With raw materials getting scarcer, energy costs getting higher, environmental conditions getting worse, and people upset by this all around, sustainability is becoming more important to the supply chain not just from a brand perspective, but from a long term business survival perspective. But it’s not enough to just say you’re going to be sustainable, only use sustainable resources when the option is there, and only use suppliers who accept your sustainability agenda. You have to walk the walk as well as talk the talk and make sure all parties involved understand what sustainability really means.
For example, using recycled materials where the recycling process takes more energy or creates more carbon than creating new materials from renewable resources is not a smart move. Sometimes you want to create reusable materials or containers and not just recyclable ones. Etc.
And while it can be easy to state the goals, it can be difficult to communicate exactly what those goals mean and how they should be addressed. And, more importantly, why it is important if the sustainable way costs more, takes longer, or displaces traditional suppliers if they don’t change their core business.
And if people don’t accept the why, the how won’t materialize. So how do you address the how? Point out anciliary benefits that could be worth more in the medium and long term than the short term (switching costs). For example:
- brand reputation
if it makes customers want to buy from you, especially those that will spend 5% to 10% more to feel sustainable, that’s good … and while most people don’t want to pay more for sustainability, if a rival brand does something unsustainable or politically incorrect and gets a media backlash, all of a sudden your brand becomes favoured
- risk management
if the new material is (more) sustainable, easier to produce, more widely available, overall supply risk is lowered and that’s a good thing since every risk that materializes causes a disruption that is very costly to the organization
- supplier engagement
if you can find a supplier who lives and breathes for sustainability, they might be much more willing engage with you on joint-development projects for joint-benefit than a supplier mass-selling the same old widget to a wide supply base, especially if it is a widget that hasn’t changed in five years and it’s now high profit and the supplier has become fat and lazy because it gained a large market share that allowed it to be less aggressive in its offering
- long-term savings
if, after the switching costs are covered, the longer term cost projects are lower, than it’s worth the up-front investment
And make sure to point out how the decision stacks up with respect to concrete sustainability factors such as:
- raw materials
are the materials you are using renewable and can they be extracted with minimal harm to the environment
- energy requirements
are the energy requirements associated with your purchase (for production, storage, and transportation) minimal and can they be met with renewable resources
- waste products
are waste products minimal and/or reusable and/or reclaimable? can the food waste be used to feed livestock? can the metal waste be melted down and reused?
- worker treatment
are all workers who take part in your supply chain treated ethically, responsibly, and fairly, using standard guidelines
If a supply management decision would increase brand reputation, reduce risk, contribute to medium and long term value, enhance supplier relationships, use renewable (and non-environmentally harmful) raw materials, reduce energy requirements, or minimize (or eliminate) waste in production, and do any of this in the context of ethical worker treatment, then, regardless of what definition of sustainability each individual on a cross-functional sourcing team is partial to, it should be easy to agree that such a decision, at least in the mid-term, is sustainable.