Supply Chain Sustainability

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Author: State of Flux

Organisations failing to address areas where they have the greatest environmental and social impact.

Eight in 10 organisations struggle to include sustainability in their supply chain management, research from leading procurement and supply chain consultancy State of Flux has found.

The study of 303 business and public sector organisations found that only 5% are leaders in supply chain sustainability, in that they make it an integral part of risk management and governance, invest in training and believe it is part of the value they will gain from effectively managing relationships with suppliers.

These and other findings are revealed in State of Flux’s annual research into supplier relationship management. The report, now in its tenth year, includes case studies from global consumer products and health firm Johnson & Johnson, the UK government’s Cabinet Office, global insurance firm Zurich, Sellafield nuclear sites, energy firm Ausgrid and the Royal Mail. They chart the real-world experience of introducing supplier relationship management (SRM) across a range of business and industry contexts.

The report also features comment from the global environmental advisory organisation The Carbon Trust, which has found that typically between 60% and 95% of the carbon emissions related to a company’s activities come from outside its operational boundaries.

Hugh Jones, managing director of the Carbon Trust’s business services team, says: “One of the greatest levers for change we have for taking action on climate change within the economy is using the power of procurement to cascade positive changes down supply chains. If big buyers with substantial purchasing muscle can flex this in a way that drives a shift towards sustainability, they will help to accelerate the shift towards a low carbon future and benefit everyone.”

However, the State of Flux report finds 47% of organisations do very little or no joint work with suppliers to manage sustainability.

State of Flux chairman and founder Alan Day says: “Organisations are under increasing pressure to become more sustainable, and in most cases, the majority of the social and environmental impact comes through suppliers. Only by managing relationships with them can we improve practice through the value chain.”

But investing in supplier relationship management does not only help achieve sustainability goals; it is also good for business. Among the leading firms in SRM practice, 46% achieve financial benefits of more than 4% after signing supplier contracts. Other commonly cited benefits of SRM include reduced supply chain risk, improved service levels, supplier innovation and better customer experience.

Download the report Sustainable SRM – nurturing growth in a new climate. For further information please contact State of Flux at enquiries@stateofflux.co.uk.

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