Home > Trends and perspectives > Sustainability in the supply chain and the new car paradox

Sustainability in the supply chain and the new car paradox

Old Car by Nouhailler @ Flickr

There is an interesting report by McKinsey Quarterly (The business of sustainability: available here). More than 3,000 executives from many different industries replied to a survey providing information on how much sustainability represents a business prioirity and which actions are taken.

Of course, we immediately looked at supply chain related aspects!

First interesting thing: managing impact of products through the value chain is at the 10th place of the concerns and motivations to implement sustainability (only 28% of the companies marked this item), after other reasons like: reducing energy and water use, waste, corporate reputation and respond to regulatory pressures.

It is therefore not surprising that supply chain management is one of the last business processes in which sustainability has been completely or mostly integrated.

There can be several reasons for this, not last, that controlling suppliers and suppliers’ suppliers is more difficult than controlling your own company. And this is even more true when suppliers are global.

However, this remains a key point: can a company declare to be sustainable if it has no clue about what is happing in its supply chain? Maybe I can replace my machineries to consume less energy, but how much energy and CO2 has been emitted to make the new machineries?

This can also be called the “new car paradox”:

Making a new car creates as much carbon pollution as driving it, so it’s often better to keep your old banger on the road than to upgrade to a greener model (The Guardian, Green Living Blog)

To me sustainability should be a matter “global omptimization” and not “local optimization”. Otherwise it is like reducing your inventories by moving them to your supplier rather than work together to reduce them and have a real benefit.

So, it seems that there is a lot of effort to be made by research to produce methodologies of evaluation that take into consideration the whole supply chain. From the other side, companies should put more effort to look also outside their bonduaries.

The good news is that some companies are actually doing that. Going back to the McKinsey survey, about 10% of the interviewed companies, the so called sustainability leaders, put a lot of effort on analyzing the product impact along the supply chain…with good returns!

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