Using Your Supply Chain for Good (and Increase Profits)

This past summer, I was a finalist for a company stewardship position with a large food manufacturer in the Pacific Northwest. Although they purportedly liked the combination of my community engagement, philanthropy, and corporate environmental compliance background, it was my lack of supply chain experience that ultimately resulted in them favoring another candidate over me. It was with this lesson in mind that I enthusiastically attended the Sustainable Brands New Metrics conference in Philadelphia. My aim was threefold: learn everything I could about the interface of supply chain with sustainability/corporate responsibility; learn about the latest methods of measuring success and progress; and network with top sustainability and Corporate Social Responsibility (CSR) personnel from companies such as BASF, Johnson & Johnson, Eileen Fisher, Dell, McDonalds, Dr. Pepper/Snapple, Genentech, and many others.
 
Lucky for me, most of the first day of the conference allowed me to dive deep into a bootcamp around supply chain. 
 
Let’s start with the basics. A “supply chain” is a network between a company and its suppliers to produce and distribute a specific product. The supply chain represents the steps it takes to get the product or service to the final customer. It is comprised of vendors that supply raw material, producers who convert the material into products, warehouses that store, distribution centers that deliver to the retailers, and retailers who bring the product to the ultimate user. During each of these steps, there are opportunities to apply your CSR and sustainability screens to your supply chain.
 
Utilizing CSR/sustainability screens in one’s supply chain results in demonstrable benefits or Return on Investment (ROI). These can include greater productivity (increased employee productivity, reduced turnover, reduced operations and supply chain costs, reduced materials costs), risk reduction (increased compliance with regulations leading to reduced fines and regulatory costs, increased reputation, reduced operational costs), and growth opportunities (innovation, increased revenue, and increased market and brand value).
 
There are a variety of methods and tools to screen one’s supply chain for CSR/sustainability progress and thus, enjoy the benefits and ROI. Additionally, utilizing these screens within a supply chain can enhance the value of CSR, strengthen stakeholder relations, keep pace with policy developments, and help a business reach corporate vision objectives, including United Nations Sustainable Development Goals priorities.
 
As an example, one way to utilize a sustainability screen on one’s supply chain that can drive both environmental and economic goals is participation in the Carbon Disclosure Project (CDP). CDP is a not-for-profit charitable organization that runs the global disclosure system for investors, companies, cities, states, and regions to manage their environmental impacts around climate, water, and deforestation (NOTE:  next year CDP will include sector-oriented disclosures around energy, transportation, materials, and agriculture/land use). In fact, 25% of all global carbon (from over 6,000 companies) has been disclosed and recorded by CDP.  In recognizing the tangible business benefits of disclosure and action, companies are raising their ambitions and taking meaningful steps to address climate change, deforestation, and water security. This ensures long-term sustainability and profitability, as well as equipping companies to respond to regulatory and policy changes, such as the Paris Agreement. In the U.S. alone and based on current disclosures, $12.44 billion in savings will be realized by emission reduction projections by 2,151 supplier respondents with a minimum savings of over $100,000 for each company.
 
In addition, there are a number of software/on-line tools to help businesses maintain responsible sourcing, assess risks, and analyze traceability, compliance, and performance with regard to their supply chains. One such tool is Supply Shift; another is Source Map. The American Production and Inventory Control Society (or APICS) also has tools to track supply chain commitments around cattle, timber/pulp (i.e. deforestation), palm, and soy.  Another resource that assists businesses with sustainability in the supply chain is from The Sustainability Consortium. 

All of this information around supply chain (as well as a plethora of information around measuring and improving employee engagement and creating purpose in the workplace to do the same) was floating around my head as I boarded my Southwest Airlines flight in Philadelphia, passing a sign advertising their partnership with Community Signature Blend Coffee. It was only after getting a cup of coffee on the plane that I realized the relationship between Community Coffee was more than just some philanthropic endeavor or publicity stunt. It was actually a supply chain decision that not only impacted supplier stakeholders (and communities from which the coffee was sourced), but also considered customers and their innate desires to feel good about their decision to fly Southwest. When coupled with other citizenship programs, customers could form more emotional bonds to the airline, leading to higher profits, thus demonstrating the impact that supply chain decisions can have on a business’ bottom line.
 
In the end, the Sustainable Brands #NewMetrics conference helped me gain a tremendous amount of insight into the utilization of supply chains to achieve both economic and sustainability/CSR goals for a company. I now have a whole host of new tools in my toolbox (and connections to many kind, experienced visionaries in the space) to help me as I continue to assist clients develop strategic and integrated CSR programs. And at least next time I’m interviewing for a position, I’ll be able to drop some supply chain knowledge during the interview.