Supply Chain experts have, for many years, balanced conflicting priorities of quality, cost, and risk. In today’s world, decisions often need to incorporate environmental, social, and economic considerations.

A major British department store estimated that they have a direct influence on less than 10 percent of the life cycle of their products. Sustainable supply chain is about ‘managing the impact’ of the remaining 90 percent.

CostCostQuality/ performance

Quality/ performance

SUPPLY CHAIN VALUE

EQUATION

SUPPLY CHAIN VALUE

EQUATION=Risk

profileRisk

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Seek to offset potential increased pricing through lower consumption; consider increases in revenue by taking sustainable option; build disposal into the total life cost model.

Seek to offset potential increased pricing through lower consumption; consider increases in revenue by taking sustainable option; build disposal into the total life cost model.

HOLISTIC APPROACH

TRADITIONAL APPROACH

Sustainability considerationsSustainability

considerations

Sustainability considerations – management of key risks and opportunitiesSustainability considerations – management of key risks and opportunities

Sustainable Supply Chain OverviewWhere are the economics of the Value to an Organization?

Sustainable Supply Chain OverviewWhere are the economics of the Value to an Organization? (C´ntd)

The value proposition of sustainable supply chain management:

Other potential benefits to be gained: Improved communication with shareholders on material sustainability risks and

opportunities Improved management of issues associated with resource scarcity and/or resource

substitution Improved confidence and knowledge to respond positively to critical media reporting.

Cost reduction

Revenue growth

Reputation enhancement

Risk management

Increased resource efficiency; rationalization of assets and suppliers; reduction in waste; reduction in packaging; reduction in disposal costs from removing hazardous materials from design; compliance with regulatory requirements can remove potential cost of non-compliance.

Introduction of environmentally or socially responsible products and services; penetration of new ‘responsible’ consumer markets.

Protection and enhancement of corporate reputation as a socially and environmentally responsible enterprise; improve employee morale and retention. Create collaborative relationships with supply chain partners.

Improved transparency in identifying and managing supply chain events and risks; respond to regulatory changes appropriately; protect brand and reputation.