Supply Chain FAQ
What is supply chain sustainability?
There is a growing movement across all corporate sustainability sectors to improve the environmental and social performance of the supply chain as a way to improve opportunities and limit risks. A green supply chain has the potential to impact the bottom line of an organization while simultaneously improving competitive advantage.
What is a supplier sustainability scorecard?
Sustainability scorecards are a fast rising global trend across the supply chains of many industries. Scorecards are used by buyers to assess a product’s and a supplier’s carbon footprint by measuring energy use and other emissions. Scorecards come in all shapes and sizes and a variety of industries are now implementing them – technology, government, retail, healthcare, telecom, outdoor – just to name a few. Most are known simply as scorecards while others are called surveys, assessments, or codes of conduct. The most well-known scorecard program is the Walmart SSA (Supplier Sustainability Assessment, also known as “The 15 Questions.”
Who is using scorecards?
Non-governmental organizations (NGOs), government, trade associations, and multinational corporations’ shareholders and investors are asserting mounting pressure to improve supplier sustainability efforts, reduce emissions across the supply chain, and disclose this data. Large buyers (such as Walmart, IKEA, P&G, the U.S. Government, and Ford) are setting the pace for these scorecards with smaller buyers starting to following suit.
Why are organizations concerned about a green supply chain?
Pressing issues such as climate change, water scarcity, energy risk, and natural resource management now affect the buying decisions of multinationals and governments with large supply chains. Buyers want to understand a product’s impact throughout its lifecycle. They want to know how a product is made and how much energy is used to create and transport it across the globe. They want to reduce risk, save costs, and eliminate waste in the supply chain.
What should suppliers do to prepare for a scorecard request?
Understand Customer Motivations: Large buying organizations implement supplier sustainability programs because they believe the program will result in some business value such as cost-reduction, improved customer loyalty, or risk mitigation. Companies that work with their customers and industry experts as they respond to scorecard requests will ensure their actions provide value to both buyer and supplier.
Consider Values Beyond Compliance: Suppliers that respond to scorecard requests generally fall somewhere on the corporate sustainability spectrum between leader and reluctant complier. Reluctant compliers generally perform a simple calculation involving customer/buyer pressure and cost when deciding on a desired sustainability score and potential outcomes. This approach leaves suppliers with little to no long-term benefit from their time and money. In contrast, the sustainability leader understands that supply chain sustainability programs will only succeed if they provide lasting value for the company. These companies analyze requests in the context of their specific business environment to identify actions that can save money while simultaneously improving customer satisfaction.
Build Support From the Top Down: Implementing any kind of new business strategy requires strong support from senior leadership, and sustainability is no different. Executives don’t need to commit to recreating their business overnight to succeed at sustainability, but they do need to believe in the business case behind it and support its champions over the long-term. Nearly all sustainability projects will require participation from many, if not all, company departments. Lack of support from one key area in a company can cause a highly valued sustainability project to fail before it gets off the ground. Building internal support from senior leadership will ensure teams understand the larger story behind sustainability projects and facilitate efficient project execution.
