Communicating a Sustainable Supply Chain Strategy

Jul 30, 2012 9:00 AM ET

There are many carrots and sticks used to promote supply chain sustainability. The ‘sticks’ range from regulatory and investor pressure to the influence of consumers and certain large retailers, however, the ‘carrots’ remain constant—the shared value creation from greater transparency and stakeholder reward from a robust and well-articulated strategy.

While formulating such a strategy remains on next years’ to-do list for many companies, an increasing number are putting their supply chains under the microscope. With the recent release of the Greenhouse Gas Protocol’s Scope 3 Accounting and Reporting Standard, companies now have even less reason to wait.

Soon, it will be insufficient to list only business travel under Scope 3; companies should focus on communicating more mature strategies that aim to uncover their full procurement impact. Even if those strategies are a work-in-progress, this will ultimately demonstrate foresight, stability and a desire to do the right thing.

The road may be challenging, but opportunities lie in many directions, and rewards can come quickly if progress is communicated effectively to stakeholders. Simple mechanisms can create an effective supply chain strategy where none existed before; for example, setting a procurement policy that requests suppliers to match your organization’s own ethical and environmental standards will open a dialogue for further engagement and demonstrate commitment to a more risk-averse value chain.

Risk, in a broad sense, can often feel like an abstract idea when it comes to global, or even local, supply chains. But risk was demonstrated all too clearly when Netflix, Instagram and Pinterest were shut down when recent Mid-Atlantic storms in the U.S. took out part of Amazon Web Services, which supplies the cloud computing their businesses rely upon. The same storms affected thousands more businesses from Virginia to New Jersey that rely on power from local utilities.

During the implementation of a supply chain strategy, companies should seize opportunities for collaboration, innovation and stronger partnerships. Recently, the creation of the Buyer-Supplier Mutual Code of Conduct (part of the UN’s Guiding Principles on Business and Human Rights) underscores the concept that productive partnerships are increasingly likely to accelerate growth on both sides of the relationship.

According to Ceres, “Nearly half of companies have environmentally focused procurement programs in place,” which means that companies are creating an all-for-one approach to raising the sustainability bar for their mutual suppliers. Gradually, a new normal is taking shape. Companies are seeing the value in staying ahead of this trend.

In response to severe external pressures, apparel companies such as The Gap and Nike have now blazed the transparency trail for an industry that struggles in other areas of sustainability, and have emerged as early adopters of ethical supply chain policy. Meanwhile, other leading companies such as Accenture and UPS are using their respective business expertise in IT services and logistics to create dynamic supply chain sustainability programs that generate business opportunities. It doesn’t end there; banks, telecommunication firms and car manufacturers are finding competitive advantage in driving efficiency and social improvements in their supply chains.

It is common for the most extensive sustainable supply chain strategies to receive attention within the industry, but until recently awareness for the wider opportunity has not been part of stakeholder communications. Differentiating yourself from your peers in this fast-changing space requires a strategy that is concise and effectively communicated.

For more insights on sustainable supply chain strategy and communications, please contact the newest addition to Addison’s sustainability team:

Keith Littlejohns
Strategist, Sustainability Communications