Incentives to tackling environmental and social issues across industries
PURCHASINGB2B MAGAZINE: MARCH/APRIL 2011
What gives an organization an advantage in developing effective, sustainable supply chains on an international level? Dr. Stephen Brammer, whose research team has just completed a comprehensive analysis of 25 years worth of research on sustainable global supply chains, answers that question and shares his research findings in conversation with PMAC’s president and CEO Cheryl Paradowski.
The research project was initiated by the Network for Business Sustainability (www.nbs.net), a non-profit organization based at the Richard Ivey School of Business. It was sponsored by PMAC, Industry Canada and Suncor Energy Inc.
Paradowski: What was the most interesting finding during your research?
Brammer: I expected to see more about bribery and corruption in supply chain. That was far less prominent than I imagined it would be.
Then there was the piece about working at the industry level…it was interesting to see the potential gains associated with treating supply chain issues as a set of challenges industries can address collectively—rather than as problems individual organizations face. Many companies in the same industry draw on the same supply base and face the same risks, so what’s good for one is good for others.
Paradowski: In your model, you indicate one of the external levers as “peers”, which refers to industry collaboration. It does seem counterintuitive, because you would think at the industry level companies would be highly competitive, no?
Brammer: First let’s accept the tension that is there—certainly, many firms in these marketplaces are competitive. At the same time our argument is that there are strong incentives for them to collaborate.
I don’t see those as being inconsistent with each other because firms in an industry have a shared vulnerability to a range of social and environmental challenges. We have seen how the reputation of fashion companies or shoe manufacturers or sportswear manufacturers is collectively influenced. When people think of buying a pair of running shoes, they are very often thinking of the potential for child labour or poor labour conditions. The reputation of the industry has been collectively impacted and, as a collective, the industry wants to address that.
We’re working with some firms at the moment, in the publishing industry in the UK on the purchase of paper. They’re concerned about purchasing paper in a way that’s sustainable: they don’t want untraceable rainforest timber to turn up in their supply chain. They’re more concerned about making sure that as an industry, they are able to take a strong view on sustainable supply than they are about competing to deny each other access to sustainable pulp.
Paradowski: The third step in the process that you’re proposing around improving supply chain performance has two levels: a baseline and a next tier of best practices. The base level was the command-and-control approach, whereas best practices involved consultation, development and learning with your supplier community. Did your research identify any conditions that made it more likely that companies would transition to that best practices level?
Brammer: Most obviously, it helps to have a history of involvement in corporate social responsibility. Often times the organizations where we see examples of really sophisticated, well-developed, effective practice are organizations for which implementing responsible, sustainable practices in the supply chain is a simple extension of a broader organizational logic. Companies that embed concerns for sustainability across the business as a whole tend to find it easier to more effectively integrate the same approach into their supply chain. You need to get your own house in order before trying to influence others.
Paradowski: If you had one piece of advice for SCM professionals looking either to start or further embed sustainability into their companies, what would that be?
Brammer: Firms currently view supply chain sustainability fundamentally as risk management. If I could offer advice it would be to turn that around to try to experiment, trust and take an open mind to the potential opportunities in sustainability and international supply chain. Think proactively in your organization about your commitment to sustainability—in terms of internal motivation of employees, protecting your brands, reducing costs, enhancing productivity and getting to market faster.
For a copy of the report or to participate in a webinar with Dr. Brammer, please visit pmac.ca/brammer.
Dr. Brammer is professor of strategy and associate dean for research at the Warwick Business School, University of Warwick, in the UK and a leading researcher in the areas of business ethics and corporate social responsibility. His research team also included Dr. Stefan Hoejmose and Dr. Andrew Millington of the University of Bath.