I recently sat down with Mark Baxa, founder & CEO FerniaCreek Global Supply Chain Consulting Group and 2019 chairman of the board of the Council of Supply Chain Management Professionals (CSCMP), and Donna Palumbo-Miele, founder & CEO of Concordia Supply Chain Group, CSCMP board of director and chair of the Sustainable Supply Chain committee. Mark and Donna are passionate about advancing sustainability in the supply chain industry, and have worked with companies across the globe to drive meaningful change. Read on to learn more about the work they’re doing to promote sustainability, and how companies can jumpstart their sustainability journey!
How has the conversation around supply chain sustainability changed over the last 5 years?
Donna: People are becoming more aware of sustainability, and it’s becoming a critical topic for companies. When you give thought to the questions we had about companies 15 or 20 years ago, not everyone gave thought to a company’s sustainability practices; instead, they may have thought about a company’s brand identity or the company’s financial health. Now the conversation is becoming more about values and brand affinity. People are looking at these companies through a different lens to ensure the company’s values align with their own. Further, investors are including sustainability in their evaluations, as well. Companies are assessing their company’s environmental footprint in order to determine their greatest opportunity and where a difference can be made.
Mark: The effort toward sustainability was originally a response to societal pressures. As these pressures mounted, consumers required companies to respond in a way that demonstrated they cared – although these responses were originally unmeasurable. But the conversation evolved as sustainability became more measurable. NGOs started holding companies responsible for their environmental footprint. There was also increased interest in the treatment of humans in the workforce around the world, and the responsibility to do things fairly, ethically and compliantly when conducting business became critical factors. This dovetailed into what we now refer to as corporate social responsibility (CSR). Investors and stockholders now look to the social and supply chain compliance within regards to sustainability as highly important, and factor it into how they score a company’s net value. CSR initiatives are even evaluated in terms of how executives are compensated. Consumers are much more attuned to the idea that there are responsible companies that they identify with, and they’re willing to spend in an effort to support that company’s social and environmental platform.
Supply chain became a bigger part of sustainability at the corporate level over the last five to 10 years as consumers and investors began to ask questions like, “What is this made from? Where are you buying this?” Investors are particularly interested in the sourcing and procurement piece of what a company sells. So much of the business-to-business interaction starts and ends with the sourcing component. “Is it done ethically and responsibly? Is there scale? Are there diverse suppliers?”
Doing the right things right matters. What I mean by that is that you’re putting together the right plan to address the manufacturing, resourcing and delivery mechanisms of what you’re in business to do for your customer. You’re going to do those things right: You want to be as efficient as possible, especially when it comes to your supply chain, because money matters. If you’re doing that right, you’re likely to find ways to reduce your environmental footprint, as well. It doesn’t get you all the way, but by looking for ways to take costs from the supply chain, you’re also reducing your environmental footprint as part of that.
Donna: Going back to Mark’s comment about procurement, a lot of sourcing activities are driven around getting the lowest cost and this continues to be the main strategy for some companies. However, quality, compliance, service, supplier diversity, and sustainability are also part of that sourcing scorecard. There is a shift taking place in what buying strategies are becoming. Companies are looking at their suppliers and asking, “How can we innovate together and be more sustainable?” At the end of the day, most companies want to do the right thing. They can learn from other company’s successes as well. That’s what we [at CSCMP] want to inspire – connect, collaborate, and engage differently in the supply chain.
Why did you create the Sustainability Chair position at CSCMP, and how has the position evolved?
Mark: Over the years, CSCMP has supported the education and development of supply chain professionals, and provided them the opportunity to network and learn from each other. It became apparent to me and others that it was time for action. I had two priorities when it came to sustainability: to give supply chain professionals the resources to learn more about sustainability, and identify how CSCMP can help its member companies be more strategic in how they think about their supply chain sustainability.
I brought Donna to the board because I needed somebody that came from a really great supply chain background, but who also exhibited a passion for total supply chain excellence that included sustainability. The direction we took was to help supply chain professionals and our member companies enhance their current sustainability journey, and to recognize companies that are doing great things for society through their supply chain. CSCMP has a cross section of awards where we recognize individuals and companies across the supply chain industry, but there wasn’t anything specifically set aside for sustainability yet.
Donna, what are your current initiatives as the CSCMP Sustainability Chair?
Donna: The mission of CSCMP is to educate and connect members; therefore, we wanted to develop initiatives that gave back to our members in the space of sustainability and provided even more value to their membership. Initiatives that we are developing include the State of Supply Chain Sustainability 2020 report, which was published on July 14, 2020. This was a collaboration between CSCMP and MIT Center for Transportation & Logistics that began with a survey issued last fall specific to supply chain sustainability, where we gleaned key insights that will enable players in a number of industries and in supply chain roles to make informed decisions. The goal is to understand supply chain sustainability, how sustainability impacts enterprises, and be informative in what supply chain sustainability may look like in the future.
We are also recognizing companies and individuals through our Supply Chain Sustainability Awards. The first award recognizes a supply chain team or individual who is a visionary, who has an innovative development, or creation of a new idea or program, and has had a successful execution in order to further the area of sustainability. The second award is specific to an academic or researcher who contributed a body of knowledge supporting supply chain sustainability or promoted educational resources in supply chain sustainability. We are excited to recognize people who are making an impact in sustainability, and this is an opportunity to do so for the recipients with this first of its kind recognition by CSCMP.
Additionally, our educating and connecting portfolio includes upcoming webinars in Q3 and Q4. Our plan is to grow and evolve these initiatives year after year, continuing to bring value to CSCMP members.
What are the biggest challenges facing companies today in supply chain sustainability?
Donna: One of the biggest challenges is that some companies know they want to be more sustainable; however, they are not quite sure where to begin. That’s why they look to other companies and organizations for resources and education to bring into their organization. Also costs [can be a concern]; with most organizations there’s a cost incurred in funding new initiatives, and being sustainable doesn’t always mean saving money. In looking at these factors and others as part of a scorecard, companies need to evaluate their position and determine what aligns with their strategy.
Mark: Supply chain professionals are faced with challenges of getting the right product in the right place at the right time at the right cost. Support systems are needed to help professionals develop the supply chain within their corporate social responsibility architecture. Companies that have unique and dedicated teams looking after CSR need to become more of a partner to supply chain professionals, rather than operate as a standalone team in the company.
The other piece of this is to look at your supply base, and segment your suppliers to find those that are the most strategic and can lead you to innovative new ideas around sustainability. Many suppliers already have options to help you develop new alternatives to the way you bring your product to market, but companies stop short of engaging them on the topic. If you want to solve a problem for a day, go it alone. If you want to solve a problem for a lifetime, go together! These are the words of someone I greatly respect as a personal development coach to many…John Maxwell. This statement makes perfect sense when it comes to creating a robust sustainable supply chain that brings sustainable products to market. Unlock the potential by engaging your strategic partners!
What resources do supply chain professionals have to advance sustainability in their own companies?
Donna: Engaging with other professionals, research firms and academics is positive for all involved. Good stewardship is easy to locate. There are a number of great organizations out there, and a lot of companies are willing to share best practices. I encourage professionals to reach out to their network and start those conversations. One additional comment I’d offer is to obtain a copy of the jointly produced CSCMP/MIT State of Supply Chain Sustainability 2020. Membership in either organization will provide supply chain professionals with one of the most impactful learning and benchmarking opportunities ever produced for the supply chain profession globally.
Mark: Companies are very willing to make their CSR and sustainability initiatives public, and they often report on these. Just by researching other companies, you can learn a tremendous amount. It’s a great way to benchmark and think about where you need to head as you start your journey. But don’t forget the hidden gem…your suppliers. Get to the conversation with your most strategic business partners to solve this question. Make it happen!
To learn more about how today’s supply chain leaders are advancing sustainability, watch our recent Virtual Sustainability Summit, where we featured speakers from Henkel, Coca-Cola North America, Land O’Lakes, the Consumer Brands Association, Gartner and CSCMP.