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Embracing sustainability in the supply chain
Embracing sustainability in the supply chain

February 25, 2024

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Welcome back to our sustainability series! After exploring the fundamentals of sustainability in my first blog, and delving deep into climate change in the second, we're now ready to unravel more layers of this fascinating, planet-friendly concept.

In this blog, I want to talk about an important facet of sustainability, one that has human, environmental and financial ramifications across the board – Supply Chain Sustainability.


(Source: IMDB)

I am sure most of you have seen this mega Hollywood starrer which has the core of this blog at its heart - responsible sourcing. The other two key levers being carbon reduction and water.

A sustainable supply chain is one that seamlessly integrates ethical and environmentally-responsible practices into a successful business model. It focuses on issues like climate change, environmental impact, water optimization, human rights, and fair labour practices. This is an evolution from the traditional supply chain process that focuses on flexibility, agility and reliability of the supply chain. A sustainable supply chain injects responsibility and awareness all through the process.

To appreciate the nuance here, let’s look at Scope 3 emissions

Scope 1 2 and 3 emissions diagram

(Source: GHG Protocol)

The Greenhouse Gas Protocol categorizes emissions into three Scopes, a standard used by influential bodies like the CDP (formerly Carbon Disclosure Project) and integrated into corporate sustainability and ESG practices. Recognizing that Scope 3 emissions come from the entirety of one's supply chain and are beyond direct control of the organization is crucial while looking to measure or reduce these emissions.

In consumer packaged goods (CPG) companies, Scope 3 emissions often represent 95% of their total emissions, with supply chain emissions comprising about 80% of this. Consequently, to effectively lower their environmental impact, businesses must focus on reducing Scope 3 emissions by working closely with their suppliers.


Technologies powering supply chain sustainability (Digital Tools in Sustainability)

While machine learning, artificial intelligence and robotics lie at the core of technologies that empower and enable supply chain sustainability, there are deeper layers of technology such as public-cloud and Enterprise Resource Planning (ERP) tools that help measure and manage environmental impact, software with built-in algorithms that enable the operations and management of smart devices, EVs, blockchain-based systems, among others. It is interesting to note that sustainability efforts can be best realized by having a combination of hardware and SaaS-enabled solutions that are built ground-up with sustainability as a core area of R&D, towards ensuing a better, greener and more efficient supply chain.

Sustainability across the board

Through my dialogues with Chief Sustainability Officers, I've learned that supply chain sustainability is multifaceted. When devising a strategy for an organization, it's essential to consider the following key points:

 

  1. Leadership and Communication: Providing leadership and clear communication to internal teams, suppliers, and other stakeholders to ensure alignment and commitment to sustainability objectives. This is a change - a massive one, and quite a few of us have seen what happens when leaders pay lip service and do not walk the talk. Leadership…counts.

    One exemplary company demonstrating leadership and clear communication in sustainability is Unilever. Unilever integrated sustainability into its core business strategy, actively engaging stakeholders and transparently reporting progress.  Unilever Sustainable Living Plan

 

  1. Focus: Tiering one’s suppliers and focussing on the tier 1. Most organizations have done this already but they still struggle. Why?

Well, because it isn’t that simple! As world leaders have been discovering at major COP events - thorough mapping exercises are essential to understand the extent of the supply chain, including tier 1, tier 2, and beyond, to identify potential risks and opportunities.

A prime example of a company prioritizing tier 1 suppliers and conducting thorough supply chain mapping is Apple Inc. Through its supplier responsibility program, Apple ensures that suppliers adhere to stringent environmental and ethical standards. Apple Supplier Responsibility Program

 

  1. Collaboration and Engagement: Emphasizing the importance of collaboration and engagement with suppliers, industry peers, and other stakeholders to drive sustainability initiatives forward effectively.

    An excellent example of collaboration and engagement to drive sustainability initiatives is Walmart. Through projects like Project Gigaton, Walmart partners with suppliers, industry peers, and NGOs to reduce greenhouse gas emissions in its supply chain by one billion metric tons by 2030. Walmart's Sustainability Efforts

 

  1. Educational Initiatives: Implementing education and training programs for both internal staff and external suppliers to increase awareness and understanding of sustainability issues. We forget how deep our upstream and downstream supply chains are and how impactful these educational initiatives can be

    An exemplary company implementing educational initiatives for sustainability awareness is Patagonia. They collaborate with suppliers to promote sustainable manufacturing practices and share information transparently through initiatives like the Footprint Chronicles, educating consumers and stakeholders about supply chain sustainability. Patagonia's Sustainability Efforts

 

  1. Data Collection and Analysis: What one can’t measure, one can’t manage…goes the old adage. Utilizing digital tools and technologies to collect, analyze, and monitor sustainability data across the supply chain, enabling informed decision-making and progress tracking. There have been quite a few which have evolved and matured post Covid years and depending on local expertise and spread, it would be wise to deploy them.

    At Cisco, my current workplace, we implement practices that not only meet but often set industry-leading benchmarks for excellence.

 

  1. Consequence Management: Establishing clear consequences for suppliers who fail to meet sustainability standards, while also maintaining a collaborative approach to drive improvement and provide support where needed.

 

I hope you enjoyed reading this blog on supply chain sustainability and found it useful. Got something to add or a question? Drop a comment and let's chat about it!

 

Author

Vinod Karumampoyil

Vinod Karumampoyil leads the Digital Transformation Office (DTO) for Cisco India & SAARC. He's also the Program Execution Leader for Cisco's flagship Country Digital Acceleration (CDA) program. Vinod's charter includes but is not limited to, accelerating the national digitization agenda by building long-term relationships with leaders at the national level as well as in the industry and academia, strengthening mindshare, and increasing our footprint in the market.

Vinod and his team have been pivotal in providing solutions and driving our success across several verticals, especially Smart Cities, Agriculture, Transportation, e-Gov, and Utilities.


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