Best practice for implementing sustainable supply chains

My 6 takeaways from "A more sustainable supply chain" by Verónica H. Villena and Dennis A. Gioia

I really enjoyed reading "A More Sustainable Supply Chain" by Verónica H. Villena and Dennis A. Gioia in the current issue of the Harvard Business Revoew. The article explores the sustainable supply chain approaches of three leading multinational corporations and identifies best industry practices on how to manage sustainability throughout the supply chain. Its a great article and definitely worth a read. As Veronica points out in her LinkedIn post that shared the article, many companies are relying on the “cascading effect” to control sustainability risks and impacts deep in their supply chains, but the good intentions are not translating to actual change where it’s needed.

Consider the embarrassing scrutiny that Apple, Dell, and HP endured not long ago for sourcing electronics from overseas companies that required employees to work in hazardous conditions, and the fallout that Nike and Adidas suffered for using suppliers that were dumping toxins into rivers in China. What’s more, all those scandals involved first-tier suppliers. The practices of lower-tier suppliers are almost always worse, increasing companies’ exposure to serious financial, social, and environmental risks."

The best thing about the article is the practical advice the authors give to multinationals to address the shortcomings. As a sustainable supply chain nerd, I get a lot out of reading new research like this, and thinking about how I can use it with my own clients, but often the "so what" message is missing for me. Not here, Villena and Gioia have explored the shortcomings in current approaches to implementing sustainable supply chain strategies, and provided really practical advice that organisations can use. I have listed my favourite six recommendations below:

1. Include social and environmental considerations (as well as cost, quality, delivery) in the vetting criteria for approving new suppliers.
2. Set sustainability goals that apply across the business (to engineering, R&D, procurement, sustainability etc...) and align the incentives for all functions that interact with first- and lower-tier suppliers.
3. Provide sustainability training to procurement personnel to enable them to properly pursue supplier sustainability on behalf of their firms
4. Create incentives for procurement staff to meet sustainability objectives, reward them for hitting all three Ps—that is, not just cost, quality, and delivery goals but also social and environmental ones.
5. Engage directly with the procurement staff in your first tier suppliers, inform them directly about your sustainability requirements and provide them training if they need it. Then they will be more able to communicate the requirements on to their own suppliers, and monitor and enforce them.
6. Also, directly engage the top executives in your first-tier suppliers and explain the importance of building a sustainable supply network, with the goal of motivating them to catalyze the dissemination of sustainability requirements to lower-tier suppliers.