MHI Solutions - Volume 3, Issue 5 - (Page 36)

FEATURE Sustainable Supply Chains Requires Effective Supply Management Capabilities BY ROBERT HANDFIELD, BANK OF AMERICA UNIVERSITY DISTINGUISHED PROFESSOR OF SUPPLY CHAIN MANAGEMENT - DIRECTOR, SUPPLY CHAIN RESOURCE COOPERATIVE, POOLE COLLEGE OF MANAGEMENT, NORTH CAROLINA STATE UNIVERSITY G lobalization has created the emergence of sophisticated supplier networks, creating management challenges as exposure to volatility and complexity of global sourcing has emerged. While Western organizations have met shortterm cost reduction and flexibility goals through outsourcing, it has been at the expense of lower transparency into suppliers' operational processes within these far-flung areas of the globe. Many enterprises have limited or no visibility into their second-tier or third-tier suppliers, due to subcontracting activities that occur without their knowledge. Opaque supplier networks leaves supply networks exposed to environmental or labor practices that are non-compliant with enterprise sustainability objectives and codes of conduct. Increased risk to the brand, and associated financial impacts due to consumer reactions, has occurred in such cases. Wal-Mart, Nike, Gap, BP, Baxter, Apple, Aldi and others can attest to the dramatic impact of sustainability risks 36 MHI SOLUTIONS * Q1 * 2016 on their brand image and customers. This has brought about a recent understanding of the role of transparency in sustainable supply chains, in support of a diverse set of stakeholder needs. It has now become clear that simple monitoring through a self-managed set of narrowly defined evaluative activities is no longer enough to meet stakeholder demands for accountability in the supply chain. Organizations must move towards a multi-faceted view of stakeholder accountability through increased transparency of activities in its extended supply chains. And there are also financial reasons why transparency is becoming more important. Sustainable and transparent supply management has been recognized as a core ingredient for driving organizational financial growth. Those who limit transparency risk incidents, which can bring public awareness around unfair/unlawful labor and environmental practices followed by loss of brand value and sales. As a result, sustainability has become a serious issue for retail behemoths and brand names. In July 2009, the retail giant Walmart announced they were unrolling a sustainable product index and required its supply base of 100,000 global suppliers to comply with 15 requirements across four major categories (energy and climate, material efficiency, natural resources and people and community). This effort was launched to improve Walmart's public image as a good corporate citizen. In the same year, Nike reorganized and decentralized its corporate social responsibility (CSR) department and established sustainable supply chain management as a mid- and long-term

Table of Contents for the Digital Edition of MHI Solutions - Volume 3, Issue 5

CEO Update
Ensuring Supply Chain Supplier Sustainability and Transparency
Energy Savings in the Supply Chain
The Future is Now
The Internet of Things: Connecting Supply Chains to Sustainability
Sustainable Supply Chains Requires Effective Supply Management Capabilities
The Changing Face of the Supply Chain: Under 35 and on the Rise
Building a Sustainable Supply Chain Workforce
Industry Focus: Apparel
MODEX 2016 Preview
Industry Trends
Economic Market Analysis
Education
“It was the coolest thing I’ve ever seen!”
Safer Handling
Solutions Group Update
Fulfillment Update
Solutions Spotlight
Scholarship Winners: Where Are They Now?
MHI News
Calendar
Index of Advertisers

MHI Solutions - Volume 3, Issue 5

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