Wednesday, April 21, 2010

Sustainable Thinking in Supply Chains: A Long way to Go

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Supply chains have the biggest potential to boost sustainable business practices, because supply chain processes control a very large number of enterprise activities including manufacturing and logistics that directly contribute to environmental degradation.
However, sustainable thinking in supply chains is still on the backburner for most of the corporations. A new McKinsey survey found that supply chain management ranked eighth in corporations’ view of where sustainability matters. Only “attracting and retaining talent” trailed supply chain management in this list. It shows that most companies view sustainability more as a marketing fad than a real shift in business environment. While there is a lot of rhetoric, the action is largely missing. According to the survey, “more than 50 percent of executives consider sustainability—the management of environmental, social, and governance issues—“very” or “extremely” important in a wide range of areas,
including new-product development, reputation building, and overall corporate strategy……”. However, when it comes to action, “only around 30 percent of executives say their companies actively seek opportunities to invest in sustainability or embed it in their business practices”. Some more interesting facts from the survey:
When asked about the “Top reasons for addressing sustainability issues”, companies ranked,
  • “Maintaining or improving corporate reputation” as their top most reason to adopt sustainability,
  • “Improving operational efficiency and lowering costs” came third and “Regulatory risk” was in eighth place.
In response to “Where sustainability matters”,
  • “Managing corporate reputation, brands” was on top, with,
  • “Planning investments” and “Purchasing, supply chain management” in seventh and eighth positions respectively.
To read the source article from McKinsey, click on the link: How Companies Manage Sustainability.
Want to know more about supply chain processes? How they work and what they afford? Check out my book on Enterprise Supply Chain Management at Amazon. You will find every supply chain function described in simple language that makes sense, as well as see its relationship to other functions.

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