Linking the sustainability imperative and logistics.
Sustainability is about minimizing a business' negative impacts on people, societies and the environment while maintaining or enhancing value for customers, business partners and shareholders. In effect, it's doing good and doing well at the same time. Many companies that focused early and intently on sustainability also made it the cornerstone of highly effective marketing campaigns aimed at consumer and business markets. Much of this low-hanging marketing fruit has now been picked.
Yet most companies still have enormous potential to leverage sustainability to do good (for people and the environment) and do well (financially). But what aspects of (SCM) are most worth emphasizing? The simple answer is all of them. However, there is no (SCM) space that is more lucrative or untapped than the application of sustainability principles to sourcing and procurement.
Responsible savings.
In recent years, sourcing and procurement has evolved from a relatively obscure back-office function to a widely recognized avenue of cost savings, relationship building and competitive advantage. Research confirms that a relationship exists between strategic procurement and superior orginization performance. Indeed, companies employing strategic procurement methods can expect to achieve savings that are 20 percent higher than traditional competitors. As a result, the emphasis leading companies place on material and equipment sourcing & procurement of materials have risen. Sustainable sourcing embodies that new potential.
Think of sustainable sourcing as a process of purchasing materials that takes into account the long-term impact on people, profits and the planet. Sustainable sourcing considers how materials are made, where and from whom they come from, how they are transported, and how they are ultimately disposed of. companies excelling at sustainable sourcing strive to ensure that their orginizations meet or exceed environmental and social expectations. At the same time, they know their actions are helping to grow revenue, reduce costs, manage risk and build intangible assets.
The time is now.
A myriad of forces have converged to make sustainable sourcing a vital area of cost savings, revenue growth and competitive differentiation. Now and well into the future, companies seeking value in green must work to ensure that their sourcing and procurement operations address a more-complete universe of financial, environmental and social responsibility.
Leaders in sustainable sourcing will have the ability to perceive and mange project risk different from their less progressive peers. They will understand the politics and changing environmental and social policies of the communities in which they build. Conversely, they will not only know their suppliers' products and capabilities, but also the extent to which those suppliers, products and capabilities comply with local, regional and global regulations and expectations. Chances are also good that supply chain leaders will use more innovative and stringent audit and enforcement functions within procurement metrics for understanding environmental and social performance, and tracking compliance levels.
Making the commitment to get, and stay, ahead of the curve.
Companies opting to wait and see, taking a reactive approach to carbon emission reduction, supplier rationalization, and sustainable material sourcing could soon be forced to make elaborate and costly changes that fit neither their operations nor their timetables.
A supply chain imperative.
Leadership, innovation and a commitment to enlightened sustainable sourcing will be needed to meet social expectations and government intiatives. However, the rewards are not only great; they stand every chance of growing further as more companies accept the sourced and procured sustainability imperative. Still, those that lead will clearly outpace those that follow, thus reaping the best opportunities to grow revenue, reduce costs, manage risk and build intangible assets. In effect, supply chain leaders will work harder and smarter to seek out opportunities for doing good and doing well.