The Global Trend of Sustainability in Supply Chain Management
Managing the unavoidable external circumstances that obstruct supply chain productivity are typically the result of an unforseeable events such as an economic recession, a natural disaster, or new laws that change supply chain regulations. There is a resolution making to the these circumstances that organizations are beginning to embrace.
Supply chain sustainability is an initiative first introduced by the United Nations in 1992. It's called Agenda 21 and in theory it suggests to minimize or eliminate certain risks associated with economic, environmental and government influences that can impact the lifecycle of products or impact the efficient performance of a service.
The primary objective of supply chain sustainability is to protect the value and integrity of the supply chain, while maintaining long-term environmental, social and economic value for the organizations responsible for transporting products and services to market.
In other words, it provides organizations an extra layer of protection in the event of a natural disaster by covering any losses that their insurance policies do not cover, while at the same time offering business owners cost cutting incentives to adopt Agenda 21 policies into the mangement of their supply chains.
From the outside it seems like a fair and profitable business solution that can't lose. From subsidiaries to suppliers, various organizations can continuously evolve their supply chains to reflect their own unique business strategy while Agenda 21 puts a little extra coin in their pockets and helps them sleep better at night knowing their products are secure within the oversight of UN authority.
This is how it works:
Supply chain sustainability integrates higher efficiency in productivity
It uses an optimized system to control the supply chain
The system is designed to implement and work according to specific strategies of each organization
The end result being the value that it creates. This is why supply chain sustainability has become the new trend within some of the worlds leading corporations.
Globally, organizations are embracing it for the value it creates in manufacturing and production, its ability to maximize pricing power, and the network it puts you in which helps develop new partnerships and create cost-effective advantages.
The United Nations has called Agenda 21 a resolution to the challenges the world must overcome if we are to sustain life on our planet. They define it as "a comprehensive plan of action that looks to create a globalized effort of business owners and corporations, with national, state and local governments making a committment to reduce their impact on the environment".
Within Agenda 21, sustainable development initiatives suggest corporations set the example and begin implementing sustainability measures into their supply chain operations and logistics procedures immediately.
Have no doubt, despite millions of people protesting Agenda 21, and many local and state governments vowing to ban it from their jurisdictions, the influence of sustainability is beginning to make a impact. It's here to stay whether we like it or not. It looks to become the most important factor behind competitive advantage and the framework for any successful business model.
Numerous multi-billion dollar corporations have already implemented sustainability measures into their business practices. McDonalds, Coca-Cola, Apple, and British Petroleum are just a few of the fortune 500 companies developing and embracing the standards and guidelines set forth by Agenda 21.
Globalization has provided the United Nations the justification to influence big business to adopt sustainability measures and completely integrate them into their operational and supply chain strategies.
Corporations have a favorable opinion of the additional oversight mainly because sustainability measures are creating huge efficiencies in their supply chain by reducing costs. The requirements of sustainability compels more responsibility in the management of inputs, which are lowering purchasing costs and leaving supply chain managers wondering why such action didn’t come sooner.
“It took 23 years to offer a truly profitable incentive that would influence organizations to take the the steps toward minimizing their environmental footprint” is what BP’s Executive Vice President of Safety, Bob Fryar had to say when asked about sustainability and Agenda 21. “More and more companies are beginning to grasp the idea of sustainability and the operational outputs that create huge benefits.”
British Petroleum’s position is not unlike other corporation who passively accepts the initiatives of Agenda 21. In most cases, they base their compliance on the profits made available through cost reductions within the conditions of purchasing.
While cost effectiveness does compel companies to embrace Agenda 21, other incentives exist which have influenced business owners to integrate the UN policy into their business model. Organizations recognize Agenda 21 as a means of improving risk management and safeguarding their investment against unforeseeable environmental problems and poor economic conditions.
Supply chain sustainability has business owners taking a second look at the mitigation of circumstances and the high responsiveness to absorbing significant risks within their supply chain. In their evaluation of Agenda 21, they simply see an improved method of controlling cost, and protecting their investment by helping reduce risk.
Social and environmental issues are rare, sporadic at best. While a few pieces of pro-corporate legislation didn’t hurt, Agenda 21 has quickly become the new mission statemet, dictating how businesses define strategy and conduct operations.
Companies have no objection to the UN resolution, in part because ignoring sustainability could potentially damage their image, brand and profitability. The last thing they want is to have 5 minutes of public denouncement destroy a reputation that took years to create. In the end, it’s all about market share and profits.
Sustainability is especially important to companies that serve customers who attribute value to sustainability. It helps create efficiency in lead times and prompt delivery of products from the supply chain to the customer. Its initiatives have become crucial to many companies who manufacture products or services, and are highly dependent on quality inputs rather than commodities only available from a minimal amount of suppliers.
Their is significance in pricing power, market share, brand recognition, reputation and consumer, as they all represent far too much value to lose if sustainability measures are rejected. The protections it offers business owners shields risk within their supply chains, providing profitability where there used to be loss.
Agenda 21 covers delays and ensures management systems are in regulatory compliance with supply chain sustainability. With advantages like these, any evidence that suggests sustainability measures will eventually destroy the integrity of capitalism have little ground to stand on to prove their claims.
