When it comes to monitoring suppliers’ sustainability performance, buying companies today largely follow a set of fairly standard procurement guidelines, which hold suppliers to compliance with environmental legislation. This has led to a sustainable supply chain plateau effect, since suppliers have little incentive to advance sustainability efforts beyond what the law requires.
Sustainability though, is not something that should be allowed to stand still. Without a critical mass of commercial organisations constantly pushing for increased sustainability, all businesses, (but especially those with global supply chains), will progressively be exposed to greater risks of disruption resulting from environmental and ethical issues.
Time to Take Ownership and Push for Progress
Your company can extract greater value from its supply chain, as well as limit increasing risks by taking ownership of your key suppliers’ sustainability performance and pushing for standards beyond legal minimums. One model to help you rise above the sustainable supply chain plateau can be remembered using the acronym AIMS.
AIMS stands for four steps in the process of improving supplier sustainability. The steps involved are as follows:
Step 1: Assess
For each of your critical suppliers, you should conduct a customised analysis of its sustainability strategy and policies, focusing on the relevance of its environmental initiatives to its geography and of course, to the industry in which it operates. Steps in the analysis should include:
• Evaluation of sustainability KPIs and the reported data
• Comparison of performance with the norms for the supplier’s industry and location
• Benchmarking sustainability performance against peers within the supplier’s industry
Step 2: Involve and Engage
It would be surprising if completing step 1 doesn’t reveal some gaps in sustainability performance. The information should not be used to browbeat your supplier though. Identifying performance issues which expose your company to risk, is an opportunity to collaborate and work with the supplier on ways to initiate improvements.
Step 3: Monitor
Assuming that you have assessed the suppliers that are most critical to your enterprise, you should make the effort to perform regular reassessments. This will enable you to stay abreast of any new risks which may surface and to keep the supplier’s eye on the ball.
Step 4: Share
As well as identifying threats and gaps in performance, your assessments will also reveal best practices which you can share across your supplier-base, so creating stronger relationships and lifting performance above competitors still languishing on the sustainable supply chain plateau.
Procure the Benefits of Supplier Sustainability
By using AIMS to take a demanding, but collaborative approach to sustainability among your suppliers, your own company can gain a reputation for responsible procurement, while mitigating future risks and strengthening buyer/supplier relationships.
The sustainable supply chain plateau needs to be conquered—so now’s the time to AIM high and lead the climb towards global supply chain sustainability.
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