• Document: Sustainable supply chains: Making value the priority
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Insights and Innovations Sustainable supply chains: Making value the priority How companies can find more value by using ethical, economic, social, and environmental levers throughout their supply chains ABOUT THIS RESEARCH In 2013, APICS and PwC joined together to study how current management thinking leads to different priorities for advancing supply chain sustainability. Together, we’re focusing on how different people in the organization—supply chain management, operations management, and senior management—are developing the capabilities they will need to run their companies more sustainably. By comparing and analyzing their perspectives, we seek to identify the levers successful companies can use to help create tangible value from these initiatives. 2 Sustainable supply chains: Making value the priority Table of contents Sustainable supply chains: Making value the priority 4 Expand the scope of sustainable supply chain initiatives to help you find more value 7 Prioritize sustainability strategies to help unlock value in the end-to-end supply chain 11 Create a well-aligned organization that can execute on your priorities 15 Appendix: Sustainable supply chain survey results 22 3 Sustainable supply chains: Making value the priority Sustainable supply chains: Making value the priority A more deliberate, focused approach Sustainability has been on the executive agenda for years and it’s now one of the fastest-growing supply chain management trends. More than two-thirds of 500 supply chain executives say it will play an important role in how they manage their supply chains through 2015.1 When PwC and the APICS Foundation decided to explore what the people responsible for executing on these strategies would say about the topic, an interesting picture emerged. Thirty-nine percent of APICS members said company leadership is not providing the mandate, incentives, and resources to turn supply chain sustainability into action.2 That’s a significant disconnect between supply chain executives and mid- level management. Too often, the people who are expected to make change happen don’t see the same picture that the C-suite sees. For example, some 30 percent of operations executives in our survey said their company has a documented and well-communicated sustainable supply chain strategy, but only 17 percent of managers and below agreed. As a result, they are not able to take the steps needed to drive meaningful change in the supply chain. The fact that so many companies are struggling, however, does provide an opportunity for those willing to take a more deliberate and focused approach. After all, operations professionals do see value in pursuing sustainability. When we asked how sustainability initiatives added value to the supply chain in the last two years: ̥̥ 43 percent of operations professionals attributed cost reduction to sustainable supply chain initiatives; ̥̥ 35 percent reported improvements in their company’s environmental impact; and ̥̥ 25 percent saw improved customer satisfaction as a result of programs tied to improving supply chain sustainability. 1 PwC, PwC’s Global Supply Chain Survey 2013, September 2013. 2 PwC and APICS, Sustainable Supply Chain Survey 2013, June 2013. We’ll reference this survey throughout this report. See appendix for details. 5 Sustainable supply chains: Making value the priority More importantly, 76 percent of operations professionals said their company’s focus on creating a more sustainable supply chain would increase over the next three years. Where should their focus be? To realize tangible benefits from these efforts they should focus on three things: ̥̥ Expand the scope of sustainable supply chain initiatives to help you find more value; ̥̥ Prioritize strategies to help unlock value in the end-to-end supply chain; and ̥̥ Create a well-aligned organization that can execute on company priorities. These three ideas work together and reinforce each other. They can help any company integrate sustainability into how the supply chain is managed. Let’s look at each of these in turn. 76% 76 percent of operations professsionals say their company’s focus on a more sustainable supply chain will increase over the next three years. 6 Sustainable supply chains: Making value the priority Expand the scope of sustainable supply chain initiatives to help you find more value More strategic, more commercial For operations leaders and managers, sustainability is evolving to mean something far more strategic and commercial than what we’ve known in the past. The relative focus is changing from compliance-based and branding activities to a set of reinforcing capabilities that have the potential to generate value to the business—whether the business value is direct, like cost reduction, or indirect, like customer loyalty. Bill

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