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Shed light on the links in the supply chain

iGuzzini IBM

As sustainability becomes a more deep-rooted part of day-to-day business decision making, companies are increasingly moving towards a single, integrated platform to manage environment, health and safety (EHS), sustainability and supply chain data. 

Companies worldwide are working to improve their sustainability and EHS performance, so accurate data management has become a crucial and rapidly growing business requirement. Investment in data management systems is one the fastest growing areas of many companies’ EHS and sustainability spending.

They are looking for increased visibility on suppliers’ performance and are investing in additional monitoring. The fashion sector is leading the way, followed increasingly by the food industry.

According to IBM, there will be 300 times more information available to use by 2020 than there was in 2005 – a figure it puts at 43 trillion gigabytes of data. Corporate sustainability managers are beginning to realise the benefits that information can have in supporting their environmental and social impact reduction efforts.

Typically, a company’s largest impact on the planet sits outside its sphere of influence: along its supply chain. It is not uncommon for more than 80% of a company’s total end-to-end carbon impact to be situated within the operations of its suppliers and for its direct effects to account for as little as 5% in many instances.

The supply chains of such large businesses are long and complex, made up of tens of thousands of suppliers across the world spending hundreds of millions of dollars. Understanding who those suppliers are and what impact they are having on the planet is crucially important if the company is to reduce its overall environmental impact. 

But it is not easy. In fact, without the right data and information on those suppliers, it is very difficult indeed.

Companies have only just started to scratch the surface in understanding how they can gather, process, analyse and make the best use of data that will help them save money, make money, build more resilient supply chains and become more sustainable. More organisations are turning to software providers to help them come to grips with the data that will help to unlock these savings.

UK-based hotel and restaurant group Whitbread, for example, has been working with UL EHS Sustainability’s supply chain software solution to help meet ambitious sustainability targets. In May 2015, the company reassessed its corporate social responsibility (CSR) goals and developed responsible sourcing and commodity policies to ensure that, by 2020, all its suppliers improve their sustainability credentials and meet the standards set by the business. 

The technology offers a centralised way to collate and manage data, and report on the sustainability performance of suppliers. By inviting suppliers to answer a series of questions, the software can analyse the responses and identify potential risks within the supply chain. 

Now, with a bird’s-eye view of its supply chain hotspots, Whitbread’s sustainability team has access to clear and consistent information that allows it to work closely with suppliers to resolve issues and to educate them about the company’s sourcing and commodity standards.

Of course, the software can also be used to encourage environmental impact reduction by asking suppliers to log carbon, energy, waste, and water data – and identify areas where improvements and savings could be made.

A sophisticated EHS and sustainability management system allows all sorts of information to be collected – from incident management and code of conduct surveys to performance metrics for Scope 3 carbon reporting.

Data also enables companies to improve transparency. They are realising that having a full picture of their supply base, backed up by data that points to potential risk, will stand up to the increased scrutiny by consumers and the media, and help to protect valuable corporate reputation. The practice of CSR and the use of advanced analytics have not always been perfect bedfellows but the landscape is changing.

Complex environmental and social challenges are increasing all the time, particularly with supply chains located in parts of the world most at risk from issues such as climate change and water scarcity. As data management software gets more sophisticated, it aids performance and strategic decision-making, rather than just pure reporting. This new knowledge is giving companies the power to make positive changes along the value chain.

Mark Ward is general manager of UL EHS Sustainability. The company is a division of Underwriters Laboratories, a global independent safety science company

 

 

 

 

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