Katie Martin
Director, Sustainability & Innovation, Avetta
To build sustainable supply chains, companies need tech that creates visibility through tiers of complexity, enabling them to see exactly who they are doing business with.
Creating a sustainable supply chain — one that uses sustainable practices to support people and the planet as well as drive profit — is easier said than done. While you can ensure that your own business is operating in a way that is safe, environmentally beneficial and fully compliant with human rights laws, how can you be certain that your suppliers are doing the same? What about the suppliers of your suppliers?
Transparency and complex supply chain risks
The problem is that today’s supply chains are increasingly long and complex. The longer and more complex they become, the greater the risk that a business with non-sustainable practices can enter your supply chain, bringing unforeseen risk along with it
“Having a level of transparency with your tier 1 suppliers is challenging enough, let alone your tier 2 and tier 3 suppliers,” agrees Katie Martin, Director, Sustainability and Innovation at supply chain risk management company, Avetta. “When those tiers start subcontracting out work, risks of — for example — forced labour, child labour, and environmental and chemical challenges increase.”
Benefits of real-time supply chain visibility
Technology that offers real-time supply chain visibility is vital because it gives a business oversight of — and control over — the safety and compliance of contractors, suppliers, subcontractors, and other workers. With more informed, data-driven decision-making, risk can be engineered out, and sustainable practices and responsible procurement can be built in. That’s good for cost savings, society, and the environment.
Removing social and environmental risks
from the supply chain is a cost-saver.
For instance, Avetta’s software-as-a-service platform is used by more than 130,000 companies globally to manage their supply chain compliance and ensure they are working with safe, environmentally sound, and secure business connections. “Businesses need technology that creates a laser pointer through the complexity of supply chains so that they can understand exactly who they are doing business with,” says Martin.
Reputational risks throughout supply chains
Naturally, not all businesses have the same levels of risk in their supply chains. The risk profile of a professional services company is going to be significantly different to that of a minerals and mining firm. Yet, without proper transparency, things can easily go awry for any business; and significant brand damage can be the consequence.
“Consumers are not going to make a distinction between your company and one of your tier 3 suppliers (that may be involved with child labour),” says Martin. “They’re going to say that your business works with a company that employs child labour. So, you need a platform that is a reputational risk management tool, too.”
Sustainability is a financial and ethical profit
Businesses improving supply chain sustainability don’t just benefit society and the environment. They’re also boosting their bottom lines. “Removing social and environmental risks from the supply chain is a cost-saver,” shares Martin. “Best practices around environmental and social performance can lead to efficiencies such as better fleet management, lighter packaging, less waste, repurposing of waste and, of course, avoiding labour and supply chain disruptions.”
Indeed, Martin notes that there’s a long-tail view, particularly among Fortune 1000 businesses, that operating sustainably can drive profitability and increase valuation. “But we’re also starting to see safety and sustainability regulations catch up with businesses,” she says. “So, it’s a must-have, rather than a nice-to-have.” However, supply chain sustainability can’t be rushed. It can take a year or two of change to get trusted suppliers onboarded and all the relevant data in place. “Companies shouldn’t wait for regulations to be breathing down their necks,” she says. “They need to act now — even if it’s just getting an initial understanding of their risk profile — so they can hit the ground running.”
