How can technology be used to support a sustainable supply-chains in the Consumer sector?

Our recent C-suite barometer 2024 report revealed that reviewing supply chains, operations and processes is top of the agenda for global C-suite executives. In addition, human rights have emerged as the second biggest ESG area, where senior executives feel they lack in-house expertise.

One of the most significant challenges for consumer businesses operating with a global, multi-tier supply chain is ensuring that human and labour rights are upheld in the sourcing of raw materials and the manufacturing of their products. This includes addressing issues such as forced and child labour, which remain highly prevalent globally, in both developed and developing nations. The most recent global estimates from the International Labour Organisation (ILO) suggest nearly 50 million people are victims of modern slavery globally – an increase of 10 million since the 2016 global estimates. This is a problem on the rise, despite legislation increasingly placing requirements on businesses to do more to prevent it.

Another critical challenge is ensuring environmental sustainability throughout the supply chain. This includes minimising carbon emissions, ensuring sustainable sourcing of raw materials to minimise biodiversity loss, and responsible waste management. With around 80% of carbon emissions falling into Scope 3 categories for most companies, addressing carbon emissions in the supply chain presents a formidable challenge for any company working towards a Net Zero target.

How is technology helping companies engage with their supply chain to address these challenges?

Barriers to successfully managing ESG risk in the supply chain often stem from a lack of communication and clarity between buyer and supplier. Technology allows you to centralise data collection and data analysis, facilitates communication and improvement planning, and supports knowledge sharing and capacity building, all in one place - providing easy access and oversight, even across multiple tiers of the supply chain.

Technology also helps overcome very straightforward, but immensely impeding obstacles to engagement, such as language. For example, ensuring surveys and assessments are provided in the supplier's local language removes any barrier to inclusion or misunderstandings, and means programs can be more easily and effectively implemented globally, at scale.

Why should companies think about implementing a supplier engagement tool now?

The adoption of supplier engagement tools, which enable supplier assessments on ESG-related topics, is accelerating. According to a 2022 Sustainable Procurement Pulse Survey, these tools are currently used by 54% of organisations but this is expected to rise to 99% by 2024. Supplier engagement tools are therefore already evidently playing a significant role in many company’s supply chain strategies, and we only see this increasing over time. There is a clear recognition by the business community that collaborating with their suppliers is essential to tackling complex ESG challenges.

A shift has also been seen as a result of emerging legislation, which increasingly requires companies to account for and report on ESG-related impacts, risks, and opportunities related to their full value chain, including upstream suppliers. The European Union’s Corporate Sustainability Reporting Directive (CSRD), for example, will require businesses to assess issues that are material from a full value chain perspective and report on topics such as workers in their value chain, which will require a new level of data collection and assessment to support reporting. This is something that wasn’t seen as a mandatory requirement in the past, where disclosures related to the supply chain were generally optional.

What are companies doing now that could be improved or that could be a potential risk?

A real proliferation of supplier engagement tools hit the market in recent years, as a result of legislation such as CSRD and Germany’s Supply Chain Act. While this is great, as it means there are lots of options out there to choose from, it can be overwhelming to select the right tool and has resulted in several tools that aren’t quite up to spec yet. It is therefore vital to establish your business's unique requirements and find a tool that meets your specific needs.

Another risk is businesses adopting the technology, but not having a clear strategy around how this will be embedded into the overall procurement process. While also not ensuring there is the right mix of skills and experience to understand what the data is saying and how to respond to risks that are identified via the tool, or how to use the data and is being collected.

It is important that businesses recognise that any tech solution only forms part of a successful, responsible supply chain program, and must be accompanied by the correct policies and practices that ensure it is fit for purpose. Otherwise, there is a real risk businesses will inadvertently collect a lot of (potentially high-risk) data, without the tools and resources in place to respond to the findings.

What are the next steps businesses should take?

There are 7 steps businesses should look at taking when starting their journey towards a sustainable supply chain. They are:

1. Understand exactly what it is you need to achieve – this should involve talking to different internal stakeholders, such as sustainability and procurement.
2. Select the right partner that can meet your requirements.
3. Engage internal and external stakeholders in developing assessments that meet your business's unique impacts, risks and opportunities.
4. Develop and implement policies and procedures that will support the technology being fully implemented into the procurement process and will encourage continuous improvement.
5. Collect data and establish a baseline.
6. Support suppliers through improvements, where necessary, and reward high-performing suppliers.
7. Track and report on progress.

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We are committed to working with organisations intent on embarking on and evolving, their sustainability journeys; not only because it makes good business sense, but also because we believe in collectively striving to create a more just and equitable society.

If you would like to speak with a  member of our team about how to create a sustainable supply chain please get in touch via the button below,

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