Four top tips to build resilient, sustainable supply chains

edie presents four top tips to build strength and adaptability.

Supply chain professionals have faced significant challenges in recent years due to a convergence of crises that have exposed global systems, including supply chains, to a lack of resilience. Here, we round up top tips from experts at Sainsbury’s, Travis Perkins and BSI to help businesses improve management approaches across the supply chain.

According to a recent KPMG survey of hundreds of supply chain managers, only 55% would consider their supply chains stable and well-positioned for the future.

They face various interconnected challenges such as geopolitical tensions, economic uncertainty, extreme weather events and digital disruption fuelled by technology.

Additionally, regulatory requirements like the EU’s Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) are pushing organisations to prioritise reducing environmental impact and enhancing social responsibility within their supply chains.

Despite these obstacles, there are opportunities for businesses to enhance the resilience of their supply chains. To address these pressing issues, edie hosted a one-hour webinar featuring insights from experts at Sainsbury’s, Travis Perkins and BSI.

The webinar, now available on demand, aimed to assist organisations in improving their management approaches throughout the supply chain to integrate sustainable practices.

CLICK HERE TO WATCH THE SUPPLY CHAINS WEBINAR ON-DEMAND

Here, we highlight four key pieces of advice from the webinar, outlining actionable steps for enhancing management approaches across the supply chain and fostering sustainable practices, including social sustainability.

1) Promote fair pay and social sustainability, not just climate action

Sainsbury’s ethical trade manager Francisca Sassetti kicked off the webinar by emphasising the significance of achieving social sustainability within supply chains, particularly through the lens of fair pay practices.

According to the latest ILO estimates, more than 50 million people globally are living in conditions of modern slavery, including in global supply chains.

While most countries globally have established minimum wage policies, adherence to these policies is not universal. An estimated 266 million wage earners receive compensation below the minimum wage, either due to ineligibility or non-compliance.

Sassetti pointed out that for suppliers to meet stringent sustainability requirements and uphold the rights of workers, businesses must engage in responsible practices themselves, including paying suppliers better.

Sainsbury’s recently announced a pledge that every banana purchased in its stores will contribute to fair wages for workers by 2027, benefiting banana growers in Cameroon, Colombia, Dominican Republic and Ghana.

The price now includes a premium, covering fruit costs and boosting workers’ wages, supporting their livelihoods and essential needs like food, housing, education and healthcare. Additionally, part of the premium helps environmental initiatives, assisting growers in adopting sustainable farming practices like carbon capture, reducing water usage and enhancing biodiversity and soil health.

2) Introduce feedback channels

Sassetti argued that making effective change necessitates fostering open conversations and building collaborative relationships with suppliers to collectively address the broader impact of corporate practices.

This includes the incorporation of feedback channels as a complement to traditional auditing methods, enabling direct communication with supply chain workers and various stakeholder groups to create a continuous feedback loop.

Sassetti acknowledged that while social audits are commonly used for due diligence, they may fall short in understanding labour rights issues and signs of modern slavery, such as excessive working hours and insufficient pay.

Drawing attention to Decathlon’s approach, she highlighted its use of a worker voice tool in tandem with its audit programme.

This tool, developed in partnership with WOVO Connect, establishes a direct feedback channel with supply chain workers, allowing for anonymous input. This enables prompt identification and prioritisation of issues related to working conditions, enabling businesses to resolve challenges swiftly.

3) Conduct scenario analysis

Travis Perkins’ group sustainability director Megan Adlen underscored the necessity of forward-thinking by highlighting the importance of mapping out how various warming scenarios could affect supply chains.

The World Economic Forum deems the increased frequency and severity of national disasters as the second-biggest risk facing the world in the near-term (i.e. 2023 – 2025), following the cost-of-living crisis.

Using timber as a case study, Adlen demonstrated the significance of future scenario analysis in understanding potential impacts.

Travis Perkins’ analysis revealed that the increasing frequency of extreme weather events due to climate change poses varying degrees of risk to timber growth hubs. For instance, heightened atmospheric carbon levels may accelerate tree growth beyond suitable parameters for construction-grade timber. Additionally, the analysis identified risks such as increased heat waves damaging foliage and soil baking, affecting growth rates.

Adlen emphasised that understanding these future scenarios enables collaborative efforts to ensure a just transition within the industry.

By comprehending how future scenarios may impact specific sectors, businesses can effectively communicate the rationale behind sustainable requirements to suppliers. This approach fosters a deeper understanding and encourages collective action toward resilience, rather than merely imposing compliance without context.

4) Understand regulation, but don’t wait to be forced to enhance transparency

BSI‘s sustainability consultant manager Kimberly Rodriguez noted the imperative for businesses to proactively engage with sustainability-related regulations pertinent to their operations, considering factors such as location, industry and associated risks.

BSI’s 2024 Supply Chain Risks and Opportunities report outlines that a surge in sustainability reporting mandates is coming in the next few years, particularly within the EU, encompassing social and environmental due diligence.

Rodriguez emphasised the importance of organisations staying ahead by comprehending the scope of these requirements and preparing to collect the necessary data for their supply chains.

Moreover, there is a potential commercial benefit to complying or going beyond compliance. A Deloitte survey revealed that 29% of UK consumers would cease purchasing brands associated with ethical and sustainability concerns, and more than a third expressing a preference for environmentally friendly products.

Rodriguez highlighted that understanding and complying with evolving regulations not only ensures legal adherence but also enhances trust and credibility among consumers. By embracing transparency and actively addressing sustainability concerns, businesses can effectively navigate regulatory complexities while fostering consumer loyalty and commercial success.

CLICK HERE TO WATCH THE SUPPLY CHAINS WEBINAR ON-DEMAND