5 steps to building a Sustainable Supply Chain

 

5 steps to building a Sustainable Supply Chain, or:
What does Supplies have to do with Environmental Management?

Last November I participated in a seminar on Environmental Management organized by FIRJAN which, among other things, inspired me to write this new article.

One of the things that caught my attention was that FIRJAN invited the Supply area to debate Environmental Management. A more attentive observer will certainly notice that something different is happening. And this movement is recent.

I remember that in the 2000s, and when I worked exclusively in consultancy in Supply-Chain, we had access to some websites, papers, and documents about sustainable & responsible sourcing. But in everyday life, in projects with the most diverse companies, there was no echo of these themes. The focus was solely on price, price, price, and really talking about a Sustainable Supply Chain seemed like talk from another planet.

Even projects that clearly brought a cost reduction in a calculation of Total Cost of Ownership (TCO), such as items that reduce energy consumption, but which depended on an investment that paid off in 3 or 5 years, were not easy to sell because, again, the focus was on the price of the item, with cost reduction in that same fiscal year.

In 2011, when we started structuring the Supply Chain for the Rio 2016 Olympic and Paralympic Games, we saw an opportunity to put those themes into practice, as sustainability came to the fore in recent Games, and as London 2012 had given good results steps in that direction. Therefore, it was up to us to take it from there and evolve the model further.

After exchanging information with other professionals who had been working on similar topics, consulting with other companies, looking into our personal experiences and studying publications on the topic, we arrived at a 5-step model for structuring a sustainable supply chain. The methodology can be adopted by any company, making adaptations to its particularities. These are the 5 steps I will take just brush in a few lines here, so as not to extend myself too much, since each step would give a new article in itself.

O first step is (1) Establish Clear Requirements. It is necessary to define what will be required, and why. But it is almost impossible to adopt specific requirements for everything that goes through the company's Supply Chain, so it is necessary to focus on what is relevant. Our suggestion is: first define basic rules that all suppliers must obey. And second, identify which purchasing categories have the greatest impact in terms of sustainability and then define specific requirements to mitigate negative impacts or leverage positive impacts in these categories. Examples: a general requirement It may be that only suppliers who hire their employees under the CLT regime are accepted. Already one specific requirement for contracting, say, road freight, it could be that cleaner fuels are used that reduce the carbon footprint. In our case, we developed a series of manuals that meet these requirements general It is specific.

O second step is (2) Develop and Enable the Market. There is no point in launching a series of manuals and specific requirements if no supplier company even knows about them. There is a risk of launching a competition where no company can be hired, as none meets the minimum mandatory requirements. Therefore, it is important to communicate in advance what will be required, and explain to potential suppliers how to reach the level we expect. Our suggestion is to use the channels that already exist to communicate on a large scale with the market in general and with specific sectors. In this sense, we created, and still do today, programs with the SEBRAE, the Industry Federations throughout the country (such as FIRJAM, FIESP, FIEMG, for example), the CNI, and even Consulates and Chambers of Commerce from other countries, which help publicize these requirements and create specific programs to develop the supplier market (internal and external).

O third step is (3) Using the Requirements in Competition Processes. It's a question of coherence. If it was said that those requirements would be necessary, it is important that they are actually used among the criteria that will define the winner(s) of the competition. On this topic, we managed to do pioneering work with the Brazilian Council for Sustainable Development – CEBDS, which materialized in the Sustainable Purchasing Manual. The idea was to raise and discuss with large Brazilian companies, or companies established in Brazil, how sustainability was included in competition processes, and from this create a methodology that would be accepted by everyone as the best market practices. The Manual is already used by many companies, and is available for free for anyone who wants to consult it.

We arrived at room step, which is (4) Monitor the Compliance of Contracted Suppliers. It is clear. A certain supplier was hired because, in its proposal, among other things, it said that it would follow the required sustainability requirements. But how is it guaranteed? This may involve requiring certification seals of the origin of the raw material (such as the FSC for wooden items), and monitor the production process in relation to quality, environmental impact and labor practices, for example. Again, the secret is to make use of what already exists, such as certifications and production monitoring methods.

Finally, the fifth step is (5) Ensure Correct Disposal after use. In traditional industry, this involves ensuring the correct treatment of waste and rejects, creating reverse logistics mechanisms, and so on. In the specific case of Rio 2016, in addition, it is about ensuring that the products we use at the Games are used. Most of the materials we buy are used for a very short time, and in exorbitant quantities. It is important to know what will be done with it afterwards, whether we are going to rent these items, whether we are going to resell them, or donate them after use. And whether in the traditional industry, or in our case, this strategy needs to be thought out and defined before da, and during the hiring.

As I said at the beginning, this 5-step methodology can be adapted in several ways, but the main points that must be taken into account when deciding, in fact, to adopt a sustainable supply chain practice are all there.

To conclude, I think it is important to highlight that the supply area, especially when it is centralized within the organization, plays a fundamental role in implementing the company's sustainability policy, since it is responsible for contracting almost all materials and services. This means that the professional in the area has to understand what the organization's sustainability objectives are, and translate them into specifications and scope in the hiring processes. And for this to happen, the Sustainability and Supply areas need to be in constant dialogue. Otherwise, sustainability discourse risks being inconsistent with practice.

Source: João Saraiva Linked in

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