What are Green Supply Chain Strategies?
A recent survey that Ivalua did in the UK, “Gaining the green view, How smart procurement can kick-start sustainability initiatives” showed that 87% of UK businesses see “greener” supply chains as a competitive advantage. This may seem applicable for businesses where their business model is focused around promoting their green credentials, such as Everlane, who promote their green credentials strongly, such as moving all cotton production to organic. Everlane is a business to consumer type business selling a range of clothing, but it may show that consumers will be increasingly interested in the supply chains of the organisations that they are buying goods or services from.
Everlane does this by showing the cost breakdown of the goods that it offers through its website and so you can see the costs of materials, labour and transport for it best selling court sneakers. It is interesting that Everlane is using this approach to demonstrate the cost savings that the consumer can benefit from through this model.
How can large companies address sustainable Supply Chain strategies?
This approach may seem 100% relevant for an organisation such as Everlane, but the recent CIPS online conference that Ivalua presented at was enlightening by understanding the focus of a large organisation such as Vodafone in social equality. Ninian Wilson, the CEO of Vodafone Procurement explained the steps that they are taking to deliver in this area and when traditional large organisations such as Vodafone are focused in this area it shows the importance of this area to their consumers. The change in perspective in board is clearly demonstrated by the CEO of Blackrock making it clear to CEOs in his 2020 letter, that they will view climate change as an important factor in investing in companies.
All industrial sectors need to be aware of the environmental impact of their supply chains with CDP International, a NGO stating in their 2019 report that the emissions from an organisation’s end to end supply chain is 5 times more than the organisation’s direct operations.
How to address Green Supply Chain Management?
This growing demand for from consumers for organisations to tackle this issue may seem a daunting task, but there are simple steps that can be taken to understand environmental impact of an organisation’s supply chain. Utilising third party data sources such as EcoVadis when reviewing suppliers can enable organisations to start to understand the environmental impact of the suppliers they are working with.
Combining this with the ability to undertake a more detailed review of suppliers through a systematic assessment of suppliers to understand the supplier’s green credentials can then identify how change can be delivered by the supplier. The use of improvement plans will enable an organisation to agree actions for the supplier to begin the process of making change in the environment.
Stephen Cleminson is the Alliances Director at Ivalua. He’s responsible for recruiting and managing a partner network across Northern Europe and brings experience of over a decade in commercial roles at a number of P2P vendors. Stephen has built a comprehensive understanding of the benefits and challenges of P2P technology from his close involvement in a variety of projects for large multi-national organisations.
Stephen’s experience was initially in the use of P2P solutions for indirect spend, but Ivalua’s strengths in direct materials procurement has expanded his knowledge and expertise to this important operational area.