Sustainability is a Growing Concern for Supply Chain Executives
A recently survey conducted by West Monroe Partners has found that more than half of North American supply chain executives consider developing a sustainable supply chain to be a strategic priority.
According to the study, which was conducted in partnership with Loyola University’s Supply Chain Centre and BearPoint, the key motivators for companies to implement sustainable initiatives are to improve their competitive advantage as well as their brand image.
The study showed that 36% of companies have already made plans to incorporate sustainability into their operations within the next one to three years. These statistics mirror the results of a survey conducted by West Monroe only last year. In that survey it was found that consumers are willing to pay at least 5% higher prices for products ordered online if they are delivered sustainably. It also showed that 76% of customers are willing to wait one extra day for climate friendly transport. Whether are not customers would stand by these attitudes in practice is not yet known, but their concerns are slowly being heard by supply chain executives.
However, according to Yves Leclerc, managing director of West Monroe Partners, current global and economic conditions make the goal of going sustainable a very difficult one to reach. “It’s telling that more companies aren’t implementing sustainable business practices in their operations given the demands of customers. Most supply chain teams are struggling to manage the complexities of globalization, the war for talent and increasing demands so allocating budget and resources towards sustainability doesn’t seem feasible unless companies can put together a business case for the return on the investment.”
Yet, companies such as P&G who have prioritised their sustainability goals have found no incongruity between becoming sustainable and remaining profitable. Since 2002 P&G has halved its impact on the environment across energy usage, CO2 emissions, waste disposal and water usage. The changes they have made have led to nearly $1bn in cost savings. And the savings made are then passed down to retailers and customers.
A similar study here in Europe showed an even quicker move towards a more sustainable logistics and transport sector. 59% of companies surveyed stated that they have already prioritised developing a sustainable supply chain. Like the North Americans, brand image was also a dominant motivator. However, in other respects there was a differentiation between the motivations from each continent. Innovation was only cited by 36% of European companies as an important motivator, while in America it reach 47%. There was also a stronger prioritisation of the economic impact of sustainability in Europe while in America environmental impact was given a higher priority.