Many companies that talk about "sustainable supply chains" are actually focusing on managing risk and public relations, according to a research study conducted by the Network for Business Sustainability, an independent research group based at the Richard Ivey School of Business.
The study reviewed 25 years of academic and industry research and revealed that ensuring safe, supportive working conditions is the top issue for companies that buy from suppliers in other countries.
However, the report found many of the companies trying to improve working conditions and environmental impacts in their supply chains are going about it the wrong way.
"Many companies today talk about developing ‘sustainable’ supply chains, but they’re actually talking about managing risk and preventing public relations crises," said Stephen Brammer, PhD, a professor at the Warwick Business School in the U.K. and the report’s lead author.
"Those companies end up implementing costly and ineffective punitive actions against suppliers after labor issues or supply disruptions have already occurred. In the end, nobody wins."
In his research, Brammer found that leading companies think about their supply chains as opportunities for competitive advantage. Those companies work proactively and collaboratively with suppliers to monitor their progress and help them improve.
"If supplier employees are experiencing high levels of injury, your company should send staff to do on-site training. If some suppliers are less productive than others, don’t just drop them. Hold supplier conferences where the laggards can learn from the leaders and everyone can share best practices."
Brammer conducted the study with co-authors Andrew Millington, PhD and Stefan Hoejmose of the University of Bath’s School of Management. He hopes their research helps executives and procurement professionals rethink their current supply chain strategy and see the potential benefits rather than just the prospective risks.
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