Over three quarters of supply chain executives and operations managers predict their firms will increase their focus on sustainability over the next three years, according to a survey.
The poll, conducted by PwC and the APICS Foundation and titled “Sustainable Supply Chains: Making Value the Priority,” found 43 per cent of respondents attributed cost reduction to supply chain sustainability initiatives and 35 per cent reported improvements in their company’s environmental impact.
According to PwC and APICS, when companies broaden their perspectives on sustainability and adopt clear strategies to tap ethical, economic, social— and environmental—levers across their extended supply chains, new sources of value can emerge. Companies are realizing the significance of sustainable supply chain initiatives; however, multiple challenges continue to impede widespread adoption of sustainability across environmental, social, economic, and ethical dimensions.
The survey found the biggest barrier to the success of a company’s sustainable supply chain practices was a lack of leadership support. Approximately 30 percent of operations executives surveyed said their company has a documented supply chain sustainability strategy, but only 17 percent of managers and below agreed. As a result, mid-level management is not able to take the steps needed to drive meaningful change in the supply chain.
“It is widely accepted that supply chain sustainability is a priority for many CEOs, but this is a complex business issue that brings with it multifaceted challenges at the management level,” said Sharon Rice, Executive Director, APICS Foundation. “This study identifies patterns in the challenges that arise, helps us understand why these barriers remain, and underscores how supply chain sustainability translates into measurable business value.”
While disconnects about sustainable supply chain strategy may occur between the C-suite and mid-level management, 76 percent of operations professionals said their companies’ focus on creating a more sustainable supply chain will increase over the next three years. Already, 43 percent of operations professionals attributed cost reduction to supply chain sustainability initiatives, while 35 percent reported improvements in their company’s environmental impact. And a quarter of all respondents reported improved customer satisfaction as a result of programs tied to improving supply chain sustainability.
“There is a clear correlation – and in some instances causality – between sustainability and supply chain performance for companies who believe they can do well by doing good,” said Nic Delaye, a director in PwC’s Sustainable Business Solutions practice. “Companies should aim to better understand the major dynamics of supply chain sustainability and how to overcome the obstacles that traditionally arise, in order to both improve their impact on society and create tangible business value in new ways.”
The major barrier cited in the survey was that leadership does not supply the mandate, incentives, and resources to turn sustainability strategies into action. Additional barriers reported by supply chain professionals included inadequate sustainability education and training, significant confusion about the scope and company goals on supply chain sustainability, and the perception that the impact on shareholder value for such practices is difficult to measure.
More than a third of professionals (38 percent) said that barriers to success included the ability to measure and monitor to targets and goals. Another 40 percent believe employee performance measurement and incentives are not aligned to supply chain sustainability results.
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