Supply Chain Collaboration & Co-Creation

Common Knowledge:
Bring All Suppliers Along for Sustainable, Profitable Change

Despite many big brands working hard to meet decarbonization remits, one key facet remains out of touch on the journey to net zero — engaging the entirety of a supply base.

Brand Provided | By James Butcher | Published 1 year ago | About a 4 minute read

Image: Daniel Torobekov

Whether it’s the impending pressure of government-mandated sustainability targets or a collective sense of awakening, brands large and small are now becoming acutely aware of their responsibilities when it comes to reducing their carbon emissions.

However, there remains a lingering perception that sustainability measures — from responsible procurement and ethically designed products and services to any number of others — are at odds with profitability, something which is typically the main driver for institutional change at boardroom level.

Put simply, this does not have to be the case.

Our research at Supply Pilot has shown that increasing sustainability can be responsible for approximately 20 percent of a business’ financial results, something which can be achieved through a combination of looking closely at how efficiently resources are being used and how small changes can be made in your supply chain.

Both resource efficiency and the principle of marginal gains work best when they are done at scale, throughout the whole supply chain; but with global brands having hundreds if not thousands of suppliers, effective supplier collaboration is no mean feat.

Lead from the front

For boardroom leaders, this is where an element of bravery and sticking your head above the parapet comes into play. Especially for larger brands that haven’t yet made huge strides in sustainability, there is a risk of “greenhushing” — rather than being acknowledged for moving in the right direction, you risk being called out for not doing enough; so, you keep quiet.

Once you have started, the next step is to enact that which sets your business apart — moving from intention to action. When we talk to brands, businesses and retailers, we often use the analogy of quitting smoking — do you want to just talk about quitting smoking or do you actually want to do it? Those who just want to talk about it will find ways of measuring how many cigarettes they smoke and how much they spend on them; but those who want to quit will understand the overall impact and take action.

It’s the same with sustainability — you can have a million and one metrics to measure your total carbon footprint; but without working with your suppliers on how to reduce it, it can be a worthless exercise. But brands of any kind of significant scale will have hundreds and thousands of suppliers, and limited time and resource to engage with them.

Many will apply the Pareto principle to sustainability in their supply chain, focusing most of their efforts on working with the top 20 percent of suppliers. While this can be effective in making the maximum impact with limited resources, there really needs to be engagement at all levels — working to scale to have a noticeable impact throughout the supply chain.

If this doesn’t happen, the smaller suppliers that typically need the most help are left behind. To counter this, companies need to arm themselves with the right tools that allow you to focus on the Pareto, but also enable the conversation with others.

The true key to driving this positive change and moving from intention to action is to engage your whole supply chain in the sustainability journey and bring them along with you. Ask yourself the question: If the top suppliers are looking at the road to net zero as a 30-year strategy, how long will it take the rest?

A journey of a thousand miles

Companies must work with the entire supply chain if they are to be seen as taking net zero and carbon reduction seriously. If not, they risk leaving behind a significant section of suppliers that may well have great ideas for how to address sustainability challenges, but not the method of making them heard.

Bringing everyone along on the journey also has the benefit of shared learnings, where the smaller suppliers learn from the bigger ones and — often more critically — vice versa. With everyone on the same journey, smaller suppliers can incorporate some processes used by larger suppliers that they wouldn’t typically be exposed to; while larger businesses can learn from innovations often introduced by their smaller counterparts, which aren’t as constrained by tradition and corporate structure.

By taking this collaborative approach to supply chain engagement, businesses can be much better placed to hit the ambitious targets that we face. Critical to this is working closely with all suppliers in a scalable way to identify what they can achieve, and how they can work together towards a common goal.

In doing this, sustainability gains can be made immediately — bringing significant, simultaneous benefits for both the environment and business growth.