APICS CEO Abe Eshkenazi CSCP, CPA, CAE -
August 05, 2011
How do you define supply chain sustainability? To some, it means working with partners to ensure the long-term viability of a product, service, or company. To others, it means reducing or eliminating the supply chain's overall impact on the environment to ensure adequate resources for the future. Still others define it as supporting basic human rights when designing, building, and delivering products and services.
Unfortunately, it seems that few companies apply these definitions of sustainability to the suppliers in their extended supply chains, according to a survey conducted by the New Zealand Business Council for Sustainable Development and reported in the article "Businesses Ignoring Supplier Sustainability," from New Zealand-based Stuff'sbusiness portal. As author Eloise Gibson writes, a mere 19 percent of the participants in the online survey said their organizations "included social or environmental criteria in their supplier terms and conditions, while 9 percent had ditched a supplier in the last year for environmental, social, or ethical reasons."
While managers and executives gave slightly higher figures compared to the entire pool of respondents, the numbers still paint a fairly dismal portrait of the current state of sustainable supply chains and supplier relationships. But at least one New Zealand company, big-box chain The Warehouse, is taking these matters seriously. Gibson writes, "The Warehouse__which sold about 60 percent Chinese-made products last year__decided to tackle the risk to its reputation with a list of factory standards 120 points long and counting, covering such things as dormitory conditions; pay and hours; health and safety; and, increasingly, the environment."
The Warehouse, like many companies, struggles to find the balance between high standards and low costs. Its leaders and executives know they have a responsibility to the planet and its people, but they also must answer to shareholders and remain economically viable. Dealing with countries such as China usually brings down costs, but potentially brings with it lower standards surrounding working conditions and pollution. More than ever, companies are finding it more difficult to achieve truly sustainable sourcing.
These issues are central to the concept of the triple bottom line__people, planet, and profit. The triple bottom line places equal weight on the environmental, social, and economical aspects of running a business.
The triple bottom line also is a core part of the all-new sustainability section of the APICS Operations Management Body of Knowledge (OMBOK) Framework, third edition, which was released this week. APICS added this section specifically to address the increasing importance of sustainability to all stakeholders in the supply chain. It defines a sustainable supply chain as one that seeks "clean methods of production, minimization of the environmental footprint of products and services, and combining environmentally friendly decisions with effective supply chain practices."
Along with the new section on sustainability, the third edition of the APICS OMBOK Framework features an expanded section on risk management, another urgent issue in the minds of operations and supply chain management professionals. Soon, we will releaseAPICS Folios on these topics as well as supply chain strategy. They contain expert analysis, the results of APICS research surveys, and APICS magazine articles to bolster knowledge and awareness of these essential issues. The APICS S&OP Folio on sales and operations planning is available now here , and you can find more information on the new edition of the APICS OMBOK Framework here.
Maybe you have an answer to the question of how you define sustainability. But perhaps the better question is this: How do your suppliers and partners define it?
In other news
How APICS Operations Management Now relates to you
Operations management is everywhere. Today, operations management professionals have unprecedented impacts on the global economy. Consider these questions and how today's edition of APICS Operations Management Now relates to you and your career.
How important is sustainability to your supply chain partners? What can you do to increase their awareness of sustainability issues?
What is your opinion of The Warehouse's approach to sustainability? Should companies create similar agreements with their partners?
What is an aspect of supply chain strategy you would like to see APICS further explore?