Historically, organisations have not considered themselves responsible for the actions of business partners further down their supply chain. However, research suggests that in some sectors, such as manufacturing, the supply chain can account for up to 70% of both total expenditure and greenhouse gas emissions, accentuating the necessity to integrate supply chains into responsible business management processes [Accenture: why a sustainable supply chain is good business] and include them as part of CSR reporting.
One of the biggest challenges that companies face is a lack of knowledge regarding the behaviour and performance of the suppliers in their supply chain. It is estimated that the average company knows only about 7% of what is happening in their own supply chain, resulting in a significant percentage being effectively invisible. This figure may come as shock to many but when put in to context of large organisations, which may have thousands of suppliers, it is not surprising that the percentage can be relatively low if effective management processes are not implemented.
Increasing traceability and sustainability in supply chains does not come without its own set of challenges. McKinsey conducted a survey of 639 company executives to identify the biggest supply chain challenges over the next three and five years [The challenges ahead for supply chains:McKinsey Global Survey results].
In order to help companies overcome these challenges the United Nation Global Compact released a guide in April 2014 entitled ‘A Guide to Traceability: A Practical Approach to Advance Sustainability in Global Supply Chain’. This guide provides an overview of the importance of supply chain transparency and traceability for corporate sustainability objectives, the risks and opportunities presented, and provides steps for improving traceability by incorporating traceability management processes within organisations. While the challenges faced in implementing a sustainable supply chain management process may at first seem daunting, companies which allocate appropriate time and resource to this activity have reported a number of business benefits. The diagram below provides an overview of the most common business benefits of sustainable supply chain management.