The primary focus of supply chain management has always been lowering costs and reducing risks. More recently however, a comprehensive strategy for social, economic, and environmental sustainability is the biggest concern for many businesses.
Why Supply Chain Sustainability Is Important
Sustainable business practices balance company operations with the environment, and the community. Aron Cramer, president of the global sustainability consulting firm BSR, says, “Many companies’ most significant impacts on the environment and society occur in their supply chains.” A sustainable supply chain strategy minimizes the impact, improves company compliance, and increases long-term profits, although implementing such a strategy may initially require more resources.
The Principles of Sustainable Supply Chain Management
The UN established the Global Compact office to help businesses develop more sustainable and effective practices. The Global Compact consists of 10 key principles. Companies who integrate these principles into their supply chain strategy can decrease their environmental impact, prevent corruption, and benefit the global community. The principles support:
- Human rights
- Fair and ethical labor
- Environmentally safe operations
Best Practices in Action
The Dutch Association of Investors for Sustainable Development (VBDO) compared the operations of 40 Dutch companies and named Royal DSM as the 2012 Sustainable Supply Chain Award recipient. DSM works with a variety of products in the fields of life and material sciences, including electronics, personal care products, medical innovations, and alternative energy.
CEO Feike Sijbesma says, “For DSM, sustainability is at the core of our business, with People, Planet and Profit of equal importance. Managing our suppliers on sustainability topics, and helping them to deliver sustainable materials and solutions, is fulfilling for our suppliers as well.” The company has:
- An integrated, fully compliant and transparent reporting system
- Consistent communication with stakeholders
- Commitment to helping suppliers adopt sustainable policies
- Leadership and innovation in supply chain sustainability
Sustainable supply chain management takes a comprehensive approach that covers every aspect of a business’s products and inventory. It isn’t always easy to implement sustainable practices, but the benefits outweigh the costs in the end.