Building a Sustainable Supply Chain
Two-thirds of the average company’s environmental, social, and governance footprint lies with suppliers.* To be truly sustainable then, a business must look beyond its own operations to those of the companies in its supply chain to ensure that they operate in a sustainable manner as well.
Sustainability in a supply chain includes the eco-friendly sourcing of raw materials, the reduction of suppliers’ pollution, waste, and carbon emissions, along with the commitment to ensuring the health and safety of workers. Even for relatively small businesses, supply chains can be complex, often built on multiple tiers of suppliers. This makes working towards a sustainable supply chain challenging. To help meet these challenges, consider taking these three steps:
- Engage with suppliers. Start by conducting surveys to determine where your suppliers stand with their sustainability posture. Communicate your expectations through a supplier code of conduct and deliver training when necessary to ensure that best practices are understood and followed.
- Improve visibility. Modern digital technologies can be used to improve real-time line of sight of more complex supply chains. Such technologies can help in implementing data-driven strategies to quantify and reduce environmental impacts at all points of the production process.
- Track performance. Incorporate specific and measurable key performance indicators to keep track of your company’s progress in ensuring a sustainable supply chain. Supplier scorecards can be helpful in tracking adherence to targets and can be used in conjunction with self-assessments and audits.
Whether prompted by consumer demand, a concern for the environment, or pure financial motives, it is clear that the sustainability imperative is growing. Meeting this imperative includes ensuring that sustainability is maintained at every point along the supply chain, from raw materials to end product. As your company implements its sustainability initiatives, we are here to support your efforts.
*Buying into a more sustainable value chain, McKinsey & Company, September 22, 2021.
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