Five ingredients for developing a sustainable supply chain

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Courtesy of Vital Efficienci Ltd.

Developing a sustainable supply chains is one of the major challenges for food and beverage companies and is still in its infancy.

Responsibility for sustainability is clearly identified at board level and is now embedded throughout their organisations. However, developing a sustainable supply chain is more complicated to address, particularly if the number of suppliers is large and multi-layered.

Nevertheless, the opportunity for organisations to create beneficial effects through a sustainable supply chains is enormous. The supermarket giant Tesco, for example, has found that the carbon footprint of its supply chain is ten times the size of that from its own activities. As a result, Tesco has recently committed to a 30% reduction in its supply chain carbon emissions by 2020 relative to a 2008 base level.

The key objectives are to create a responsible and resilient supply chain that addresses the threat from climate change by reducing carbon emissions and adapting to challenges such as increased water scarcity.

The Environment Agency recently published a Greener Business Report that said: 'Businesses increasingly use environmental credentials as part of their brand. We want businesses that make these claims to show good environmental stewardship throughout their supply chains, and we will lighten the regulatory burden on businesses who take this responsibility seriously.'

The ability of a company to influence its suppliers is strongly affected by the proportion of the suppliers' sales that they represent

The term sustainability in the supply chain is in its infancy and organisations are tending to look for the lowest hanging fruit. Often, this is cost reduction such as energy efficiency, but it can also be the efficiency of other resources and waste reduction. 

The ability of a company to influence its suppliers is strongly affected by the proportion of the suppliers' sales that they represent. The level of influence is also affected by the number of tiers within the supply chain and the number of suppliers in within each tier.

The five key ingredients for a sustainable supply chain are as follows:

  • Leadership: commit to a sustainable supply chain strategy
  • Measurement: establish baseline performance and then set measurable goals
  • Partnerships and engagement: adopt a partnership approach with suppliers, share best practice and reward sustainability champions
  • Incentives: encourage improvements rather than penalising poor performance
  • Transparency and communication: ensure transparency, communicate sustainability performance and avoid 'greenwash'

The development of sustainable supply chains is one of the major challenges for food and beverage companies. The opportunity to meet customer needs, reduce costs, ensure security of supply and manage risk is not just a project for short-term gain, but an investment in long-term resilience, and a challenge that cannot be ignored.

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