By now, organizations don’t have to be told about the benefits of sustainability. Most companies understand that protecting the environment and their workforce will, in turn, protect their revenue. What happens, however, when not every link in the supply chain sees the value of sustainability? Then it’s time for companies that do recognize the advantages to engage with the suppliers that don’t.
Six Steps in the Supplier Sustainability Cycle
1. Set Expectations
There should be more to a relationship with a supplier than a service rendered; the supplier should conduct business in accordance to an acceptable standard. As such, organizations should draft a Code of Conduct and communicate sustainability standards to the rest of the supply chain. The Code of Conduct should be integrated into contracts, and Key Performance Indicators should be set to maintain a high standard.
2. Map the Supply Chain for Risk
The entire supply chain needs to be mapped so that the risk manager can assess and segment the supply chain by risk potential. In this manner, the organization has full visibility on the scope of the project, and efforts can be focused where they can have the biggest impact.
3. Assess Sustainability Performance
Just because a particular segment may pose the most risk doesn’t mean the risk hasn’t already been mitigated by best safety practices. That’s why existing supplier sustainability processes need to be considered to determine the actual risk.
Once gaps and deficiencies are identified in the supply chain, it’s time to work with the supplier to remediate their shortcomings. Depending on how the supplier reacts, this may be the time to replace the supplier or procure secondary and tertiary sources in the event of a disruption at the primary supplier.
5. Training and Culture Building
It doesn’t make practical sense to constantly scrutinize every supplier for sustainability compliance. Instead, the culture at the supplier needs to change to adopt sustainability as a constant goal. This can be achieved by training and investments in management capabilities. Other organizations in the supply chain should also help support non-compliant suppliers.
6. Develop a Cadence for Evaluation
An organization should feel comfortable enough with its suppliers that constant monitoring won’t be necessary, but that doesn’t mean reviews should never happen. Instead, supply chain partners should develop a review cadence that works for all parties so that blind spots can be identified, and constant improvement can be promoted.
Once this cycle completes, it should be started again. By continually setting standards, mapping the supply chain, and evaluating suppliers, an organization can ensure that they are working within the most sustainable supply chain as possible. Fortunately, businesses can speed up this process by building their supply chain with suppliers, contractors, and vendors that have already been vetted. With Avetta's supplier compliance management software, you can rest assured that suppliers have the proper certifications, insurance, and other necessary documents to fulfill work to the standards your organization sets. See how joining the Avetta network can help you build a sustainable supply chain.