The world demands sustainability. Shareholders, customers, lobby groups, and not-for-profits want companies to be more sustainable. While the mantra is simple, giving real effect to that philosophy can be more complex. MBA programs continue to teach historic practices maximising return on capital being the centrepiece of commerce. But most successful and enduring companies have a broader focus. In the context of sustainability, such companies understand and utilise the broader system they operate in; that the wider human community comes first. That approach has particular merit in a conversation about sustainability, inventory manufacturing and procurement.
Research, in fact, shows that, for consumer-goods-oriented companies, as much as 90% of environmental impact comes from the supply chain. This means that, while an entity can streamline its own processes and operations for sustainability, it cannot effectively deploy sustainable practices without materially influencing or changing the supply chain.
A sustainable set-up
Consider running your business through a brief sustainability health check-up. Check if the business has:
- A clear map of the supply chain and all the constituent companies and task-flows
- Ongoing communication about its value and culture with all of the supplier companies
- Data collections, whether by survey or another method, to analyse the environmental and social impacts of inventory manufacturing
- Programs and capability to support and develop suppliers through exemplary case studies and training
- Audit and reflection methodology that the business actively practices and engages in
- Awareness of relevant industry efforts towards specific environmental or social initiatives (global, regional, and/or local, as may be relevant)
Gearing up for change
These features will position the business to make a marked difference in the supply chain and, overall, take steps towards improving its sustainability. Leaders in the organisation will also want to re-examine the types of relationships that the firm has (for example, with its upstream suppliers). Being commodity or transactional-focused is likely to hinder real progress.
Notice where non-government organisations (NGOs) are active in an area of interest or a field where the business wants to improve in. It is important not to underestimate the expertise and accumulated knowledge that NGOs have and are willing to share.
Taking a holistic view is also likely to serve the business. Business leaders, whether the senior executives or organic leaders within the organisation, are often well-placed to re-position the business and enhance its relationship with the world. Through data collection, problem identification, and proactive leadership, the business can build a group of people who are motivated and willing to help improve the business and how it goes about achieving and delivering on sustainability.
Include your people
At this point, the business is well on the way to being sustainable. It is essential that the business has not overlooked the livelihoods and margins of its suppliers. The firm’s inventory manufacturing and procurement metrics may be influenced by weather events, commodity and labour prices, and so on, but so is the supplier’s well-being and their business model.
To help ensure the business includes this important social metric, communicate regularly with the downstream suppliers to check that the business pays fairly across the seasons and cycles. Supporting the suppliers in the short to medium term goes towards helping your business over the long term and its continued future viability.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.