By Jonathan Thatcher, CSCP, and Christopher Jablonski | November/December 2013 | 23 | 6
Two sustainability leaders team up to explore corporate practices
What are the greatest risks to your supply chain? How mature is your company in its sustainability practices? What does your executive team really care about? Where does the money go? More and more, business leaders are considering these questions and their impacts on the organization. A growing body of research demonstrates that a focus on sustainability, coupled with a real commitment for lasting change, benefits the business at all levels. If you’re not already, you need to get serious about supply chain sustainability.
Despite what many people might think, supply chain sustainability is not just about cleaning up the planet. Myriad factors fall under a larger umbrella, including social, ethical, and economic concerns. Sustainability definitions are becoming wider, encompassing transportation, packaging, workplace health and safety, corruption, supplier diversity, globalization, and many more concepts frequently encountered by supply chain and operations management professionals. (See Figure 1.) Sustainability is substantial, is vast, and can even refer to management practices, strategy, and finding value. One operating definition of supply chain sustainability might be that it is a practice that minimizes risk, reduces costs, and drives growth through positive environmental, social, economic, and ethical practices.
Typically, research in this area includes surveys that capture the sustainability plans and goals of senior managers. Less common is research that looks at supply chain and operations management practitioners. For the past several years, APICS has devoted resources to researching how supply chain practitioners approach various issues in sustainability. In part, this effort led to the APICS Supply Chain Sustainability Folio: Uncovering the Triple Bottom Line, which explores how employing sustainable practices is critical to meeting certain business needs.
APICS maintains a strong membership base of supply chain practitioners, enabling an in-depth examination of the perspectives of those who work most closely with supply chain in their careers. However, it’s rare to find research that looks at both the practitioner and senior managers. It’s also difficult to obtain data that identifies the gaps in management thinking that can lead to negative perceptions, misplaced priorities, and barriers to advancing supply chain sustainability.
The perfect partnership
For the last few years, APICS and the APICS Foundation—the nonprofit body of APICS, which has the goal of advancing supply chain and operations management knowledge through research, educational programs, and workforce development—have been partnering with multinational professional services firm PwC to explore the harder-to-pinpoint sides of sustainability. Not content with the traditional model of people, planet, and profit, APICS sought a wider view. The association brought its strength understanding the supply chain practitioner to PwC’s knowledge of the upper-level manager and C-suite executive.
“It seemed logical that we could pair our expertise,” says Rocco P. Ciccolini, operations advisory manager at PwC and one of the principals in the partnership. “There are plenty of synergies we are excited about, not only in areas of how best to align supply chain strategies, but new and exciting topics in sustainability.” Now, APICS and PwC representatives meet regularly to discuss upcoming research initiatives, current trends, and additional ways they can leverage their expertise.
For 2013’s research initiative, APICS and PwC decided to focus on a number of areas, including the challenges to widespread sustainability maturity; differences in perspective and commitment between senior management and practitioners; the effectiveness of metrics, reporting, and training; and the factors that differentiate sustainability leaders and laggards. APICS and PwC collaborated on a survey to get at these and many other questions. The survey was sent to a cross-section of 20,000 APICS members and customers around the world in a variety of roles, including directors, managers, practitioners, and across several industries. Many of the survey results and interpretations were shared with attendees of APICS 2013 in the session “Sustainability Delivered: Interpreting and Executing the Vision for Tangible Benefits.”
Mind the sustainability gap
One of the more revealing insights from the 2013 survey is the significant gap in how executives and leaders differ from supply chain and operations management professionals in their views of sustainability. Because of this disconnect, communication, support, and tracking of supply chain sustainability practices are significantly weakened.
Consider the following discoveries:
Most senior executives and directors—about 90 percent—say they support supply chain sustainability ideas from staff members. However, about 30 percent of practitioners believe senior management is either neutral or unsupportive in this area.
While 30 percent of executives and directors say they fully communicate supply chain sustainability strategy, only 17 percent of managers and assistants agree.
A mere 15 percent of senior managers report having no measurements or tracking in place for supply chain sustainability initiatives. However, 45 percent of practitioners say they lack these metrics.
“These gaps probably do not come from different interpretations of what sustainability is,” says Nic Delaye, sustainable business solutions director at PwC and a central figure in putting together the APICS-PwC research initiative. He adds that the survey was carefully designed to define clearly what supply chain sustainability means. “What the data tells us is that these disconnects between executives and lower levels are real,” he says.
It seems that the senior manager is not seeing the perspective of the supply chain and operations management professional, connect with each other more effectively on supply chain sustainability? Clearer understanding of each other will help address the complexities of improving alignment between supply chain sustainability strategy and tactics.
Within a production facility, for example, reducing the energy consumed by finishing machines paradoxically can increase material consumption thanks to an increase in scrap. In conflicting cases, a sustainability strategy needs to provide better guidance and priorities and always focus on getting the best value for the entire organization. Practitioners can make recommendations from their perspectives, but it is the senior managers who remain responsible for the definition of desirable results and outcomes—and for final approval.
The survey data uncovered additional barriers between practitioners and management. Only 5 percent of executives and directors report having no supply chain sustainability strategy, compared to 21 percent of practitioner managers. Further, practitioners do not believe upper management provides adequate mandates, incentives, and resources to turn sustainable strategies into action. Unfortunately, many practitioners also report significant confusion about the scope and goals of supply chain sustainability.
Sharing perspectives and recommendations is important, but it is part of a bigger goal—the successful execution of supply chain sustainability as guided by business unit strategy. Senior managers rely on practitioners to consider both business unit strategy and tactics. When a practitioner is unable to evaluate tactical execution of strategy, the entire company suffers. Survey results showed a clear desire for improved metrics and reports—including supply chain sustainability dashboards.
An effective dashboard provides data that integrates with decision making, planning, and prioritization efforts without overwhelming these or other processes. Ideally, a dashboard also might display soft measurements, such as partner relationship levels and the status of obscured internal goals and conflict resolution.
Unfortunately, soft data often is difficult to measure precisely and report objectively. Targeted education and training may help. Education can build knowledge of best practices and provide the practical skills unique to each layer of management. Education and training also can provide a forum to ask questions and obtain answers that span more than a single department or division, helping break down sustainability implementation silos. Finally, supply chain sustainability education and training bolstered with incentives can help bring best practices into daily practice.
For Ciccolini’s part, he offers a few straightforward ways to achieve a sustainable organization. “You have to have the mandate from leadership, you have to have the measurement, and you have to have the strategic goals documented,” he says.
What trends and topics in sustainability interest APICS and PwC for future study? For Delaye, performing more research on all areas of sustainability, not just environmental issues, will become fruitful areas of exploration. Social concerns, worker livelihood, health, education, economics, wealth generation, job creation, anticorruption, and conflict minerals all are expected to become major sustainability topics in the future. “These trends are affecting all businesses now,” Delaye says, “and they are not going away.”
Jonathan Thatcher, CSCP, is director of research for the APICS professional development division and author of the “Ask APICS” department in APICS magazine. He may be contacted at email@example.com.
Christopher Jablonski is staff editor at APICS. He may be contacted at firstname.lastname@example.org.
To comment on this article, send a message to email@example.com APICS and PwC soon will release a white paper on their sustainability findings.
Read this and other APICS research publications, including the new project management folio, at apics.org/research.