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Profitability starts with sustainable supply chain (I)

In fact, the green revolution was regarded as anathema to profit in some quarters. Today, issues of sustainability have come front and centre in all business corporate conversations and will continue to trend the world over.

AT some point in the long history of business, sustainability initiatives were once considered a luxury. Such programmes were regarded as ‘nice to have’ for the sake of enhancing the brand image.

The general feeling then was that sustainability programmes had no direct impact and significance on organisational performance other than market perception.

In fact, the green revolution was regarded as anathema to profit in some quarters. Today, issues of sustainability have come front and centre in all business corporate conversations and will continue to trend the world over.

Sustainability issues are slowly becoming top page agenda items and highly regarded as very important in enhancing the reputation of the brand in front of the civic society.

Over the years, companies of various forms and sizes have realised that managing environmental performance throughout their supply chains will result in more gains than what is often reported.

The general feeling amongst supply chain management leaders across the industry divide is that the industrial revolution is evolving into the sustainable revolution.

The world order is forcing companies to make sure that the sustainability philosophy is designed and reflected in the entire production process, starting from where raw materials are sourced, proceeding to the manufacturing processes through to distribution and logistics.

For those that care to listen, it is important to remember that sustainability issues are slowly becoming less of a ‘nice-to-have’ and more of a ‘need-to-have’ especially in the eyes of progressive supply chain practitioners.  Said differently, sustainability efforts are recognised for providing a framework on how best to conserve resources with the future generation in mind.

Leaders sitting at boardroom tables must acknowledge that today’s supply chain practices will significantly impact tomorrow’s business environment.

Progressive supply chains are slowly shifting from regarding sustainability issues as largely compliance driven but as voluntary programmes literally meant to create revolutionary changes in the way supply chain issues are handled.

As a corollary of the above, sustainability procurement must be regarded as future proofing the organization, making it more resilient to supply scarcity especially during a crisis or in an emergency.  For those organisations that have bothered to follow the sustainability path, there is a full realisation that it is key to a business’s longevity and success.

Some will say that “sustainable business” can be equated to “profitable business”. Those companies that are environmentally and socially responsible have come of age in business. The broader sustainability initiatives also revolve around managing the triple bottom line, namely profits, people and planet. The hallmark of the concept of the triple bottom line is that instead of one bottom line, there should be three: Profit, people and the planet.

The major objective of the triple bottom line concept seeks to measure the firm’s commitment to sustainability by tracking the financial, social and environmental performances of the business over a prescribed period.

However, there is a general feeling that corporate leaders seem to move heaven and earth to achieve their profit targets, but the opposite is true of their people and planet targets. But as green issues continue to trend, business leaders are now incorporating three Rs as part of their sustainability efforts. The emphasis is on reducing, reusing and recycling as ways of reducing waste while improving the efficient use of resources.

Some companies are therefore moving towards a circular economy featuring zero waste as all resources used in products are recycled or reused.

This has generally forced business leaders to press pause on the pursuit and prioritisation of profit as a way of balancing revenues and eco-friendly production processes.

It, therefore, marks a major shift away from the general view that organisations are only worried about profits.

Are there any benefits to be gained from sustainability? Some will continue to dismiss the ‘green philosophy’ as a publicity stunt, but there is undoubtedly a business case for adopting sustainable supply chain practices.

The expectation is that when done properly, businesses can use their eco-friendly programmes to benefit society while boosting their brand and improving their bottom line.  In order to create even more benefits out of sustainability efforts, there is need to redesign supply chains. In their current state, they are flawed.  Today’s supply chains are potential creators of waste and pollution. The current make-up of supply chains has the potential to threaten the very existence of life on earth if they are not redesigned.

It is increasingly becoming important to have a close-looped environmentally friendly supply network that relies on the use of eco-friendly products and processes.

Redesigning and streamlining the supply chain processes has got the potential to reduce the overall costs because of the intelligent product redesigns that allow for efficiency of shipping and storage, ultimately resulting in carbon footprint reduction.

Redesigning will, therefore, entail peeling the layers of the onion and rooting out areas of supply chain inefficiencies with its attendant costs.  For sustainability efforts to take hold, corporate business leaders must acknowledge that the complex supply chain challenges prevailing in the world of business cannot and will not be solved by individual efforts but requires industry wide collaboration.

Putting combined efforts to change the world for the better will certainly require concerted efforts, thinking and actions that go beyond the four walls of one organisation.

Business organisations are generally regarded as a nexus of business relations involving many stakeholders to include civic society, employees, suppliers, customers and competitors.

As an organisation sets its own sustainability strategy, the results thereof are a function of how well the organisation works with its stakeholders.  The whole supply chain network is, therefore, encouraged to dedicate their time and effort to doing sustainability activities beyond the realm of day-to-day business.  In the process, the whole supply chain network will be positioned to create value not only for themselves and their shareholders, but crucially for wider society.

  • Nyika is a supply chain practitioner based in Harare. —  charlesnyika70@gmail.com

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