The power of oversight: monitoring sustainable supply chains

When it comes to man­ag­ing a sup­ply chain, trans­paren­cy is every­thing. But it’s no longer only about improv­ing effi­cien­cy and main­tain­ing the vis­i­bil­i­ty of mov­ing goods. Instead, more com­pa­nies are expand­ing the con­cept of sup­ply chain trans­paren­cy to check up on the sus­tain­abil­i­ty cre­den­tials of their part­ners.

Of course, achiev­ing over­sight of the sup­ply chain for the pur­pos­es of sus­tain­abil­i­ty can be a daunt­ing prospect – espe­cial­ly if the sup­ply chain in ques­tion has many stake­hold­ers or cross­es bor­ders. And, under­stand­ably, many com­pa­nies have pri­ori­tised sim­ply get­ting their sup­ply chains mov­ing again after the pan­dem­ic, rather than focus­ing on sus­tain­abil­i­ty. 

Broad def­i­n­i­tions of sus­tain­abil­i­ty can fur­ther com­pli­cate the process. Does it cov­er pay, work­ing con­di­tions and human rights, for exam­ple, or does it mean a tight focus on car­bon foot­print reduc­tion and envi­ron­men­tal stew­ard­ship?

If it’s going to work, then, exam­in­ing the sus­tain­abil­i­ty prac­tices of sup­ply chain part­ners needs to be an embed­ded prac­tice from the out­set, rather than an after­thought. Ralph Kirk­wood, head of pro­cure­ment at elec­tric bike man­u­fac­tur­er FreeFlow Tech­nolo­gies, says sus­tain­abil­i­ty needs to be con­sid­ered “at the point of con­tract­ing, [because] this is where you have the most lever­age to demand some out­put from sup­pli­ers to align to your require­ments, be that in rela­tion to the prod­uct or ser­vice spec­i­fi­ca­tion, or to wider sus­tain­abil­i­ty goals.”

He recog­nis­es that it can be “tricky” to assess com­mit­ment to sus­tain­abil­i­ty dur­ing the ten­der eval­u­a­tion but adds that these ques­tions need to be asked from the out­set to help com­pa­nies work out if first-tier sup­pli­ers will “roll your com­mit­ment down the sup­ply chain”.

That requires lead­er­ship. “Sup­pli­ers want to see that the ulti­mate cus­tomer is seri­ous about sus­tain­abil­i­ty,” says Mal­colm Har­ri­son, CEO of the Char­tered Insti­tute of Pro­cure­ment and Sup­ply. “Often the ulti­mate cus­tomer is a larg­er organ­i­sa­tion with more resources than oth­er com­pa­nies in the sup­ply chain. A com­mit­ment to sup­port and edu­cate small­er sup­pli­ers is a pos­i­tive action.”

Increased pub­lic aware­ness of sus­tain­abil­i­ty issues can also spur com­pa­nies to exam­ine their sup­ply chains more close­ly. The tex­tiles indus­try is one exam­ple of this, par­tic­u­lar­ly after many cloth­ing man­u­fac­tur­ers were exposed in the media for poor work­ing con­di­tions, low pay and dan­ger­ous fac­to­ries.

Rob Web­bon, CEO of sports­wear man­u­fac­tur­er Presca Sports, says that when the busi­ness launched, few com­pa­nies were cre­at­ing sus­tain­ably made fab­rics. “We would go to trade fairs and ask exhibitors to see their recy­cled or renew­able fab­ric lines. We’d be tak­en to the back of the stand and shown a small sam­ple of hang­ers – as if it was an after­thought,” he says. “Fast-for­ward a few years and now every tex­tile com­pa­ny is des­per­ate to show how sus­tain­able they are. In many ways that’s great for the indus­try. But it does mean the mar­ket is much more open to green­wash­ing – and we need to be aware of that.”

So, what’s the best way to get to the truth? Is it bet­ter to build con­fi­dence in that rela­tion­ship by get­ting to know sup­pli­ers and seek­ing assur­ances on the basis of trust, or to set firm met­rics that sup­pli­ers are expect­ed to hit? 

Max Wino­grad, VP for con­nect­ed prod­ucts at man­u­fac­tur­ing spe­cial­ist Avery Den­ni­son, says both approach­es are impor­tant. “Trust is a foun­da­tion­al ele­ment in every busi­ness rela­tion­ship but firm met­rics are need­ed to ensure that these stan­dards are adhered to.”

He adds that gen­uine trace­abil­i­ty means com­pa­nies can prove where their com­po­nents orig­i­nat­ed, can demon­strate reg­u­la­to­ry com­pli­ance in all mar­kets where prod­ucts are made and sold and can show that envi­ron­men­tal and eth­i­cal con­sid­er­a­tions have been fol­lowed. 

For Har­ri­son, met­rics are essen­tial, even if they’re not used as hard tar­gets. Instead, they can be use­ful for show­ing progress, espe­cial­ly ear­ly in the rela­tion­ship: “Sus­tain­abil­i­ty is a long-term goal and, as such, con­tin­u­ous improve­ment is key in the short term. Then it’s about hit­ting tar­gets in the long term.” 

At floor­ing man­u­fac­tur­er Inter­face, a sup­pli­er code of con­duct requires every­one along the sup­ply chain to com­ply with all rel­e­vant envi­ron­men­tal reg­u­la­tions and con­duct oper­a­tions in ways that min­imise the impact on the envi­ron­ment. The com­pa­ny is help­ing 26 pri­or­i­ty sup­pli­ers to iden­ti­fy projects in their oper­a­tions to reduce green­house gas­es and is pro­vid­ing tech­ni­cal sup­port to reduce the car­bon foot­print of man­u­fac­tur­ing.

“[We share] lessons we’ve learned and [col­lab­o­rate] on poten­tial solu­tions or new approach­es, includ­ing sourc­ing alter­na­tive raw mate­ri­als,” says Erin Meezan, Interface’s chief sus­tain­abil­i­ty offi­cer. “We are cap­tur­ing more detailed life-cycle assess­ment data on the [26 sup­pli­ers’] mate­ri­als to under­stand their car­bon impacts bet­ter. These assess­ments will form a base­line that allows our sup­ply chain team to devel­op a strat­e­gy to reduce car­bon across that ecosys­tem.”

But what about com­pli­cat­ed, cross-bor­der sup­ply chains where mon­i­tor­ing, over­sight and com­mu­ni­ca­tion are all more of a chal­lenge? Thank­ful­ly, this is where tech­nol­o­gy can play a greater role.

Automat­ing process­es, such as ques­tion­naires for stake­hold­ers to com­plete dur­ing the move­ment of goods, and even live loca­tion ana­lyt­ics, can flag up risks. If com­pli­ance can be checked in real time, con­cerns can be man­aged before they become big­ger issues.

“With mobil­i­ty ana­lyt­ics, com­pa­nies can eval­u­ate their sup­ply chain net­works, improve site selec­tion for ware­hous­es or dis­tri­b­u­tion cen­tres, and bet­ter under­stand sup­pli­er per­for­mance, which all can lead to a small­er car­bon foot­print,” says Jeff White, co-founder and CEO of loca­tion intel­li­gence provider Gravy Ana­lyt­ics. 

“For exam­ple, loca­tion ana­lyt­ics can help com­pa­nies under­stand truck traf­fic pat­terns with­in their sup­ply chain and deter­mine where bot­tle­necks might be occur­ring. With these insights, organ­i­sa­tions could address logis­tics issues to reduce over­all car­bon emis­sions.”

Interface’s Meezan agrees, not­ing that lever­ag­ing real data “is the most effec­tive way to move the nee­dle on achiev­ing sus­tain­abil­i­ty in our sup­ply chain”.

“We encour­age our sup­pli­ers to mea­sure their impacts by estab­lish­ing tools like green­house gas inven­to­ries, as well as devel­op­ing strong assess­ments of their cur­rent impacts through life cycle assess­ments,” explains Meezan. “Giv­en that the raw mate­ri­als in our prod­ucts con­tribute the bulk of our impact, life cycle assess­ment data helps us – and our sup­pli­ers – under­stand the impacts.”

Intro­duc­ing the right tech­nol­o­gy, then, along with fos­ter­ing a cul­ture of trust and open com­mu­ni­ca­tion, can not only help com­pa­nies choose the right part­ners, but also retain rela­tion­ships with exist­ing part­ners.

As Bob Glot­fel­ty, chief growth offi­cer at sup­ply chain fin­tech com­pa­ny Tau­lia, puts it: “Since chang­ing sup­pli­ers can be dis­rup­tive to the busi­ness or, in some cas­es, isn’t even pos­si­ble, many busi­ness­es focus on encour­ag­ing improve­ments by their exist­ing sup­pli­ers to match their com­mit­ment to sus­tain­abil­i­ty.”