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Moving beyond "minimally acceptable" sustainable supply chains…

A lot of people are emphasizing the need to drive sustainable supply chains.  “If we have a more sustainable supply base”, we hear from advocates, “…it will cost less, and we will be better corporate citizens.”

I’m not sure I buy this line of thought, although I would certainly put myself squarely in the camp of someone who is for“sustainable supply chains”.  Being green is all well and good, but in the process, it is also important to get a sense of what is “minimally acceptable” , and what is a “home run”…

I recently spoke with a Chief Procurement Officer, who recalled his experiences in driving green manufacturing practices and labor conditions in the semiconductor industry.  “Years ago the electronics industry aligned on an Electronic Industry Code of Conduct.  We would do a heat map around auditing suppliers, essentially a “check the box exercise”, and then declare that “we are sustainable!”  So now we’ve gotten a bit better – we have people who do self-assessments in the supply base, and we still put out a heat map, we do a little more due diligence – and so we think we are okay.”

In the opinion of this executive – “this is the minimal acceptable approach”.  In fact, becoming sustainable needs to be a much broader intention, which begins first and foremost around the value to the stakeholder.  Many organizations today are striving to be green to cater to potential investors (but NOT internal stakeholders).  Private equity funds are starting up “green stock funds”, designed to cater to those who prefer a “green portfolio”.  Some companies have also launched brand redesigns to exploit the green consumer movement.

But in fact, few companies have really driven a green agenda around what the stakeholder is trying to deliver.  Being minimally acceptable is a cop-out.  But driving a solution around what is really NEEDED, and being able to define that need in terms that makes it absolutely critical to drive a different solution is at the core of what it means to be sustainable.  This is a very different question that drives a very different set of decision criteria, and which results in a very different set of outcomes.

This executive noted that he worked for a solar company that produced solar panels at one point in time.  As a supply chain executive, this company did business with Maersk – one of the world’s biggest shipping lines, that burned tons of crude oil products in their operational business as a matter of course.  “By comparison, they had a much better sustainability program than we did!  We were a renewable energy company, and our idea of sustainability was recycling paper!”

Look around – most companies are doing what is minimally acceptable.  Putting in scorecards, doing some measures, filling out WSJ assessment surveys, and putting in programs to get “cookie points”.  But how many are really driving sustainability back to stakeholder value?

The executive I spoke with concluded with another interesting thought:  “ It seems like the people with the burning platform are the most innovative when it comes to supply chain sustainability.  Rather than the burning platform being about the public image, it is about the business.  Are we trying to do the right thing for the business and for the community – and where are we trying to get to?”