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Supplier Monitoring Essential for Sustainable Supply Chains

Pepsi logoTalking about a sustainable supply chain is fine and dandy, but without independent monitoring of suppliers, a company can’t back up its sustainability claims, says Tom Seal, head of research at Procurement Leaders Network, in a guest column in The Guardian.

To follow through on corporate social responsibility policies, companies must monitor suppliers. But Seal says research shows that many firms don’t have set sustainability standards, so they end up relying on their suppliers to self-audit.

When companies follow a proper course of action, they reap big rewards, he says, citing the example of PepsiCo, which discovered $60 million in energy savings after it implemented better carbon management.

The cost of an effective audit may put off some companies, but in the long term, the benefits will usually make the costs worthwhile. It will also send a strong message to suppliers, increase transparency and highlight problems that need to be rectified.

Seal also notes there are pitfalls, like when Frito-Lay launched its SunChips in an environmentally friendly bag and then had to withdraw the packaging within 18 months of its debut when customers complained about the noisiness of the bag. He says customers everywhere may want green choices, but only as an added value, not as a replacement for what they originally liked about the product.

However, when it comes to operations, placing ethics over profits will pay off, especially as companies begin paying careful attention to not just what they buy, but also whom they buy it from and whether their suppliers have sound CSR policies.

He cites Lush cosmetics as an example of an ethical company that also enjoy financial success. Lush is a UK-based handmade cosmetics firm that has grown to 800 stores and is well-known for its ethical supply chain.

In August, Environmental Leader guest columnist Sophie Martin with Best Foot Forward wrote about the importance of transparency in a company’s supply chain. She says customers are now beginning to question companies — what is really in my beef burger? Is my new shirt coming from an unsafe Bangladeshi factory? Is my chicken fed genetically modified food? Customers now don’t always take what they use and consume for granted, Martin writes.

 

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