2Sustain

Despite the downturn in the economy, leading companies across all industry sectors are continuing to incorporate sustainability into their overall business plans. However, a recent survey of supply chain executives by Research and Markets found that sustainability is not yet a core part of most companies supply chain strategies. Instead, sustainability is a mid-level priority, behind improving service to customers, reducing supply chain risk, and managing and optimizing an extended supply network.

That’s unfortunate –because the majority of virtually every company’s carbon footprint is embedded in its supply chain, and  because study after study has shown that sustainable supply chains are fundamental to meeting financial, regulatory, and broad-based CSR objectives. (In other words, once you start to focus on sustainability, you’ll also be mitigating risk, insuring compliance, exercising better supply chain management, etc.) Globalization is driving ever-expanding supplier networks, and now more than ever, companies need to focus on supply chain sustainability in order to meet the challenges of today’s demanding business environment.

Here are a few more key findings from the survey:

• Three-quarters of respondents believe that their company’s environmental stance will have a material impact on customer relationships within the next three years, though just over a third of them feel the issue is material with customers today.

• The most popular sustainable supply chain activity this year was creating energy efficiency.

• 70 percent of respondents said they had already implemented a commitment to recyclable and upgradable product design.

• Fewer than half of the respondents are using effi cient, low-emission vehicles, are working with transportation providers that do, or are tracking the environmental impacts of transporting their products. Many companies have plans to invest here in the next one to two years.

• Many companies have not yet integrated the systems that manage their environmental information with those that manage their supply chain activities, presenting a hurdle for those companies seeking to make environmental concerns a factor in supply chain design and operations.

• A minority participate in third-party sustainability reporting initiatives such as the Carbon Disclosure Project. But the vast majority (80 percent )said they will be reporting in the next 12 to 24 months.

• Respondents said  the biggest barriers to greater sustainability in the supply chain are a lack of a defensible financial rationale and a challenge sorting out conflicting priorities.

• Nonetheless, the majority of respondents feel that greening their supply chains will pay off over time, in some combination of brand enhancement, efficiency gains and cost savings.

• Overall, the survey found that supply chain spending plans remain fairly firm this year.  Most respondents said that their 2009 supply chain spending will increase versus 2008 spending levels, by an average of 11 percent. In aggregate, respondents say they are increasing spending by 3.8 percent.

More details about the Research and Markets survey are available here. For tips on managing information in sustainable supply chains, take a look at this earlier post.