There is a lot of anecdotal
information on what makes a value chain sustainable, but very little data. To
change that, we partnered with ASQ, the Institute for Supply Management, and
Deloitte, on a multi-year research study to identify proven management practices
and cost-saving approaches, and the initial findings are out.
The supply chain is where the ROI on sustainability gets real — in
the triple digits according to this research. It’s also what separates “real”
sustainability from “green washing.” That’s why many businesses and NGOs are
looking at how to make the value chain (supply chain, distributors, partner
organizations, etc.) more sustainable. While others have conducted research in
this area, there are two things that make this research significant:
·
Beyond focusing mainly on an organization’s suppliers, this study
encompasses the entire value chain from the moment something comes out of the
ground until it is put back into the ground, reused, or recycled — encompassing
suppliers, distributors, partners, and internal operations.
·
Instead of looking just at interest in sustainability or at future
plans, it looks at which concrete actions most effectively increase supply
chain sustainability — helping organizations know where to put their time,
energy, and resources to provide the greatest benefit.
The first
phase of this research – a survey with almost 1,000 responses from sustainable
supply chain execs – identified ten management practices that can improve
sustainable value chain effectiveness, both in terms of the financial return
and the sustainability outcome. Below are the top five. Click here to see the full Top 10 List.
- Organizations that engaged with suppliers at any tier
saw a 38% increase in their effectiveness.
- Organizations that had sustainability embedded into
their culture saw a 24% increase in effectiveness.
- Organizations that had worked with suppliers and others
(such as distributors) as part of quality programs in the past experienced
a 22% increase in effectiveness.
- Organizations that engaged with or talked about
sustainability with value chain members saw a 21% increase in sustainable
value chain effectiveness.
- Organizations that rewarded suppliers for sharing
expertise and knowledge around sustainability recorded a 17% increase in
effectiveness.
The survey also identified five management practices that reduce operating costs. Below are the top three. Click here for the full Top 5 List.
- Organizations that engaged with suppliers at any tier
saw a 46% reduction in operating costs.
- Organizations that provided suppliers with monetary
rewards for sharing expertise and knowledge around sustainability saw a
45% reduction in operating costs.
- Organizations that provided tools, policies, or
processes to suppliers and value chain partners saw a 41% reduction in
operating costs.
In the next phases of the research we will interview the best (and
worst) in class companies and develop in-depth case studies on them. Interested
in participating? Then make plans to join us at the COMMIT!Forum taking
place October 2-3 in New York City for a deep dive into the research results
and to sign up to participate in the next phase. Register with ID Code “SVC35”
and receive 35% off your registration.
_________
Richard Crespin is the President of SharedXpertise and the Executive Director of the Corporate Responsibility Officers Association. The Center for Values-Driven Leadership is a member of the CROA and a proud supporter of sustainability initiatives.
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