By GSS on May 4, 2010 |
Category: Sustainability & Transparency |
This is the second year I have attended Stanford University’s conference on Responsible Supply Chains. This year focused on the theme of collaboration in the supply chain, and consisted of speakers and panels of top industry executives from Levi-Strauss, Nike, Johnson Controls, Business for Social Responsibility, Dow Chemical, Bon Appetit, and many others. The conference’s growth in attendance and complexity of topics covered were representative of the continuing significance many companies are placing upon sustainability in the supply chain. Despite some of the presentations having more of an advertising slant, most of the presenters did a good job of highlighting lessons learned and best practices. In addition, I thought the size and format of the conference helped foster candid and challenging audience questions which generally earned insightful responses from the speakers. Here are the highlights and conversation topics of the conference which I thought were most noteworthy:
- The conference–presenters, panel speakers, and attendees were much more international this year than last year. In addition, it seemed several large corporations who were looking to international emerging markets for growth were taking sustainability very seriously in the development of their business models in these markets.
- To try to implement sustainability initiatives in the supply chain from a boardroom that is an ocean or continent away from production is not realistic.To identify problems and develop practical solutions, one has to get on the ground and visit the factory, visit the field, talk to personnel and partners involved, and get your hands dirty. Determine the unit of analysis that will be essential to spurring widespread adoption and change, and understand it deeply. Everyone must agree on the objectives, and someone must take the reins and push action.
- CXO leadership and support is critical. Presenters unanimously cited that support from the top echelons of management was essential to being able to push change and achieve sustainability objectives in the organization and supply chain.
- It is clearly not just about reputation management anymore. Many feel regulatory risks are on the horizon and its best to begin addressing high profile issues now. Furthermore, at a more fundamental level, a few executives cited the inevitable increase in scarcity of resources and the rise in input costs as a growing, long-term risk to their competitiveness. Whether the company relied heavily on cotton, oil, plastics, chemicals, food, etc., the cost and scarcity of future resources were prime motivations to address sustainability in the supply chain and make the long term business case in light of short-term financial pressures. Sustainability in the supply chain will be a competitive driver of the next decade and will eventually become a price of market entry.
- The challenges of reliably monitoring, or “policing”, the supply chain, have caused companies to adopt approaches centered on capacity building. Supplier managers are engaged and asked to monitor themselves and demonstrate not only their effectiveness, but their continual improvement as well. Because of the investment required to build the capacity of a given supplier, advancing these programs is more challenging in industries where switching suppliers is common.
- The food industry is an excellent example of just how fast an industry can change and sustainability can become a major consumer concern. In the last decade, the market progressed from consumers not caring where their food came from, to explosive growth in demand and supply of organics, locally sourced and fair trade food categories, adoption by major grocery retailers, and TV shows and documentaries stirring consumer awareness. Apparel is another industry that is experiencing rapid change. Executives cannot take these issues lightly with respect to how quickly they can alter the competitive landscape.
- One presenter felt that to truly move a company towards sustainability, metrics and incentives in this area must be embedded into company management systems. Also, some companies, which are taking sustainability very seriously, are reorganizing their structures to allow for greater innovation and information sharing in these areas.