Supply Chain Sustainability a Priority, But Achieving it Remains a Challenge

sustainable supply chain

The majority of executives see supply chain sustainability as a strategic priority, but few organizations actually have a plan in place or a dedicated team to create a greener supply chain, according to a recent study by West Monroe Partners the Supply and Value Chain Center of Loyola University Chicago.

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The study found 51% of executives in North America from a variety of industries, including consumer packaged goods and retail, said having a green supply chain is a top concern. Yet just 37% of these executives said their company has a dedicated team to tackle green supply chain improvements.

“It is important for organizations to consider whether sustainable practices should be an option or the norm,” the report said. “In other words, should sustainable business practices, recycling, reduced carbon emissions, green facilities and other initiatives be business as usual? Pioneering organizations have a tremendous opportunity to create competitive differentiation by becoming early adopters. As our survey illustrates, few are embracing more than the basics when it comes to implementing sustainable business practice.”

Supply Chain Management Review recently conducted an informal poll of its readers on the importance their companies place on sustainability that showed similar results to the West Monroe study. A total of 70% of the SCMR survey participants said sustainability was a top priority. Specifically, 40.6% said it was “very” important and about 30% said it was “extremely” important.

However, the survey also identified a number of obstacles keeping their organizations from improving sustainability. Thirty-six percent of participants identified achieving any payback from sustainability projects as an obstacle, while 13% cited a lack of resources, 12.5% cited lack of buy-in and 12% pointed to lack of a budget for such projects.

Motivators Vary

The things motivating companies to adopt sustainable supply chain practices vary, however, according recent studies. The SCRM survey showed 71% of participants saw the potential cost savings a greener supply chain could create as a top motivator. The West Monroe report identified an improved brand image as a main motivator. These executives see creating a more sustainable supply chain as a way to stay competitive, the study said.

“What we hear from our clients and the business community is that sustainability can be a clear differentiator and source of competitive advantage, in addition to its other benefits,” the West Monroe report stated. “For example, one of our clients was able to reduce carbon emissions by 15% — something that gave them an edge against competitors.”

AT&T is one company that recently announced a push to reduce its carbon emissions. In November, the company said its goal was to enable carbon savings “10 times the footprint of its operations by 2025.” AT&T said its goal will be achieved in part by working with the industry to develop and promote sustainability efforts that will “transform the environmental and social impact of technology supply chains.”

Siemens, too, recently announced it plans to invest more than $108 million to cut carbon emissions in half by 2020. By 2030, the company also said it plans to be climate neutral, eliminating 100% of its carbon footprint.

A Continuing Trend

The rise of sustainability practices was something Spend Matters predicted for 2015. We specifically called out European organizations for leading the way in sustainable procurement practices this year. Unilever, which is based in the U.K., reported this fall it had become a “zero landfill company” in Europe, meaning zero waste from its facilities in Europe are going to a landfill. Unilever announced its plans to continue this effort around the globe.

It’s clear companies plan to continue to tackle sustainability issues in the year ahead. However, as recent research has shown, putting the right teams, plans and budget in place to hit green supply chain goals will be key in 2016 and beyond.

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