When looking for operational excellence in after-sales services and supply chain management, companies tend to focus primarily on KPIs such as speed, reliability and cost. However, more and more organizations are also looking at their supply chain in terms of sustainability. We have explored four ways to help you ensure your interaction with society and the environment is more transparent and proactively managed.
Can a company measure and manage the direct impact of its business on the environment and society? Yes, it is possible. But are the effects of an individual company at all relevant? No, unfortunately only to a small extent. McKinsey came to this conclusion in a comprehensive study on the sustainability of supply chains. The result: 90 percent of the impact on society, climate or nature cannot be directly attributed to a single company, but occurs along the entire supply chain, distributed through a global network of partners and suppliers.
1. Encourage Multi-Stakeholder Collaboration
With reference to the smart mobile and consumer electronics industry with its R&D locations in Silicon Valley, offshore production in China and Taiwan, a global distribution network and an after-sales setup with hundreds of fulfillment partners such as logistics providers, call centers and repair shops, it soon becomes clear that sustainability in the supply chain is a challenge that an individual company cannot effectively control and manage on its own.
On the contrary, we are dealing with a complex network of different stakeholders. Without the cooperation of all stakeholders, a sustainable positive impact on society and the environment is no longer conceivable today. The United Nations have already included Supply Chain Sustainability in their Sustainable Development Goals, with the aim of respecting human rights, ensuring fair working conditions and making progress in environmental protection. The basic willingness for multi-stakeholder collaboration is the prerequisite for achieving a sustainable positive impact.
2. Set Expectations in Partner Selection Process
The sooner companies that cooperate within a supply chain set their sustainability goals, the easier it is for all stakeholders to align their resources, competencies and investments to these goals from the outset. Joint agreements on the conservation and protection of the environment as well on the consideration of social interests belong in every cooperation agreement. Sustainability criteria should be part and parcel of the sourcing process and should be considered in the same way as commercial criteria when selecting a partner.
In its recent report The State of Sustainable Supply Chains, the global consultancy EY recommends that the cooperation agreement should include mutual obligations to invest in sustainability innovations. For example, in the area of after-sales service, this could be the requirement to invest in environmentally friendly reusable packaging or to use CO2-neutral means of transport.
3. Create Competition for the Better
Thanks to digital transformation, the information flow along the supply chain is more transparent than ever before. Partners should make the most of this and openly share information on different aspects of sustainability. Common goals that measure the positive contribution to society and the environment create incentives and can initiate a positive competitive spiral. Ultimately, the competition for good ideas should not just remain a lip service, but should be made measurable with social and environmental KPIs.
In conjunction with regular training and best practice sharing sessions and an open exchange of knowledge, this can result in a positive competition for the best ideas, which quickens the pace of innovation. Due to cultural and infrastructural specialties, regional standards are sometimes very different, especially in globally connected supply chains. When stronger regions assist weaker ones and help develop new skills, this translates into a direct economic benefit for the local communities.
4. Engage in Broader Initiatives
In addition to collaboration with partners, it’s worth thinking outside the box. At 82 percent, the vast majority of Fortune 500 companies report extensively and transparently on their sustainability initiatives. In the after-sales and supply chain sectors, organizations could likewise report on their contribution to protecting the climate and the environment, as well as their positive contribution to society, and could even participate in global initiatives such as UN Global Compact. By the way, this could also have a positive influence on the buying behavior of end customers – an additional competitive advantage for providers of smart mobile devices and consumer electronic providers in a highly competitive market.
Victor Romero is Supply Chain Manager at B2X.