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Sustainable Value Chain 

The functional areas throughout the value chain face specific pressures, challenges and opportunities when responding to organization-wide sustainability strategies. Aspects to be addressed include: Sustainable Supply Chain, Sustainable IT, Operations, Fleet Management and Logistics,Marketing, CRM, and Human Resources.

Sustainable Supply Chain
To deliver a truly sustainable product to market, the entire supply chain should be brought to bear. As consumers and regulators increase their expectations of a company's ability to manage environmental, social, ethical and safety issues on a life-cycle basis throughout their supply chain, impacts are being felt from primary industry to retail.


For those just getting started, some immediate gains can be realized by simply including sustainability and social responsibility elements in their purchasing criteria, in a way that simultaneously maintains or increases quality while decreasing cost and risk.

 
The longer-term gains that can be realized from building a fully sustainable supply chain extend beyond regulatory compliance and customer approval to unforeseen strategic, efficiency and cost reduction opportunities, as has already been demonstrated by leading examples of transformative sustainability projects. However, the challenges of building a sustainable supply chain range from maintaining cost and quality, to the logistical challenge of monitoring and improving the performance and compliance of dozens or hundreds of suppliers.


Having a common standard to hold suppliers accountable to becomes critical: however, the complexities of today's global business environment have created challenges regarding the sufficiency of standards such as ISO14001 and SA8000.


Outsourcing strategies will likely become more complex as sustainability requirements are added to the standard evaluation criteria. Third party assurance and the role it plays in monitoring the supply chain is becoming increasingly important as regulators and markets demand evidence of compliance with the principles of sustainability.

 

Sustainable IT
Over the past 30 years, Information Technology (IT) has gone from a negligible consumer of energy and resources to one of the most consumptive segments of the modern economy. Estimates attribute between 3 and 13 percent of global electricity consumption to server farms alone.


Many see the greening of IT as a data centre centric issue, rather than from a broader technology perspective that includes end-user computing. When printing, networking, and desktops are taken into account, IT is likely the second largest consumer of commercial power after buildings themselves.


As companies adopt green agendas, IT departments will need to both evolve and show innovative leadership. For example, developments in server virtualization have been successfully pursued and are saving enormous amounts of power and money.


Meeting customer performance demands and energy efficiency targets also requires new operating models and novel thinking. IT leadership on this front can include providing stakeholders with the automated data inputs, measurements and reporting required to support their own corporate sustainability programs.


IT has the advantage of being a fast-moving sector with technologies and strategies being refreshed every few years. This fast pace brings the promise that IT will continue to evolve from being an environmental offender, to playing a leading role in the sustainable business world.


Operations
The quest for higher profits has always provided a strong motivation for gains in operating efficiency, but the widening scope of environmental regulation and mounting consumer pressure are increasing the urgency to do so for sustainability purposes as well.


Implementing a sustainability agenda within a firm's operations is a complex task, but the methods and tools to achieve them are often familiar. Operational improvement frameworks such as Six Sigma and TQM already include many aspects of sustainability such as decreasing waste generation and energy consumption.


With the wide variation of regulatory regimes globally, many firms worry about their ability to stay competitive against foreign firms that are not subject to the same regulatory rigour. Many industries are capital intensive and require long amortization periods for payback on R&D and new equipment, which can drastically increase their ability to make and finance significant changes. Recognition of the underlying strategic imperative requires strong executive insight into emerging risks and opportunities.


Fleet Management and Logistics
As fuel prices become more volatile and emissions receive closer scrutiny, logistics professionals are being pushed to find more fuel-efficient methods of getting goods to market.


Route optimization, fuel additives, alternative transport modes, and outsourced and shared fleets are just some of the examples that are now being considered by firms that did not consider them prudent in times of cheaper energy and less environmental scrutiny.


As fuel costs rise, less energy intensive (but often slower) transport modes become increasingly favourable. However, for industries where speed of delivery is critical, driving sustainable logistics will require a broader supply chain initiative that may include local sourcing and distributed production.


Marketing
From the development of new products and services to the adoption of enhanced corporate values and strategies, sustainability is changing the way the world does business.

 
As companies respond to this change, they are rapidly acclimatizing to the new opportunities and risks in the marketplace. Companies are now actively promoting environmentally and/or socially responsible products, services and behaviour. Effective communication on these issues can open new markets, attract new business, and promote education and awareness among the general public. However, organizations engaging in sustainable marketing must beware of misleading or unsupportable sustainability claims, as they can cause severe damage to both reputation and brand.


Ethical marketing and communications policies and codes of conduct are highly valued in today's market, as standards for disclosure are almost non-existent. These types of voluntary standards are growing in popularity, as they help companies to avoid the pitfalls of "greenwashing" while building credibility through a commitment to honest, transparent and fair communication.


CRM
Increased competitiveness in the market calls for innovative measures to maintain and build customer relationships.
Traditional concepts of CRM such as loyalty and retention are strengthened by the principles of sustainability and responsibility. Companies who can begin a dialogue with their customers to identify the sustainability related challenges they face will be better equipped to meet their needs in the future.


CRM and sustainability meet where companies:

 

  • Leverage the environmental and social value of products and services for existing and future customers, thereby increasing satisfaction and addressing the long-term interest of the company, customer, and society.
  • Create mechanisms and implement the technology that will permit the company to source, receive and incorporate customer feedback into processes, products and services.

 

Human Resources
Human resources are proving to be a valuable driver of the corporate sustainability agenda.


The traditional principles of a sustainable approach to HR are to provide fair, ethical and equal employment of individuals-in a safe and healthy work environment. These principles can help to reduce employee turnover and boost productivity, thus saving costs and increasing revenue.


While these traditional principles stay the same, companies are identifying new ways to utilize the principles of sustainability and Human Resources together to further the sustainability agenda. Some characteristics of this generational shift are evident:

 

  • Increasingly, individuals are making employment decisions aligned with their individual values. A noted value shift in society indicates increased awareness and higher expectations for corporate sustainability and responsibility.
  • As a result, both attraction and retention of talent becomes a measurable output of the integration of the principles of sustainability throughout the company.
  • Companies can encourage sustainable growth and increase productivity by including sustainability metrics and objectives in individual performance evaluation frameworks. These metrics and objectives may apply both to the company itself, and to its contribution to the sustainability efforts of its stakeholders.