Home' MHD Supply Chain Solutions : MHD Nov-Dec 2014 Contents 66
The ongoing growth of international trade
between developed and developing
countries has put the health of supply
chains firmly under the glare of a bright and, for
many, unwelcome spotlight.
Whilst addressing the challenges of
sustainability risks, potential opportunities and
trade-offs from a business perspective have
received little research attention in the past.
These days the matter is of critical importance.
Despite this, companies are grappling with
the opportunities and risks presented by
sustainability, though they understand it is
important to get serious about this subject.
Ensuring that sustainable supply chain
management is in place is particularly critical for
companies outsourcing elements to developing
economies, with the employment prospects
of millions of workers hanging in the balance,
making it of great socioeconomic importance.
Not only that, but companies also need to
manage the risks of negative media attention and
consumer boycotts that play out in various indus-
tries, such as textiles, food or electronics industries.
The other issue to keep firmly in mind is the
changing mentality of consumers, who these
days are demanding environmentally friendly
and socially responsible products and services
on a global scale.
Companies that do currently outsource to
countries such as Korea, India, China and the
Pacific Region understand that the challenge
lies in measuring and managing the sustainable
practices of supply chains.
We have conducted new research in this
area, which has uncovered the importance
of companies being able to identify the inter-
relationships between supply chain members,
particularly for those companies that are part
of a supply chain with a wide geographic
spread. Often, these scenarios present the
greatest reputation risk, with poor working or
environmental conditions at production sites
often difficult to identify.
While some literature on sustainable supply
chain management has been published,
few publications have specifically dealt with
sustainability performance measurement for
improving supply chain management.
For many, the real challenge lies in fixing
issues within existing unsustainable supply
chains and implementing a sustainable model
without interrupting the flow of business along
the way, which is an incredibly challenging task.
Mitigating the risk
Our research reveals the way to mitigate the
risks associated with unsustainable supply
chains is to conduct a company audit to
uncover the issues, consider an assurance
process, implement some training, reconsider
how to communicate more effectively with
suppliers, or offer incentives to overseas
supplier once improvements have been made.
However, bear in mind that implementing
a sustainable supply chain management
process where poor practices have been in
place is not easy. Not only is this because
of complex international paths and inter-
relationships of goods and services, and often
large geographical distances between several
suppliers, but also because of cultural and
political differences in supplier countries, often
also with the need to consider unstable political
and socio-economic conditions.
Then there is the issue of battling sustainabili-
ty risks, which often relate to specific production
sites or working conditions among suppliers,
which can negatively influence the reputation of
the company or the acceptance of its products.
These issues can be serious, and could even
include the use of child labour or slavery by
the company to which you are outsourcing. Of
course, these issues can be reported widely by
international media, bringing unwanted attention
to companies that have most likely been
completely unaware of the issue raised.
PERFECTING THE SUPPLY CHAIN
OUTSOURCING BUSINESS PROCESSES TO OVERSEAS COUNTRIES MIGHT BE ONE
OF THE MOST EFFECTIVE WAYS FOR COMPANIES TO REDUCE OPERATING COSTS,
BUT THE WORLD IS IN DESPERATE NEED OF A NEW, SUSTAINABLE SUPPLY
CHAIN MANAGEMENT FRAMEWORK TO MANAGE THE PROCESS.
PROFESSOR ROGER BURRITT
Successful supply chain
management of emissions can
be elusive but is essential.
Marcin Rybarczyk photo.
MHD SUPPLY CHAIN SOLUTIONS --- NOVEMBER / DECEMBER 2014
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