A report from supply chain and operations management association APICS Foundation and PwC last month claimed that 43 per cent of respondents attributed operational cost reductions to their sustainable supply chain initiatives.

The report, Sustainable Supply Chains: Making Value the Priority revealed that innovative businesses that had embarked on supply chain sustainability programs had seen benefits both in terms of reduced environmental impacts but more significantly, costs.Save Money - Green Button

This report echoes findings from a Verdantix / BSI survey in April which claimed that more than two thirds of business executives are associating sustainability with their company’s financial performance.

While the reports back the business benefits of analysing supply chain sustainability, they also call for greater clarity at boardroom level.

Sharon Rice, executive director at the APICS Foundation, said: “It is widely accepted that supply chain sustainability is a priority for many CEOs, but this is a complex business issue that brings with it multifaceted challenges at the management level.”

She adds that the APICS study identifies patterns in the challenges that arise, helps us understand why these barriers remain, and underscores how supply chain sustainability translates into measurable business value.

Nic Delaye, a director in PwC’s Sustainable Business Solutions practice, claims that “there is a clear correlation – and in some instances causality – between sustainability and supply chain performance for companies who believe they can do well by doing good.”

He adds that “companies should aim to better understand the major dynamics of supply chain sustainability and how to overcome the obstacles that traditionally arise, in order to both improve their impact on society and create tangible business value in new ways.”

It’s also an issue raised by Andrew Winston in his book The Big Pivot, who laments the lack of Fortune 500 executives who understand what sustainability means to their business. He says that business executives need to be less sceptical and believe in sustainability and not just pay lip service to it if they are to really see any benefits.

This is a key issue. Supply chain sustainability is still in its infancy and many of the pieces are still falling into place with internal sustainability staff still having to sell the benefits to their colleagues. This is where starting small can work. Begin with footprinting. Understand how suppliers are performing from an energy and carbon standpoint and analyse hotspots for potential issues. This would provide a foundation on which a supply chain sustainability strategy can be built. From there the business can start to drill into specific areas of concern, whether it’s regional suppliers or specific industry suppliers, identifying potential risk and areas of potential cost improvement.

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June 2nd, 2014

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