Organisations across the globe are changing their entire approach to supply chain management as they focus attention on anticipating and responding to customers’ increasingly discerning needs at the same time as driving operational efficiency improvements. One of the most significant trends in recent years has been around the pressure being brought to bear on organisations to operate in a sustainable manner, which today, is a major consideration for consumers before committing to a purchase. According to an Accenture survey, more than half of consumers would pay more for sustainable products designed to be reused or recycled. With consumers willing to pay more, the onus is placed on businesses to ensure ethical practices are employed.
In the journey to becoming green, many businesses review their operations and identify ways to reduce their overall footprint. However, there’s one aspect impacting footprint that businesses have little visibility over, and even less control—the activities of their partners and supplier network. While it’s important to ensure internal operations are ethical and sustainable, it’s equally important to consider the operations of suppliers and partners, namely the extended supply chain.
Looking at the modern supply chain
Today’s extended supply chains offer unprecedented levels of visibility to both organisations and customers. Businesses use it to improve supply chain performance, be it a distribution centre able to better prepare for an incoming shipment or an entire supply chain able to adjust in the face of an anticipated disruption. Customers also benefit as they can not only track the location of a product but get a better understanding of where it has been sourced from, how it has been sourced, and so on. With this level of traceability and visibility possible across the supply chain, organisations must ensure they’re meeting customer expectations from a sustainability and ethical standpoint.
Visibility and transparency between partners and suppliers is important in order to develop a trusted network. By having access to supplier information including provenance of materials, environmental performance, and the ability to share this information with customers, organisations can ensure a level of accountability is maintained. This has traditionally been a challenge for organisations, with research suggesting that 71 per cent of organisations have a supplier code of conduct, yet less than three quarters enforce the policy.
To address this, businesses should look to establish a centralised repository or directory of partners/suppliers and any associated information relating to their ethical and sustainable practices. In this way, a directory can provide organisations with a greater understanding of their partner network and the extent to which their supply chains are ethical. In addition, it ensures businesses are practicing what they preach when it comes to ethical codes.
Laying the digital foundations
To achieve this degree of supply chain visibility, it’s essential for the supply chain to be digitised, setting the foundations for the requisite levels of collaboration required between supply chain partners and ultimately for enabling ethical compliance. Supply chain-based transactions must be automated with electronic data interchange (EDI) solutions, which will result in reduced energy usage, greenhouse gas emissions, water consumption and solid waste. At OpenText, we support customers in this journey and already digitise more than 26 billion transactions each year. Just by doing this, organisations ultimately save 5.92 million trees and also experience reduced net energy usage, greenhouse gas emissions, water usage and solid waste. This all stems from the laying the foundations for the digital supply chain—process automation.
Today’s consumers are better informed and more aware of the environmental impact of their actions, and this extends into their purchasing decisions and the types of business operations they support. For businesses to grow in today’s market, a greater emphasis must be placed on ethical and sustainable practices, extending to the supply chain. Businesses competing on price or product quality alone are lagging behind, with today’s leading organisations across the globe aiming to grow their loyal customer base by building extended supply chains that are both ethical and sustainable.