Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

How to Adopt Sustainability in Supply Chain?

1. Tracking sustainability metrics

By tracking sustainability metrics in your supply chain, you can monitor different areas of your operation that encourage environmental and social responsibility among suppliers. 

Also, companies can use artificial intelligence and pre-defined rules to ensure that their products are not shipped out unnecessarily. 

2. Identify sustainable issues

For you to build a robust supply chain, you must identify sustainable issues in your supply chain. 

By doing this, you can first try to break down the supply chain into various segments and check if there are processes that need improvement. You can focus on slowly adopting a circular supply chain where the raw materials are recycled back into the production process. 

3. Managing sustainable procurement

Managing sustainable procurement is an important factor in adopting sustainability in your supply chain. 

Adopting sustainability in your procurement model will help you to understand day-to-day involvement with your suppliers. Thus, companies must be aware of sustainable procurement tools to fully adopt sustainability in procurement. 

Sustainable Supply Chain Analysis

Supply chain transparency leads to the optimization of processes in the chain and thus has a positive influence on the value for customers and the competitive strength of an organization. 

However, to start with, you must first analyze your supply chain by starting to create an inventory of products and services you purchase, produce, and sell. 

For each item, you must determine where it is manufactured and which suppliers you utilize. If you produce and sell products, you must identify the chain that follows your organization. 

Furthermore, for composite products, you must identify the most important raw materials or semi-finished products and their origin. If possible, determine how and by whom the products will be transported. 

Initial Risk Assessment of Sustainability in Supply Chain

For you to identify sustainability issues associated with each part of the supply chain, you must solicit advice from stakeholders across various functions as well as from external sources. 

Thus, your initial risks assessment must include answers to these questions:

• What and where are you sourcing?
• What are your key products and services? What do you generally know about the potential risks and impacts of your products and services in the environment?
• Is your company sourcing directly or through third parties? How many third parties are involved in your sourcing activities?
• In which sectors or countries, directly linked with the company’s operations, are the main risks of adverse impact on people, environment, or governance most present? For example, are there any geopolitical issues?
• What is the company’s visibility beyond direct suppliers? How can it be improved?

By identifying and answering these questions, you can determine the risks you can face in the entirety of your supply chain. Thus, you will know how to mitigate or reduce the impacts of these risks and lessen the chance of disruptions in your supply chain.

It is important to classify all your purchases into four main categories. These are leverage, strategic, routine, and bottleneck purchases. 

As you can see in the picture above, there are two words outside the arrows which are impact and risk likelihood. 

The impact is the volume of purchase, the percentage of total purchase cost, the impact on product quality or the growth of the company, impact on people & environment.

On the other hand, the risk likelihood is about the availability of products, the number of suppliers or the competitiveness of the demand, risk due to climate change or changing regulations, violations of human rights like slavery in cocoa bean plantations, etc.

The impact is the volume of purchase, the percentage of total purchase cost, the impact on product quality or the growth of the company, impact on people & environment.

On the other hand, the risk likelihood is about the availability of products, the number of suppliers or the competitiveness of the demand, risk due to climate change or changing regulations, violations of human rights like slavery in cocoa bean plantations, etc.

Do you want to learn more about how you can assess your supply chain, especially your procurement activities in achieving sustainability? Then look no further. Our Sustainable Procurement Course will help you to analyze the possible risks in your supply chain. Additionally, our course will teach you how you can categorize all your purchases that can greatly affect your supply chain. So what are you waiting for, enroll now!