does your company have an environmental policy?’) to more complex (‘Does your company encourage local community work and commit to making a positive impact on the local community in which they operate?’)
These questionnaires not only allow organisations to find out about the companies they do business with, and indicate levels of knowledge on strategic topics, but send a clear message to suppliers about the issues that are important or rising in importance. Take a look at Mirvac’s recently-released Annual Supplier Report 2016 as an excellent example.
Don’t forget that your influence often counts more than you think. As Sam Walton, founder of WalMart, famously pointed out, “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
If companies through your supply chain don’t want to answer questions, reduce emissions in line with your targets or align themselves with your strategy, it may be time to spend your money somewhere else.
To manage complex and international supply chains many leading companies, including Supply Chain Sustainability School Partners across Australia, are implementing supplier qualification programs that ensure that they only do business with suppliers that share their own values. Programs can include regular checks and audits that look at supplier issues ranging from basic compliance to energy and emissions, materials and waste, health and safety, human rights and child labour, and more.
You can also make sure your organisation’s risk matrix reflects your supply chain risks and levels of understanding about how you’re managing and minimising them. Elements you may wish to look at include sustainability in all its forms, from climate change and climate extremes to social sustainability and modern slavery, and from community resilience to financial resilience.
Be aware of what leading organisations are doing in this space. For example, the City of Melbourne, in collaboration with the 32 metropolitan Melbourne councils and associated partners, now have the Resilient Melbourne Strategy. There are many great examples out there of organisations collaborating to achieve change and minimise risks collectively.
Now that you’re getting more comfortable with what you know and don’t know, it’s time to clarify your direction. If you know where you are now, do you know where do you want to be?
Take a look at the strategies of leading organisations around topics such as sustainability, supply chain efficiency or resilience, and start setting some goals and targets with a medium- to long-term. These will help you set your direction and, in turn, help with shorter-term objectives. Don’t forget that learning is a constant process, not a binary situation (you know nothing/you know everything). Getting to know your supply chain and your suppliers will take time, but the environmental, social and economic opportunities they hold are many.
Greater direction can also mean increased collaboration between teams, between business units and between aligned organisations to make sure that you’re not just minimising your risks but identifying opportunities. The NSW Office of Environment and Heritage’s Sustainability Advantage program does just that by looking at opportunities to collaborate to achieve greater efficiency and benefits.
So 2017 holds great opportunities for you to set some direction for your supply chains, since:
- Deconstructing and rebuilding your supply chains can stimulate innovation and help embed sustainable supply chain management as part of your company strategy. This also means you can spot the risks early on, let your whole supply chain know about your short-term, medium-term and long-term targets so they can work with you to achieve them, and make best use of the opportunities.
- Steady supply chain improvements can benefit an organisation’s financial strategy, by identifying areas for greater energy, water, materials and waste efficiencies, lowering costs and minimising environmental impacts (which have their own types of costs.)
- Staying ahead of regulation is important. Not only do you need to stay ahead of the market, but it’s much better to take lots of small, simple steps in your own time, at minimal cost, with organisations like the Supply Chain Sustainability School providing free information, rather than waiting until the market or tightening regulations force you to take big, difficult, time-consuming and expensive steps.
Now that you know more about your supply chains and have a sense of direction, it’s important to be clear about where you’re going, both to staff and suppliers.
For a start, both staff and suppliers will need a good sense of the purpose and the context; why you are doing this and why it is relevant. Regular internal and external communications must encourage transparency through your supply chains, not just so that efficiency can be improved but so that areas of weakness can be identified.
It’s also important to show how fast and how much the industry has changed over the past 10 years, and how it will continue to change. Change is, in fact, perhaps the only constant. And with increased knowledge and a clearer sense of direction, it’s time to communicate more openly with suppliers.
In terms of context, there are multiple ways of framing this discussion, from the high level Sustainable Development Goals or the intentions of the 2015 Paris Agreement to your organisation’s own monthly, quarterly or annual targets. The 17 Sustainable Development Goals, also known as the Global Goals, were announced at the UN Sustainable Development Summit in New York in September 2015 and include 169 targets to achieve sustainability by 2030. These were discussed in more detail at the recent SCGA16 Conference in Sydney. The goals provide a framework for businesses to align their strategies with sustainable development by increasing the focus on their social and environmental performance and impact while still generating economic rewards.
This is relevant because businesses will be the single most important driver for the delivery of the Global Goals, say almost 49 per cent of CEOs in a recent report by Accenture Strategy and the United Nations Global Compact. UN Global Compact executive director Lise Kingo explained that “the adoption of the SDGs gives companies a clear and universal roadmap to make global goals (relevant to) local business.”
According to the report, 70 per cent of CEOs see the SDGs as a clear framework for businesses to structure their sustainability efforts, and even more (87 per cent) view the goals as “an essential window of opportunity to rethink and reset approaches to sustainability.”
All signs indicate that 2017 will be the ‘Year of the (More Sustainable) Supply Chain.’ Are you ready?