A responsible supply chain is one that takes into account all of the social and environmental impacts throughout every step of the supply network. A growing number of companies are working to improve the ethical responsibility of their supply chains through open communication and transparency. In doing so, they hope to improve their sustainability through increased efficiency.
The UN defines sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” Taking this definition into account, if a supply chain is truly sustainable, it is also responsible. However, oftentimes businesses assume that reducing environmental harm comes hand in hand with ensuring ethical responsibility in supply chain management. This article explores what differentiates a responsible supply chain from an environmentally sustainable one, and how companies can work to attain both.
What Makes a Supply Chain Responsible?
Supply chains can be extremely complex, with dozens, even hundreds of providers making up a company’s total network. Recent years have seen a push for companies to improve their supply chain transparency so that businesses and consumers alike can know where a product is coming from and how it’s produced.
Supply chain management is key to ensuring your company’s supply chain is taking responsibility for its social impacts. A recent study conducted by MIT found that only 8.3% of US companies have full supply chain transparency, while one in five lacks factual data on their suppliers’ suppliers. This leaves massive gaps in understanding the entirety of a supply chain and reduces a company’s agency on how their products and services are procured. In many instances, this lack of intervention leads to unethical practices, including worker exploitation, unsafe factory conditions, and worker abuse.
These practices may be legally compliant within certain countries, but it is the responsibility of companies to ensure advances in social efforts are being made.
Businesses that take advantage of supply chain management software can significantly improve the communication of their network, and in doing so can gain much better control over the ethical responsibility of their supply chains.
A transparent supply chain also helps companies improve their sustainability efforts, as better network communication can lead to efficiency. However, this is not always the case, and oftentimes additional efforts are needed to make a responsible supply chain simultaneously sustainable.
Combining Responsibility with Sustainability
The majority of a company’s environmental impacts stem from its value chain. Scope 3 emissions, which encompass all greenhouse gas emissions both upstream and downstream of the company’s direct impacts, can have significantly detrimental effects on the environment, and often go unaddressed when looking at improving sustainability efforts. Improving your company’s supply chain transparency can greatly reduce Scope 3 emissions, or at least bring them to attention. This can include:
Reducing emissions from transportation and shipping
Improving energy efficiency in factories
Creating products with sustainable disposal in mind
Reducing waste and unnecessary steps in the value chain
These steps towards sustainability can be drastically improved through supply chain transparency, but alone they’re not enough to make a company adequately sustainable.
In order to fully combine responsibility with sustainability, companies must be addressing both features simultaneously, rather than assuming one will automatically bring about the other. To merge sustainability with responsibility, a company must continuously make the following efforts:
Establish long-term sustainability goals
Establish long-term plans for continuous improvement and regularly update plans
Task a point-person to ensure sustainability efforts are being made by suppliers
Identify and address areas of indirect emissions in the value chain