When companies project their future cash flow, it’s unlikely that any of them budget for sustainability shortcomings. How much money should be allotted to worker injuries due to safety oversights? How much do child-labor violations cost? When does air pollution become too expensive? The budget for these and similar categories should be zero, because organizations should be doing whatever they can to practice sustainability in order to prevent these issues from disrupting business. Fortunately, proper supply chain management can be the most impactful way for businesses to concentrate on sustainability efforts.
Supply Chains Must Adapt to a Growing Consumer Market
Population growth is a double-edged sword for businesses, especially for those dealing in consumer products. The global consumer market is expected to add another 1.8 billion people by 2025. That’s a lot of spending power that every company wants a piece of, however, current unsustainable business practices cannot scale with that growth. Instead, companies must find a way to reduce their carbon footprint as an inverse trend to consumer growth.
Optimizing supply chains for sustainability is a smart decision for any organization for two reasons. The first is that supply chains are one of the biggest contributors to social and environmental impacts. Whether it’s during the manufacturing process, transportation and logistics, or end-of-life of a product, supply chains account for more than 80 percent of greenhouse-gas emissions and more than 90 percent of the impact on the environment and society. Knowing this, the second reason to focus on supply chains is that the damage supply chains do could reflect back via environmental repercussions. Depending on the business, a drought, deforestation, or overlooked human rights violations could lead to costly disruptions and a permanently damaged reputation.
Resolving Sustainability Issues in Supply Chains
One of the biggest obstacles in any supply chain is visibility. The bigger the supply chain, the harder it is to know what every supplier is doing. Mapping out the entire supply chain is key. Internally, standards must be set to establish a measurement framework that suppliers will be judged against. Then a vetting process must begin to ensure that suppliers are meeting the standards of the supply chain.
Once these processes are in place, supply chains can discover where their sustainability problems lie. Do suppliers have the correct insurance and enough of it? Are contractors certified to perform the work they’re hired for? Can the supply chain count on quality work to be performed? These questions and more can be answered only after proper supply chain mapping and vetting.
Avetta’s Role in Sustainable Supply Chains
Avetta supports clients in their sustainability and corporate responsibility initiatives by helping them choose suppliers who are aligned with their beliefs about environment, philanthropy, and ethical labor practices. With a focus on environment, occupational health, and safety at work, Avetta’s management platform, supplier prequalification, and auditing services enable the prevention of incidents or accidents that could result from a lack of visibility or oversight.
Learn more about how Avetta can help build Sustainable Supply Chains.