In recent years, the issue of supply chain sustainability has steadily become an important topic for discussion. Now more than ever, organizations are paying attention to how their supply chain practices contribute to sustainability efforts. With an eye on the bottom line, companies are trying to reconcile increasing demand with environmental compliance factors.
Why should supply chain operations managers strive to create a supply chain that's as sustainable as possible? What are the main driving factors behind this movement? Let's take a look at three key arguments to make for the sustainability case:
1. Sustainability efforts foster business transformation
In a 2010 interview with The Harvard Business Review, Peter Senge, the founder of the Society for Organizational Learning and a faculty member at MIT Sloan School of Management, stressed that it's critical for operations managers to start thinking of sustainability as a matter of being able to shape a business's future.
"To confront [sustainability] issues practically, you need employees who are innovative – who have the skill and the vision to redesign products, processes, and business models – and who understand the business context," Senge said. "Most important, they need to be able to tell a story about why this is a meaningful journey."
In 2016, the story is no different. Environmental Leader contributor Jessica Lyons Hardcastle noted recently, for instance, that companies are paying more attention to the ways in which their supply chains conserve natural resources and curb carbon emissions. Basically, organizations are transforming their businesses by changing processes and improving sustainability – effectively changing the narratives by which they represent themselves to the rest of the global market.
2. Risk management is one and the same
Not only does the environmentally friendly supply chain impact business growth and opportunity, but sustainability can also have a positive impact on risk management activities. In protecting against risk, companies have the opportunity to become more compliant with environmental standards, including within the IT department.
In a paper for the International Journal of Production Economics, researchers Mihalis Giannakis and Thanos Papadopoulos found that sustainability should be treated as a part of the risk management process. By accounting for sustainability risks (including environmental, economic and social factors), organizations can improve their management strategies and capabilities.
3. Reduce cost and increase revenue
Incorporating more environmentally sound practices can also have significant, positive financial outcomes, as well. For this reason, quite a few large companies are making the change to become more sustainable. For instance, according to Spend Matters contributor Elizabeth Ichniowski, in 2014 Coca-Cola invested $5 billion into a supply chain project in Africa that would secure more consistent and sustainable ingredients for the company's products. In addition, Hardcastle noted that Apple is pushing for higher environmental standards.
This all boils down to the fact that sustainability is becoming a key characteristic of the modern supply chain, and organizations ensure they're maintaining the aforementioned environmental standards within their operations while at the same time turning a profit. With logistics solutions like the cloud-based Oracle Transportation Management software from Inspirage, organizations can improve their supply chain sustainability and thereby support business transformation, better manage risk and increase revenue down the line.
For more information, get in touch with the supply chain experts at Inspirage today.