The sustainable supply chain has become a prerequisite for the successful operation of businesses. They face calling for a range of solutions due to the diverse challenges. Through sustainable supply chain enables the introduction and implementation of collaborative abilities in vertically integrated firms. It at the same time, it keeps intact the flexibility and responsiveness capabilities of market-oriented governance structures. Its flexibility can see in its ability to accommodate lean manufacturing practices, which could integrate with the supply chain.
Thus, as a strategy as well as a paradigm, it augurs well for value leadership. It goes far beyond a cost-reduction approach. Wherein the outcome is judged in terms of cost performance operations. As distinguished from cost-reduction measures, with which the suppliers can offer high-quality products on time at reasonable prices to their customers.
In this article, we discuss why the supply chain is essential to your business. And five keys to creating a sustainable supply chain from a practical perspective. It would be beneficial to your business operations.
Why of Supply Chain Management
The everyday experiences of organizations show that 50 to 70% of the total costs of business operations. Accounted for by the values that are related to external suppliers. And the supplier lead times invariably are longer than production lead times. It is also the case that if they were to make gains, they have to manage the costs, lead time. And quality through working in partnership with the suppliers and customers. Besides, the demands show uneven patterns due to the swings, which could attribute to seasonality and other uncertainties.
Organizations, therefore, have to find ways increasingly. It means to rely on supply chains to compete effectively in the global markets. The ‘why of the supply chain’ can be justified. By citing the fact that it offers a model that covers suppliers, manufacturers, distributors, and customers. It makes it possible to include the right mix of products in the right quantities. At the right moment at a minimal cost by incorporating flexibility and reliability in the final delivery of the products/services.
Five keys to creating a sustainable supply chain
In this section, we discuss five keys to developing sustainable supply chain management. Wherein the focus is creating a strong business relationship with the key stakeholders. Nonetheless, it has to keep in mind that no ‘one-size fits all.’ And these have to see as ‘best practices.’ And you should apply the methods that best fit your business model.
a. Communicating your unique vision to the stakeholders
The stakeholders with whom you are and would be dealing would have to understand your concept. It would make them know what they would be supplying to you or buying from you.
It would enable each one to understand their roles better. And help in sharing best practices that would save time, resources. And result in the eventual boosting of productivity. Also, it is possible to chalk out the guidelines that would pave the way to collaborations, which can foster innovations. On a macro level, it can lead to the strengthening of the industry’s sustainability as a whole. Which, in turn, could benefit your business at a micro-level. Thus, the vision statement, along with the communication of it across the board. It offers you the advantage of setting the stage for putting in place a sustainable supply chain model.
b. Mapping and Segmentation
To confront the challenge of the more extensive system. In which you fall part and parcel and learn to work with other businesses. Which you have not worked with hitherto. It is essential to map and segment yo
your supply chain vision. It involves locating your significant suppliers, trace the flow of supplies, services, and manage the informational flow.
c. Establishing a supplier plan
As already pointed out, the procurement part of your business is critical. Because of its forming a significant chunk of your cost besides the longer lead time it needs. It makes it imperative to deal with and manage the suppliers. Objectively by establishing compliance and audit programs. Which comprises of rewards for compliance and punishments for lack of it. Such a plan should contain elements that determine quality standards, monitoring and evaluation parameters, risk management, and mitigation. By adhering to policy and implementation of ‘trace-and-track’ solutions, you can facilitate quality at affordable costs.
Which would go towards a sustainable supply chain?
d. Obtaining Certifications
Certifications add credibility and improve the visibility of your business. Which lends authenticity to the specialized vertical in which you are operating.
Some examples are:
- ISO 50001 pertains to energy management and improving the efficiency therein
- ISO45001 and 18001 relate to occupational health and safety
- ISO 26001 lends credence to social responsibility
- Leadership in Energy and Environmental Design (LEED) certification, developed by the US Green Building Council (USGBC). It provides a benchmark for green building and energy efficiency that accepts across the globe.
e. Building an ethical framework
An ethical framework is fundamental to supply chain sustainability. Much of supply chain sustainability has to deal with human resources. It means the businesses would have to adhere to reasonable standards. And comply with the legislation/ statutes developed to cater to fair labor standards. Whether it is occupational health and safety, workmen compensation, child labor, women employee’s welfare, etc.
Adapting to a sustainable supply chain calls for putting in not only a substantial chunk of your financial resources. Infusing changes in the working culture of your employees by way of upfront investments. It can cause hardships, stress, and pain, in the long run, while in the short term. It would confer benefits that are well worth the short term disruptions.
Such benefits include an improvement in the entire business processes, which include demand management of existing products, customer relationships, inventory management. And evaluation opportunities for the creation of new products, etc. It covers all the areas virtually by addressing issues. It has an impact on the whole performance of your business. That can crop up on the shop-floor as well as production areas.
Keywords: SUPPLY, supply chain, BUSINESS, sustainable supply chain, SUPPLIER, COST, KEY, MANAGEMENT, PRODUCT, LEAD