The notions of what can be termed as either socially responsible, sustainable or green supply chains have obvious prior history among multiple industry supply chains or networks.
On this Supply Chain Matters blog, we have highlighted multi-industry supply chain efforts within these areas dating back to our inception in 2008.
Some have stemmed from prior negative history with customer, governmental and watchdog groups providing visibility to unacceptable practices. They unfortunately came about from a quest to seek out lowest cost global sources of raw materials, components and end products. Lowest cost sourcing or manufacturing sometimes did not equate to socially or environmentally responsible practices.
The lessons learned amounted to negative customer perceptions of certain brands; perceptions linked to the exploitations of human labor as well as our global environment.
Increased global citizen awareness to the overall threats of global warming have considerably changed as-well. The United Nations has identified three sectors, Energy, Agricultural Practices and City Infrastructure that are the most critical toward achieving GHG emissions reduction, since each is responsible for a major portion of such emissions.
“Trends in temperature readings from around the world show that global warming is indeed taking place. Every one of the past 40 years has been warmer than the 20th century average. 2016 was the hottest year on record. The 12 warmest years on record have all occurred since 1998.” Further noted: “As CO2 levels increase, the pace of warming accelerates. Satellite measurements confirm that less heat is escaping the atmosphere today than 40 years ago. Though other heat-trapping gases also play a role, CO2 is the primary contributor to global warming.”
The Supply Chain’s Role
When companies establish multi-year sustainability goals, they invariably require a focus on a company’s supply and customer demand networks, since product value-chains and supporting services are responsible for a considerable portion of carbon and greenhouse gas emissions. Consider the carbon emissions footprint of logistics and transportation, manufacturing, agricultural production, generation of paper-based documents along with reducing waste across all processes.
Led by high profile corporations and smaller, responsible minded businesses, meaningful change is occurring.
Many Consumer Products and Food producers such as Procter & Gamble, Nestle and Unilever and others are recognized for their wide-reaching efforts for incorporating sustainability in business strategy. Beverage companies such as Coca Cola, PepsiCo and SAB recognize that large consumption of water is a critical component of a sustainability strategy. They have appointed senior managers responsible for water conservation and sustainability initiatives that ensure supplies of water are continuous.
High profile manufacturers in the high tech and consumer electronics sector such as Apple, Dell, Hewlett Packard and others have always been on the forefront of sustainability initiatives. Across various other industries, innovators have been openly active and committed to sustainability efforts because it drives meaningful benefits.
New initiatives have increasingly been spawned from committed corporate sustainability goal setting.
A survey among U.S. Fortune 1000 CEO’s and C-Suite executives conducted in 2018 by Covestro LLC, a producer of high-performance polymers found that 51 percent of executives believe there is inherent tension/conflict between a company being profit-driven or purpose-driven. However, most (69 percent) indicate that the act of balancing profit and purpose is having a positive, transformational impact on business. Nearly 80 percent indicated that a company’s future growth and success will hinge on a value-driven mission that balances profit and purpose, with three-quarters (75 percent) believing these companies will have a competitive advantage over those who do not. Finally, but not least, a significant 86 percent confirm that today’s top talent is more inclined to work for companies that have a demonstrated commitment to social issues.
Indeed, the good news is that much more positive change is occurring, changes that relate to visible proactive corporate social responsibility efforts that directly link to corporate business objectives and enhancement of brand value. Sustainability efforts ensure strategic continuity of commodity supply, raw material and natural resources. They confirm that a business has plans and strategies that can support long-term competitiveness and industry leadership.
On the product demand side, consumers and business customers are much more attuned toward seeking out components and products that are both socially responsible and environmentally sustainable. As an example, today’s Millennial generation cares about their environment along with social values, and, in-turn, factor buying, and loyalty decisions based on the reputation of the particular company or brand. Consumers further expect, and in increasing frequency, demand visibility as to where products such as food, drugs or raw materials were sourced in the supply network.
The New Emphasis of Ethical Supply Chain
The terms ‘green’ and ‘sustainable’ are often used interchangeably, and now, a new term has emerged, the ‘Ethical Supply Chain.’
This term takes on a broader umbrella and focus across extended supply networks. It includes efforts from manufacturers, retailers and services providers as meaningful extensions of corporate purpose, to leverage advanced technology for enabling broader social, sustainable and ethical practices.
In my recent travels among technology conferences and in discussions with supply chain leaders, I have noticed that technology providers are as-well, becoming more sensitive to applying technology to assist companies in eliminating overall waste of important resources and in providing global social agencies access to advanced technology to better enable social, environmental and ethical responsibility needs.
At the recent Oracle OpenWorld conference held in September, an applications keynote placed emphasis on efforts to assist Industries for the Blind and Visually Impaired (IBVI).
More than seven million US adults are blind or visually impaired and an estimated 70 percent of them are not employed full-time. IBVI employs people who are blind for a wide range of jobs, from assembly of tool kits for military troops to various customer service and office roles. IBVI is always seeking ways to improve product quality and accuracy around factors such as shipment status and inventory. Unlike most companies, however, IBVI is not looking to cut its labor costs. Its mission is to create opportunities.
At this week’s Kinaxis customer conference, in his CEO keynote address, Jon Sicard emphasized the sustainability purpose and role of that technology provider, namely to assist customers to enable transparency across the supply chain in time, opportunity and resource dimensions which can be key elements to efforts in eliminating overall waste.
The most emphatic emphasis came at the OpenText Enterprise World conference held in July. In his mainstage keynote address, CEO Mark J. Barrenechea specifically shared remarks challenging more tech companies to increase their applications of technology for broader social and ethical needs.
Cited was this Enterprise Information Management provider’s efforts to assist the United Nations Refugee Agency (UNHCR) to leverage the use of biometrics technology to register and uniquely identify displaced people, ultimately providing access to life-saving aid. The International Committee for the Red Cross (ICRC) is leveraging OpenText’s B2B technology platform to better assist agency employees to focus on responding to emergencies or helping those affected by armed conflict.
In the specific focus area of enabling Ethical Supply Chains, an on-stage demo illustrated how companies can soon leverage the OpenText Business Network Global Partner Directory. This directory lists more than 800,000 trading partners and services providers to identify specific suppliers that conform or demonstrate certain ethical supply chain attributes.
Indeed, positive change is occurring, changes that relate to visible proactive corporate social responsibility efforts that directly link to corporate business objectives and enhancement of brand value. The umbrella of CSR will likely increasingly include notions of enabling more Ethical Supply Chains by the leveraged use of advanced technologies such Internet of Things (IoT), Blockchain, JAWS, bots, and others.
The significance of one of the major Cloud based B2B Business Network providers commitment to this goal is noteworthy because it opens up end-to-end primary and secondary supply network transparency across multiple-tiers of a product’s value-chain. From our lens, that can significantly springboard CSR and Ethical Supply Chain identification, conformance and adoption.
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