Attending to the social and economic impacts of the supply chain
My blogs so far have mostly focused on carbon reporting and decarbonising the supply chain. There is no doubt that in supply chain management we have a significant role to play in innovating and optimizing our end-to-end networks in these areas. However, I am also focusing more on the social and the economic impact of supply chains, which are equally important. These areas are increasingly being taken into consideration by companies on a global scale, particularly as they look upstream in their sourcing activities.
I was recently challenged to define what we mean by “sustainable supply chain” at the Business for the Environment (B4E) Summit in Korea. Developing a sustainable supply chain means taking into account environmental, social and ethical concerns when addressing issues across the whole supply chain – so for me it is about bringing about a more ‘responsible’ or ‘holistic’ approach to business decisions. This aligns to more general views of sustainability, including taking actions that that meet the needs of the present without compromising the ability of future generations to meet their own needs.
At the B4E conference I reflected on the relationship between sustainability and population growth. It was only 100 years ago when the world population was around 1.6Bn. It has now more than quadrupled to 6.8Bn and could rise to 9Bn before reaching a plateau. We must comprehensively support education, up-skilling and empowerment—for example, by lending support to the empowerment of women in emerging economies, for example.
So how does this relate to us as supply chain practitioners? As our upstream supply networks become more complex and spread into more rural parts of the world, they are directly influencing some of these issues. We impact millions of lives in the jobs that we create and the ecosystems or industrial clusters that we develop in and around our organizations. As supply chains expand, so does manufacturing and sourcing in areas such as western China, sub-Saharan Africa, Indonesia and Vietnam.
I think that we must recognize the social impact that we are having as we expand into such markets, and should look to build community and education programs. We should place more significant value on the suppliers and partners that demonstrate the appropriate behaviours. This will require moving away from a narrow focus on “lowest unit cost” and find more long-term ways to value suppliers who are creating a more sustainable society and environment.
The behaviours, decisions and tradeoffs that we make in supply chain can make a real difference to achieving equilibrium in the world. The network modelling, the partnering decisions, the sourcing and the supplier development programs we initiate can all drive towards a better society, a more educated population and increased sustainability. The real challenge we face is not in singling out any one of these issues but by changing the global consciousness to address all them all simultaneously.