If you want more effective supply chains, you need to build in more responsible solutions by connecting it with the core business, channelling colleague enthusiasm, challenging expectations and being bold. That was the message coming from the panel discussion Sancroft hosted on Wednesday this week, where business leaders discussed the hard but rewarding topic of how to turn supply chain disruption into business opportunity through more responsible practices. After setting the scene with a picture of the disruptions that businesses are facing, we saw a lively discussion between the business leaders who joined and our esteemed panellists. We heard from Stephen Cawley, Head of Sustainability and Responsible Sourcing at John Lewis, Matthew Rowland-Jones, Sustainability Manager of Pearson Publishing, and Daniel Muir, founder of Supply Chain Scotland. The discussion was wide-ranging, but a few key themes emerged about what works when tackling these challenging questions:
Connect it to the core:
Responsible supply chains are too often treated as an add-on compliance question – not part of the core running of the business, and not demanding much action. However, all the panellists agreed given the growing challenges, from resource shortages, to labour issues and investor demands, businesses cannot afford to move slowly. Success comes from showing how it links to the core purpose and running of the business. In the case of Pearson, this meant demonstrating that water availability is fast becoming a challenge to their ability to expand printing in their growth markets, where access to e-readers is limited. Better understanding of these growing shocks, and how they will affect society also helps design new educational tools, publications and courses to help people adapt and thrive. In the case of Macphie of Glenbervie, where panellist Daniel Muir was Head of Supply Chain, they embraced becoming a B-Corp (Benefit Corporation – meaning strict sustainability standards in their supply chain) as a critical part of securing and expanding the market for their food ingredients, as many clients were demanding higher and higher specifications. Meanwhile for John Lewis, clearly defining what will have the strongest impact on the business and communicating this across the teams was key to turning a theoretical discussion on supply chain complexity into a practical picture of what to do next.
Channel colleague energy:
One of the biggest surprises that panellists found in driving responsible supply chains was how engaging and motivating colleagues found this – particularly in the case of changing a whole organisation to be a B-Corp as in the case of Macphie of Glenbervie, where this became a matter of pride for colleagues. Or take John Lewis’ recently announced innovative set of trials in Oxford which includes vouchers for the return of empty packaging and used clothing along with innovative low carbon delivery options. This huge effort, which is responding to customer demands, and generating widespread press – came largely from the local staff, without needing heavy central pushing. That was because the priorities for the business had been clearly communicated and space was given for people to channel their own passions to achieve this. At the same time, it can mean closing down options and helping people prioritise what really matters – rather than giving free rein to try anything and everything – but this creates better results in the long term, as colleagues see the real impacts on the business, rather than being disenchanted if their efforts do not get much recognition. This of course remains a challenge for how to engage colleagues across large global organisations and at every stage of a complex supply chain. The audience and panellists noted one of the areas that still needs work is how to engage across cultural differences and expectations, for instance on what acceptable labour standards are.
Challenge expectations e.g. on margin and secrecy:
As we heard, and often see in our work, many responsible supply chain initiatives go slow, or fail because they start with the wrong expectations – stakeholders expect higher margin products before they are willing to invest or assume you can get recognition for transparency while maintaining high levels of secrecy. But by challenging these, you can get the impact needed. So, several of the businesses attending mentioned their stakeholders presume that the more sustainable option will cost a lot more, therefore the product or service should have a large premium. But this runs up against tight margins and only a limited audience of consumers who are willing to pay more. As the panel noted, challenging these assumptions can mean treating ‘responsible supply chain’ costs not as a separate line item to be passed directly on, but as part of the bigger web of decisions buyers and supply chain leads make all the time. For instance, one of the businesses in attendance has just launched a fair-trade range and took the decision not to increase prices. This has led to huge consumer interest, and a very successful product, with healthy returns through scale, and because buyers were tasked with looking at how to balance the bigger picture. When it comes to transparency in supply chains, a common assumption is that this will undermine competitive secrets and be too exposing. However, after challenging these assumptions, John Lewis were able to publish the factories they use years ago, helping to meet the growing expectations of stakeholders, while having no negative impact on their bottom line.
Disruption is accelerating and demands from all stakeholders are growing – as we saw in our introductory presentation, and the questions and concerns in the room. The only response is to be bold and ambitious in spotting big opportunities and going after them, based on a clarity of vision, engaged set of colleagues and unblinkered approach. The panellists in particular drew attention to the potential in circular economy approaches – moving from ‘take, make, waste’ to ensuring products, and its packaging, remain in a closed loop for longer and achieve a second life once disposed. This is so exciting because it offers the chance to design new business models that can be efficient and profitable from the outset, not just adjusting incumbent systems.
Altogether it was an energising chance to hear about how challenges are being overcome in practice, and we plan to continue the conversations and draw out more of these secrets to success – email email@example.com to be kept in the loop about future events. For supply chains, if you are interested in finding out more, next week we will be releasing our report summarising the disruptions that businesses are facing, and the actions they are taking to overcome them. In the meantime, get in touch at firstname.lastname@example.org to hear more about what we discussed this week, or to talk through the challenges you are facing – we are always happy to share our perspective based on our responsible supply chains expertise.