SUSTAINABILITY
SUSTAINABILITY
Driving sustainable business with SRM
State of Flux opinion:
This is the first analysis of supply chain sustainability management that we have conducted. From the evidence we have uncovered and laid out on the following pages, it is a clear indication that organisations can do much more to use SRM to manage sustainability risks – the majority of which can come from the value chain. As consumers, governments and NGOs pressure organisations to improve their sustainability performance, investors will see a clear commitment and a clear strategy as a prerequisite for backing companies. Sustainability will become a vital plank to business success. But companies cannot make progress in reducing environmental impact or improving social outcomes by working alone. Collaboration between organisations allows them to share information and innovate together, but only if there is the trust between parties, nurtured through managed relationships. In SRM, there lies an opportunity to make a difference.
Improving sustainability is no longer an option: it now features higher on the corporate and shareholder agenda than ever before. And, as consumers are taking an increasing interest in the environmental and social impact of products and services, sustainability is becoming important throughout the supply chain. Creating and delivering a compelling sustainability strategy is about doing what’s right and gaining competitive advantage. But companies positioning sustainability as a cornerstone of their market offering will be expected to live up to their promises. Whether they do so will depend largely on their supply chain and how well they manage their suppliers. We have chosen the significant milestone of our tenth global SRM research report to explore in more detail how organisations are managing sustainability in their supply chain and to what extent this is an integral part of their approach to SRM.
64% OF FIRMS WITH AN SRM VALUE PROPOSITION INCLUDE SUSTAINABILITY
The value proposition is the vehicle for capturing and communicating the reason for investing in SRM and developing more collaborative relationships with suppliers. Of the 154 companies that reported having developed and documented their SRM value proposition, only 50% make specific mention of sustainability being an area of potential value.
How mature is supply management’s support for sustainability?
Only 5%of organisations are well advancedmaking sustainability part of supply chainmanagement Fig. 21. 2018 Sustainability maturity model
Our research shows nearly eight in 10 (77%) organisations struggle to include sustainability in their supply chain management. These organisations we consider undeveloped in their approach. Only 5% of firms can be considered leaders in supply chain sustainability, showing that they recognise its importance by including it in their SRM value proposition, making it an integral part of risk management and governance and investing in training, making them ‘advanced’ on our maturity model. Around one in five organisations we regard as ‘fast followers’ with capability and practices that are on average ‘established’. In our total sample of 303, only five companies regarded as leaders for sustainability are also leaders in broader SRM practice. Good overall SRM capability doesn’t necessarily transfer to sustainability unless organisations consciously make it their focus.
Leader
Fast follower
Follower
Advanced Established Undeveloped Developing
56 STATE OF FLUX
2018 GLOBAL SRM RESEARCH REPORT
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