Is Sustainability Risk the Next Supply Chain Value Opportunity?

Work over the past few decades by academia, professional consulting firms and solution providers has primarily focused on providing businesses with cost savings incentives to invest resources in the supply chain. Popular practices such as Lean, TPS, Total-System-Value, Just-In-Time, and Six Sigma have been used to create efficiencies and reduced total supply chain costs. While these practices provide great insight into cost reduction, our professional consulting believes the next generation of supply chain management will include integrating sustainability concepts into traditional practices to evaluate risk and create value.

According to many leading business consulting firms, it is often practical to consider risk categories as a starting point for an initial value assessment of a supply chain. Recognizing and understanding risk opens the door to implement measure to improve performance. As we move into the discussion of applied sustainability concepts in the supply chain, this line of thinking becomes even more relevant. The questions becomes: what process, best practices and tools will we be talking about in the future that address supply chain sustainability risks such as:

•    Globalization has extended the once arm’s length supply to sources from around the world, in many cases decreasing process control.

•    Proposed regulatory measures imposed by government entities, is raising awareness of carbon emissions and other waste streams.

•    Increasing eco awareness and shifting expectations among consumers is creating market risk for many traditional businesses.

•    Supply side capacity constraints on sustainable supply could make it more difficult to meet demand requirements.

Within our sustainability consulting practice, we considers risk along with other categorization methodologies, including spend classification and functional categorization, as a means of identifying sustainable value in the supply chain. We believe successful implementation of any sustainable supply chain process requires visibility, engagement, and alignment with all process stakeholders.