Fair wages. Eco-friendly supply chains. Healthy margins. Operating ethically and operating profitability are no longer mutually exclusive concepts. And leading companies are walking the walk: balancing the goal of achieving commercial advantage with achieving positive social and environmental outcomes. Better yet, those focused on this “triple advantage” in supply chain operations can increase competitiveness through improved revenue and brand reputation, while decreasing cost and risk.
Ethical Supply Chains Boost Profits
Business has reached a tipping point. Sustainable supply chain operations can increase competitiveness through improved revenue and brand reputation.
Recent research by Accenture Strategy has found that companies stuck in a mind-set of “what’s the minimum I need to do” are missing out on opportunities to use ethical business practices as an integral part of what makes them unique.
Achieving responsible and profitable supply chains is about gaining a triple advantage: creating a clear business case for corporations, as well as benefits for the environment and society. Those focussed on this “triple advantage” in supply chain operations can increase competitiveness through increased revenue and brand reputation while decreasing cost and risk.
- Companies that talk about sustainability instead of actually shaping responsible supply chains will begin losing their ability to grow and compete
- Social media puts businesses under the lens for their practices, and they may feel a reaction from a global customer base that will “vote with their wallets”
- Reputable analyst firms are increasingly factoring ethical behaviour into their valuations, and sustainability can create significant impact on stock prices
- Ignoring business sustainability may make it difficult to attract and retain new talent. Millennials consider sustainable practices to be essential, and 46% of CEOs reported that employees would be among the most influential groups in guiding their action on sustainability over the next five years – second only to consumers
- Companies that don’t embrace responsible supply chain practices risk falling behind and losing a competitive edge they may never regain
- Companies must move beyond the concept of sustainable business practices as a noble purpose, and instead embrace them as a strategic weapon wielded to gain an advantage. To do so calls for getting the numbers straight and building a clear business case for investments
- It also is key to collaborate on sustainability issues across an extended value chain of internal stakeholders, suppliers, sub-contractors and the end consumer. By working together, companies can find new ways of achieving social, environmental and economic gain, and ultimately create a competitive advantage
The infographic contains a great overview of the research findings (click to enlarge.)
It was satisfying to see this research highlight the need for corporations to create a solid business case for sustainable practices by taking a more holistic view of what impacts the bottom line. As I have mentioned on a number of occasions, if the true cost of business is taken into account then doing good is much more likely to be shown as good for business, particularly if the real costs of unethical and unsustainable practices are also factored into the equation.
For me though, the most fascinating aspect of the research study was the mention near the end of the article about “new forms of collaboration.” Even collaboration with competitors. Accenture gave the example of Nestlé and PepsiCo combining parts of their supply chain in Belgium to increase delivery frequency and provide better service, while reducing transportation costs and environmental impacts.
That kind of behaviour by corporations will lead to a better and brighter future!