Whilst there has been an undoubted rise in the development and marketing of corporate social responsibility (CSR) many organizations could still be accused of developing and nurturing their staff without focus on how activities such as sustainability should be incorporated into day to day activities. This has the result of producing employees, whose only methods and skills are to succeed and capitalize on markets and make profit and to do so with little minimal focus on social and business responsibility. For example while many organizations may be able to quote their social/environmental mission statements how many executives can quote statistics and KPI performance relating to these strategies?
Corporate Social Responsibility however is playing an increasingly important role in many boardrooms. Many businesses are establishing corporate and social responsibility (including sustainability) strategies as measurable objectives within their corporate plans. These objectives are not self-contained but are typically promulgated throughout the organization within various disciplines from operations to sales through to supply chain.
Corporate responsibility becomes just that – everyones responsibility. The mounting awareness by external stakeholders (primarily shareholders, customers and more importantly those with legislative powers) regarding topics such as the impact of CO2 emissions, ethics and biodiversity are leading organizations to develop strategies that can help minimize their own impact and drive change in an attempt to resolve the issues at the heart of the concerns. Clearly many large organizations are beginning to take corporate responsibility seriously.
It does albeit, I believe, require a facilitator and competitiveness and compliance are two key ones.
But what of SME’s? How much are they contributing and are they too developing appropriate strategies. As with many initiatives the challenge for SME’s will be customer and compliancy based. Likely to be affected are:
- Those supplying to markets where the customer is applying pressure for change through buying power
- Or the customer/business utilizes sustainability criteria as part of their sourcing process and a failure to comply would result in lower revenues.
- Those supplying products or services which may be affected by legislative controls.
For supply chain professionals whose companies are adopting corporate and social responsibilities rest assured supply chain and in particular procurement can and in most cases will be at the heart of this.
But is business really taking sustainability seriously or is it just a different approach to in the pursuit of improvements, which can be explained away as a social conscious?
For example consider that once targets are set and KPI’s established benefits can be measured and once improvements become realized, marketed within the marketplace and used for competitive advantage. Consider how CSR contains many issues from climate change, ethics, sustainability, bio-diversity etc etc. CSR could be explained as a catch all that enables organizations to switch easily from one consumer cause to another.
It could be argued that Social Responsibility can be explained away as merely doing good business, this is especially true where CSR compliancy can be a stopper to entering the market. In time supply chain improvements touted as being sustainable can be easily communicated as targeting, for example, biodiversity.
Another issue is the rationale behind such initiatives. For example cap & trade markets were launched some time ago to faciliate Co2 reduction. But It could be argued that carbon trading has resulted in just rewarding the heaviest polluters with carbon credits to match historic production
Initiatives like carbon trading do not initiate changes in processes or strategies indeed it could be argued that they sustain a “business as usual” approach.
One things for sure for near term future corporate responsibility will be increasingly present in most businesses and in most industries. Supply Chain teams will need to develop the policies, processes and measures in order to support the initiatives and demonstrate performance.
Sometimes people treat the supply chain in a manner that is not wholly appropriate. They think of the R&D team as being the innovators, the tech guys as being those who implement all the technical items and the supply chain? Well that is the bottom of the pile, they only supply the widgets and the components that we turn into something special. So why should there be any need for either innovation or technology in the supply chain?
Well this kind of ignorance could cost a company dear. If the supply chain can be both innovative and apply technology appropriately, then there is a whole wealth of savings that could be made! In turn this keeps a company with an innovative and technologically advanced supply chain in a position where it is Lean, mean and competitive
Here are some examples of typical supply chain innovation and technology use:
Innovation and Technology Combined
If innovation can be combined with technology then effectively the limit for bringing in new developments is in a sense limitless! For example, the use of Radio Frequency ID tags, often referred to as RFID is both using technology and it is indeed an innovation because it helps the supply chain become more cost effective. The levels of stock can be almost instantly monitored by using a pretty straightforward merchandise monitoring and management system, so gone are the days when you had to worry about counting each individual item.
Now you have the tags attached to pallets and this feeds the information to the system and the results are almost instantaneous and this results in the stock levels being kept to a minimum whilst ensuring that stock outs do not occur. These RFID tags do really rock and will change the way that warehouses work and keep costs down; so that is why innovation and technology need to be implemented within the supply chain. Only through keeping costs down can you increase competitiveness and so the supply chain has to have innovation and use technology. After all, if one company doesn’t do that, then here are others who most certainly will!
Innovation To Beat Obsolescence
Obsolescence is a real threat to businesses. You spend years developing a product, you bring it to market, then within a couple of years component parts become increasingly obsolete, costs rise and your competitiveness suffers. So what do you do?
Well, if there is a good deal of innovation within the supply chain, then the instance of obsolescence can be reduced. Items can be updated, reviewed and changed within a supply chain that is innovative, flexible and stable. If on the other hand, the supply chain is intransigent and can only provide x number of widgets, created to the specification that they have had for the last 10 years and no changes can be accommodated, then obsolescence can be a real threat. Companies simply cannot remain competitive if they have high levels of obsolescence, so it is vital that this is kept to a minimum.
Global Sourcing
Increasingly the supply chains that are in operation are becoming global and there is little doubt that only supply chains that are innovative and use the latest technology will be able to survive into the future. Those who simply react retrospectively will be unable to cope with the demands of a global supply chain: but those which manage to embrace both innovation and the use of technology will be able to survive. This will be the logical extension of competitiveness, so innovation and technology are inherent requirements of the supply chain, not luxurious options to be addressed as and when; they are needed now!
Sustainability
With Corporate responsibility garnering such interest the impact of the procurement team on the environmental footprint of the business is significant. Through innovation and changes in policies and processes change can come. With appropriate strategies and goals – procurement teams can take a close look at requirements and incorporate sustainability criteria on supplier and product selection helping to save both the environment and cost.
Purchase to payment
Perhaps the most significant innovation through the utilization of technology can come from streamlining the Purchase to Payment (P2P) process. Technology driven Purchase to payment can challenge and mitigate typical operational issues (compliance, authorization, visibility) through process simplification and bringing together the procurement team, requisition, suppliers and finance teams within the value chain.