Published in PASA on the 27th April 2015
Whether organisations managed their supply chains in a sustainable way, was the subject of a national study in 2014. ‘The Sustainability and Supply Chain Divide: insights into the gaps, challenges and opportunities for Australian companies’ was undertaken to shed light on how ‘green’ supply chains are in Australia.
The research clearly identified that there were four distinct categories of organisations when it came to sustainable supply chain management. The four distinct groups of organisations that emerged were:
Walking the talk: those committed to best practice sustainable supply chains and often first-movers in an product or industry category – who also used this attribute to differentiate themselves in the market
Stalking the Walkers: the classic ‘follow the leader’ organisation that follows the ‘Walkers’ in their industry.
Chalking up the wins: those on the path picking off specific ad hoc projects.
Talking the talk: the laggards.
Last week, in Part 1 we looked at ‘Walking the talk’ and ‘Stalking the Walkers’. Now for the next two distinct groups:
- Chalking up the wins
“We have done some great things with some of our supply chain, but we undermine what we do by not having a whole of suppliers approach.” Supply Chain Manager
These organisations are driven by risk or issues management as their rationale for addressing sustainability in the supply chain. They may have ‘had a supply chain issue’ in the past that had negatively affected their brand or business and so are likely to be focussed on one or two risk areas such as safe and fair working conditions, reducing the impact of packaging and sourcing sustainable materials. Think palm oil, Bangladesh clothing manufacturing and organic certification.
‘Chalkers’ are struggling to identify where their supply chain responsibilities begin and end – except in the obvious connections. For this reason, they are more likely to be focussed on large Australian suppliers with little attention for the bulk of their other, smaller suppliers or sub-contractors. Most felt powerless to influence their international suppliers.
They have some systems and processes in place, such as publicly-available supplier codes of conducts or ethical purchasing policies. However, validating these claims and data collection is arduous for these companies, as they largely rely on manual systems or unregulated compliance.
The sustainability team has moderate influence over the internal purchasing process or processes and view contract negotiation time as the key time to change supplier-reporting requirements. Signing contracts or codes of conduct to comply, however, is often where the validation ends. Most have limited or moderate impact on executive or board-level of the organisation and most felt that their performance was typical of their industry.
These organisations are more likely to be involved in healthcare, manufacturing, some areas of government, distribution and those companies with fragmented supply chains and supply chain management.
- Talking the talk
“We have over 15,000 products being supplied to us, coming from hundreds of suppliers from here and overseas. I simply don’t know where to start or who to talk to.” Sustainability Manager
These organisations clearly identified themselves as being at the start (or at compliance stage) of their own sustainability journey. While some of these companies are beginning to start to look at their supply chain, they feel that they need to be further down the path themselves before engaging with their suppliers. As one respondent said: “we don’t have our own house on order, so how can I make demands on our suppliers?”
These organisations are likely to have limited sustainability experience, with the sustainability professional unlikely to be included in the internal procurement process or involved with the supply chain. “I don’t know anything about our supply chain and I certainly don’t have the time to do anything about it,” said a sustainability manager. They are likely to have little or no visibility of supply chain behaviours, except in energy or waste management, and are likely to be overwhelmed with internal reporting and engagement. Data management practices are manual or inefficient and while they are likely to have codes of conducts or procurement policies, these are still waiting for approval, support or implementation.
From those companies interviewed it was the general consensus ‘Talkers’ were more likely to be private companies, some areas of healthcare or some not-for-profits.
So which category does your company fall into? If it’s compliance Talking or ad hoc Chalking, then it is time to start taking steps towards prioritising sustainability within your supply chain management. And why? As the report clearly shows, customers are clearly demanding more transparency around supply chains and demanding a more ethical and sustainable purchasing practice.
Tania Crosbie is a sustainability consultant who runs The Crosbie Collective. The Crosbie Collective improves your organisation’s profitability, reputation and resilience by delivering sustainability communications, training, strategy, leadership, supply chain, research and engagement.
To obtain a copy of ‘The Sustainability and Supply Chain Divide’ NSW Office of Environment and Heritage report, email Tania on [email protected] or call her on 0412 149624.