Supply chain · 23 February 2016

What does the sustainable supply chain look like in 2016?

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Conversations around ethical practice in the supply chain will continue for small business this year
In his latest column for Business Advice, chief strategist at GT Nexus and supply chain guru Kurt Cavano tackles the complex issue of sustainability for small business.

In 2016, firms will need to consider supply chain transparency and ethical best practice more than ever in an increasingly globalised business environment.

In the years following the Rana Plaza Factory disaster in 2013 pressure has mounted for businesses particularly from millennial consumers to provide greater insight into the working conditions of manufacturing facilities in emerging markets.

There are now even larger conversations around environmental impact opening up, whilst sustainability continues to be a hot topic. At the recent COP 21 climate conference in Paris, clothing companies, called out as one of the most hazardous industries for environmental impact, were asked to reconsider their high carbon footprints.

In 2016, conversations around ethical practices in the supply chain are likely to continue and businesses will need to consider how they can provide consumers with the visibility they are calling for, whilst reducing their environmental impact.

The move towards sustainability

Ethical sourcing and sustainability, business have realised, is not just the ideal of a few ethically minded campaigners but a driver of real long-term growth and profitability. Understanding the importance, some companies have made sustainability a core ambition and a powerful differentiator. These companies are leading by example.

Analysing thelife cycle of jeans, LevI Strauss & Co found that 3, 800 litres of water were used and 33.4 kg of Co2 were produced in the process of making a pair of jeans. In response, it optimised trucking routes to significantly reduce carbon emissions, implemented a manufacturing process that uses only recycled water, and developed a product line that reduced the water used in finishing by up to 96 per cent.

Levi’s has also offered financial incentives for suppliers to comply with its environmental, health, safety, and labour standards in theirterms of engagement. Patagonia, meanwhile, has an ongoing footprint chronicles? on the firm’s website that allows customers to see exactly where products are made.

Moreover, following last year’s COP 21 summit, retailers like Ikea and Marks & Spencer vowed to reduce carbon impact, coinciding with a mandate that businesses need to seriously evaluate how operations are impacting climate change. China, meanwhile, was sanctioned for the high level of pollution the country created in manufacturing.

Although there is an undeniable movement towards focusing on sourcing, ethical practices, and sustainability with consumers leading the charge not everyone is joining in. There are still far too many stories of businesses allowing appalling working conditions, or allowing illegal materials to enter supply chains. These practices need to be eradicated. As more businesses realise the financial and reputational implications of failing to do so, we will see supply chains become increasingly:

(1) Sustainable and ethical: Firms that make sound environmental decisions and uphold ethical’standards providing’sustainable supplier initiatives that help meet environmental, health and safety, and labour standards will be held in the highest regard.


 
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ABOUT THE EXPERT

Kurt Cavano is the vice chairman and chief strategy officer of GT Nexus, a cloud based supply chain platform provider. It helps companies to manage their logistics and trade processes. Kurt is responsible for maintaining the company's track record of innovation and market success, and for guiding key customer, industry and partner relationships.

Business development