A Practical Guide to Supply Chain Sustainability
March 26, 2021
This is the second in a series of articles on sustainable supply chains: what they are, why they matter and how companies can develop procurement strategies to mitigate risk and maximize benefits across their network. Read part I here.
The men and women working behind the scenes to source raw ingredients for major brands play a pivotal role in maintaining and elevating a brand's reputation — and driving industry standards.
The everyday decisions of supply chain professionals have become more important than ever as consumers push for transparency about the origin and impact of their purchases. Beyond consumers, regulators and other stakeholders want to know: Were the workers who helped produce, transport, prepare and package food products well treated? Were the animals in the supply chain humanely handled? Did the production of the final product contribute to deforestation or other environmental problems, or did it support sustainable practices?
A company's ability to address these questions depends on its supply chain strategy. Businesses that strive to manage the impacts they have on the wider world will have more visibility into the pathways and impacts of their products. Still, it will be up to their supply chain teams to ensure that best practices are upheld and that the business is up to date on emerging sustainability risks and opportunities.
PROCUREMENT BEST PRACTICES
Practically, supply chain professionals can do this by contracting with like-minded suppliers. The contracting process not only makes it easier to project costs, it also improves supply chain visibility. By working with partners who also prioritize sustainability, a company can also take advantage of supplier innovations and capabilities designed to maximize benefits and mitigate negative impacts.
Supply chain professionals should also stay on top of emerging trends. The list of risks to monitor is growing: In addition to food safety, animal welfare and routine trade risks (risks associated with trade between certain countries or involving certain materials), procurement specialists now must be aware of costs associated with greenhouse gas emissions, deforestation, ethics violations and water usage. The more informed the teams are on these emerging issues, the better equipped they will be to navigate them and to advise customers looking for sourcing expertise. This may require teams to lean on other internal or external resources within their network, do deep dives into specific topics, and up-skill where necessary. It may also mean developing new strategies and implementing technology to track information that was once not viewed as a priority. At OSI, we've been implementing a range of these strategies. In the last couple of years, we've digitized our supply chain through a partnership with Elementum, a company behind the leading supply chain service management platform. We've also invited experts to educate our team members about deforestation impact within the private sector and how companies like OSI can address these risks while remaining competitive and even enhancing the long-term outlook.
SUSTAINABILITY AS A COLLECTIVE EFFORT
Perhaps the most important thing procurement teams can do to advance sustainability is to use supply chain relationships to elevate best practices across the industry. At OSI, we firmly believe that sustainability in food production must be a collective effort. With so many players involved in the global industry, the great work of one company or one portion of the industry alone will not be enough to elevate standards. This belief compels us and other sustainability-minded companies to share what we’ve learned on our sustainability journey. It also drives us to support our partners as they adopt best practices (recognizing and rewarding the ones who do) and to adopt new practices we learn about through our industry relationships.
Sustainability-minded procurement teams should therefore engage suppliers on sustainability topics and also embrace the use of feedback and benchmarking as tools to understand and plan for improvement. Some of the ways we do this at OSI include making voluntary disclosures each year to the climate non-profit, CDP, which enables us to benchmark ourselves against others within our industry and strategize our next opportunities for improvement. OSI Europe has also done this through supplier benchmarking aimed at understanding and supporting the progression of sustainability in its beef supply chain.
Throughout the industry, supply chain teams are in a powerful position to drive sustainability progress and ensure value reaches all the way to farm level. As global buyers supplying to global brands, food production companies are able to leverage relationships in order to encourage adoption of sustainable practices far and wide.