Sustainable supply chains: breaking out of the tick box
If manufacturers want to drive resource efficiency innovation across their supply chains, they need jump beyond compliance, take risks and be creative, argues Ramon Arratia
It's time to rethink the accepted approach to managing sustainability in the supply chain. The resource crunch we are experiencing will not ease without radical change. It's time for manufacturers to push for a brave new world, one where only the leanest most creative suppliers can survive.
Typically if a company wants to achieve sustainability across its supply chain it will draft a company supplier standard and then audit for compliance with that document. The process often begins with a questionnaire and is followed by audit visits to suppliers judged to be the highest risk.
Well intentioned as this is, the impact is inherently limited by the narrow scope of the dialogue and the schoolteacher-student nature of the relationship. It might work well when addressing major issues (such as avoiding child labour), but telling suppliers what not to do misses an opportunity to foster their talent for commercial advantage and innovation.
Sustainability should never be relegated to compliance. Making that a central message to suppliers is key. At Interface, we say: 'If you want to continue to do business with us, in fact if you want to do more business with us, then inspire us to make more sustainable products with your own innovations'. It's the opposite of checklist compliance.
This approach also differs from the conventional one in the scope of the conversation. Most supplier programmes focus on the supplier's own operations, usually a factory. But as lifecycle assessments continually show, the biggest impacts are frequently outside that boundary, in the supplier's own supply chain.
Another key thing we've learned is the power of sharing your biggest challenges with suppliers. For example, at Interface we want to achieve 100% recycled or bio-based raw materials in our carpet tiles. This demands radical innovation. Sharing this hugely ambitious goal doesn't ask suppliers to improve their process incrementally. It forces them to consider if there is a better process altogether - and if they can design better products.
The supplier that develops a sustainability innovation first has a competitive advantage and the supplier that fails to innovate risks losing out. The risk and reward become implicit in the supplier-customer relationship.
Another key point is focusing on the biggest win rather than the quickest or easiest. For the manufacturer of a component, redesigning the component or changing its specification is likely to yield greater environmental benefits than focusing on the manufacturing process. Yet the latter is exactly what typical supply chain programmes require.
Suppliers are too often faced with slightly different requirements from customers, all of which concentrate on what happens inside the factory. Ticking the sustainability boxes is seen as a necessity to satisfy customer requirements, rather than a way of inspiring business vision, and the burden of compliance can lead to negative attitudes towards sustainability.
The '700-question supplier questionnaire' epitomises this fatigue. How can we possibly inspire supply chains with questionnaires and boxes to tick? Engineers and product managers love the products they make. They also love difficult technical challenges. Discussing products with them is such a fertile ground. They also know much more about their product than you do as a buyer.
We continue to be impressed by what can be achieved when suppliers are encouraged to innovate and are rewarded for solving our problems instead of us trying to solve theirs. Our experience is proof indeed that the 'inspire, measure, innovate' approach can deliver so much more than 'code, questionnaire, audit'.
Ramon Arratia is sustainability director for Interface in Europe, Middle East, Africa & India