This is the first in a series of articles on sustainable supply chains: what they are, why they matter and how companies can develop procurement strategies to mitigate risk and maximize benefits across their network
A company’s purchasing decisions create a chain of effects that extend far beyond the firm’s four walls. In the food industry, in particular, a business’s sourcing decisions generate more social and environmental impact within the supply chain than within the business’s facilities themselves. This presents those in the industry with both a great responsibility to understand their indirect impacts, and a unique opportunity to extend benefits throughout their network and empower partners. The work begins with the prioritization of sustainable procurement and the development of a strategy.
Sustainable procurement strategies are where a company’s sustainability values meet practice. At their core, these strategies strive to maximize benefits and mitigate negative impact as far and wide as possible. Any business that challenges itself to think beyond its immediate activities must also consider its supply chain. In other words, the supply chain is integral to a company achieving its sustainability goals.
The good news is that a sustainable supply chain strategy is naturally compatible with the objectives of any smart procurement strategy. The buying of raw materials and other goods always presents opportunities for businesses to develop relationships with suppliers, examine risk, drive down costs, eliminate waste and generally increase efficiency. A sustainable procurement strategy simply uses existing supply chain relationships and supply-chain knowledge to extend these practices further.
Rather than simply ask, “How can we drive down costs?” a sustainability strategy may ask, “How can we drive down costs while honoring our sustainability priorities?” Beyond looking for places to eliminate waste within the organization, a sustainability strategy may look for places to maximize positive impacts in service of a larger goal with shared value as well.
GOOD FOR THE WORLD AND FOR BUSINESS
Perhaps most important for businesses to consider is that sustainable supply chains have grown to increasingly affect brand reputation and, consequently, the bottom line. Investors, consumers, regulators and other stakeholders are increasingly interested in the origins of everyday products and the impact their journeys have had on the planet and people along the way. In general, those interested in learning about a company’s sustainability practices often look for commitments to environmental and social goals, through both publicly-shared targets and regular reporting. The more transparent a company is about its business practices and the way it manages risks, the greater trust it will foster with stakeholders.
A NATURAL GUARD AGAINST DISRUPTION
Beyond brand reputation, sustainable procurement practices naturally strengthen a company’s supply chain and guard it against disruption. As the term suggests, sustainability practices are intended to make businesses ultimately more resilient and sustainable. A company that maintains high supplier expectations is less likely to experience business loss stemming from, say, a costly animal welfare or environmental incident. Companies that take a more proactive approach to supply chain management reap other benefits too: increased quality assurance, brand protection, stability and innovation.
A sustainable procurement strategy is essentially a good business practice that protects a brand, bolsters its resilience and, crucially, ensures that its values don’t end at its door, but are practiced across its network.