Corporate Supply Chain Sustainability Strategies & Programs: Count as a Cost or Strategic Investment? Consultant to Large-Cap Companies Provides Some Helpful Answers for Corporate Managers

by Hank Boerner – Chair and Chief Strategist – G&A Institute

Question:  Does a corporate sustainability program “cost” (and thus shows up on the “expense” side of the ledger) or are there measurable “returns” on the investments that companies are making to develop or adjust strategies, assemble teams and launch sustainability programs? (Especially those that have set goals and where progress is measured and then publicly reported.)

We frequently hear this kind of discussion in the meetings and phone calls we have with corporate managers, especially those at companies where management is now considering what to do or perhaps just starting out on their sustainability journey. 

Senior managements often begin internal discussions with the questions for their managers:

Who is asking for this? What will this cost to respond? 
And where is the ROI for our efforts?

Working with client organizations we see the firms’ customers and clients asking their supply chain partners about their respective sustainability efforts and requesting extensive ESG information, directly of the firms (with detailed questionnaires) and through third parties such as EcoVadis and CDP Supply Chains.

The questions are coming faster and more detailed than in previous years.

The important customer with a range of sustainability-themed “asks” of course considers their supply partners to be part of their (the customer’s) overall sustainability footprint – and so the questions.   

Corporate sustainability leaders understand the importance of the “ask” and provide detailed answers to their valued customers.

If the questions internally at the supplier company are along the lines of: “why” or “who is asking” and “what will this cost us” or “what is the return”…consider: 

“Economic longevity and social and environmental responsibility are increasingly two sides of the same coin. Consumer surveys show that many favored brands are focused on sustainability.  And, removing waste and emissions from the supply chain goes hand-in-hand with efficiency…both boost the corporate bottom line.”

That’s some of the essence of a timely report – “Sustainability: The Missing Link” – that was authored by the Economist Intelligence Unit and sponsored by LLamasoft, an Ann Arbor, Michigan-based supply chain management software provider serving such clients as Ford Motor, 3M, Intel, Bayer, and Kellogg’s.

Highlights of the report and important background come to us this week from Supply Chain & Demand Executive magazine, with an interview with Dr. Madhav Durbha, Group VP at LLamsoft. 

The interviewer explores how sustainability considerations cause companies to think differently about their supply chains and examples of global companies are managing the triple bottom line.

The questions asked of Dr. Durbha by the magazine’s Amy Wunderlin

Why are many supply chains still doomed to inefficiency and environmental waste?  What are the top mistakes companies often make when trying to make their supply chain green? How many organizations strike a balance between profitability and sustainability despite current economic uncertainty? Why are addressing sustainability needs through the entire supply chain important? (There are more questions and more answers in the interview.)

An important take away from the interview: 

“As long as organizations think of cost reduction [efforts] and sustainability being at odds, they may be missing out opportunities to accomplish these dual objectives.”

There are numerous helpful hints for you in this week’s Top Story. 
SDC/Supply Chain & Demand Executive magazine, published by b-to-b media & intelligence company AC Business Media, covers warehousing, transport, procurement and sustainability, among many topics. Subscriptions to SDCExec.com are free. 

This Week’s Top Story

Profitability or Sustainability? It Doesn’t Have to be a Choice
(Wednesday – March 27, 2019) Source: Supply and Demand Chain Executive – Dr. Madhav Durbha of LLamasoft offers insight into why–with the proper tools–organizations don’t need to choose between profitability and sustainability, despite current economic uncertainty. 

Here is the link to the report: http://www2.llamasoft.com/Sustainability:TheMissingLink-NA