Sustainable Partnering – Creating Supplier Self-Management Incentives

image: partneringBloomberg Businessweek recently released an article, Companies May Oust Suppliers Over Environment Goals, Group Says, which examines the business sustainability pressures being placed on suppliers by major corporate customers.  While these programs have received much recognition, the Carbon Disclosure Project has reported that they are not yet seeing the expected results.   Some professional consulting firms argue there may be a more effective and sustainable supply chain management approach.

“One of the best ways to motivate supplier self-management and improvement is to provide them with an understanding of how they perform relative to competitors. Show your suppliers how they are performing against each other in specific performance categories to drive focus on improvement.”  -Procurement Strategy Council

Progressive supply chain approaches over the past few decades has move us beyond the traditional buy/supplier adversarial relationship.  More recently organizations have seen the value in aligning supply chain goals in a now common win/win framework.  As sustainability concepts begin to emerge within supply chain discussion, companies continue to push for aligned business sustainability value pursuits.  The recent emergence of sustainable supply chain management provides the opportunity to leverage this progress from an expanded perspective. 
  • Supplier Integration: Creating integrated processes with supplier to improve communication, increase efficiency, and ensure common sustainable processes.
  • Supply Chain Transparency - Implementing sustainable best practices within the supply chain will standardize operations and allow for transparency of customer expectations across the supply chain.
  • Open Innovation - Engaging the knowledge of key supply stakeholders, a sustainable supply chain can make significant gains over the competition (who in comparison may be unwilling to share information across its supply chain).
  • Risk Mitigation – Promoting greater understanding of sustainability within the supply chain will mitigate environmental, social, and market risks common to all.
  • Continuous Improvement - A common understanding of sustainability concepts, goals and objectives provides a platform for ‘common’ performance measures and continuous improvement.
  • Increase Partnership Profitability – In the end, proactively incorporating sustainability concepts into the supply chain can decrease cost and add the value to all supply chain partners.

Our sustainability consulting work finds companies seeking out the unique value opportunity in sustainable supply chain management by creating aligned sustainability goals with suppliers.  Rather than regressing to the old model and passing along the cost and risk to suppliers, we are following the progress of leaders who are creating business sustainability incentives for existing and new sources of supply.

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