How the pursuit of sustainability is changing the supply chain
You don’t have to be particularly interested in politics or social sciences to know that there is a jolt going through Germany and Europe. The Fridays for Future movement has evolved from a small group of students into a global movement. The movement’s call for the creation of a political framework for a more sustainable economy creates enormous pressure on the economy. The first episode of our webcast (https://adconia.de/publikation/) deals with the challenges facing the designers of procurement and supply chain.
Social responsibility is certainly not something fundamentally new that has yet to establish itself. Rather, most companies have already integrated corporate social responsibility into their guidelines for years. Since 2018, capital market-oriented companies have been obliged by law to provide information on all non-financial aspects of their activities within the framework of CSR reporting. However, social responsibility and thus also the transparency of reporting have so far always ended at the limits of their own companies.
Due to the demands of society and the hardly foreseeable consequences of climate change, the United Nations, the G20 and the G7 countries have put sustainability on their agenda. Instead of just reporting the CO² Footprint, companies are increasingly being asked to align and review their entire supply chain with sustainability criteria.
Procurement is the interface to the supplier market and in this function is responsible for the design of supply chains. Therefore, it is only natural that it will be the task of procurement, together with management, to meet the sustainability requirements and design the processes accordingly. In the short to medium term, we see six fields of action with which procurement and the supply chain have to deal, from SMEs to corporations:
- Sustainability strategy: Definition of a sustainability strategy derived from vision and mission and backed by clear guidelines and measures
- Risk management: further development of risk management regarding potential risks such as human rights, corruption or environmental protection
- Supply chain transparency: Creation of increased transparency across the entire supply chain including continuous monitoring and reporting
- Recycling: Implementation of a recycling concept in accordance with the sustainability strategy and ensuring compliance with recycling regulations within the supply chain.
- Cultural change: Change management to change the awareness of the entire workforce. Managers as communicators and role models
- Supplier development: Further development of Supplier Relationship Management into a partnership-based approach to sustainability targets
Most of these fields of action do not involve a fundamental reinvention but rather the further development and expansion of already known and often already implemented instruments. The implementation of these fields of action does not contradict the stakeholder demands for cost reduction and EBIT increase. On the contrary, the usual goals can even be supported by the right sustainability strategy. Listen to our current webcast to learn more about the challenges and our quick check.
The prerequisite for this is a structured approach to defining strategies and goals as well as the identification of prioritized fields of action. With our experience from strategy projects in purchasing and supply chain, we support companies in the development of a sustainability strategy.
Gregor van Ackeren
Managing Director, ADCONIA GmbH (Oberhausen)
Consultant, ADCONIA GmbH (Oberhausen)