Sustainability is a crucial element of today’s Supply Chain Management (SCM). When designing supply chain strategies, it is essential to keep in mind responsible business practices and the commitment to society for a cleaner, safer environment. A company’s Supply Chain poses inherent social and environmental risks and governance challenges; however, adopting Supply Chain Sustainability can be very rewarding for the business, organization, and society at large.
Supply Chain Sustainability is comprised of two elements: the management of environmental, social, and economic impacts; and the practices that encourage good governance throughout the lifecycle of goods and services.
The Supply Chain team must ensure that sustainable practices are adhered to during activities such as vendor on-boarding, identifying alternative energy sources, outsourcing projects, de-risking processes, and waste disposal. SCM originates and owns various ideas and initiatives to reduce carbon footprints from the overall ecosystem. As an example, use of coal at manufacturing sites can be replaced with Bio Briquettes. This reduces the pressure of consumption on fossil fuel and reduces emission of Carbon Dioxide & Sulphur Dioxide into the atmosphere, which in turn helps in reducing the carbon footprint. One can also use carbon-free electricity, which contributes towards green energy.
The Supply Chain organization can contribute towards a company’s green initiatives in other ways. For example, they can lead the way in sourcing and consuming non-conventional energy, such as the procurement of solar energy for manufacturing sites, corporate offices and warehouse locations. Specifically, the capex procurement team within the Supply Chain organization can collaborate with the site engineering team to identify sustainable solutions that can be implemented across the entire manufacturing facility. The use of Scale Elimination System at manufacturing sites can help reduce or eliminate scaling in condensers, cooling towers, piping, etc. This leads to power and water savings with minimum use of cleaning chemicals, thereby ensuring a cleaner effluent and a sustainable solution. Within the site engineering function, V belt drives can be modified with flat belt drives, which helps save power. The use of energy efficient motors is promoted, which also helps reduce energy consumption. Disposal of waste and spent solvent should be done with buyers who are compliant with the local environmental and pollution control regulations. This helps in reducing the overall impact on the environment.
The responsibility to choose the ideal outsourcing partner lies with the Supply Chain team and it is imperative to choose partners that align with the organization’s guidelines on sustainability. During the partner selection phase, there must be a thorough screening of the manufacturing sites of the outsourcing partner from an EHS perspective. Local regulatory and statutory compliance, along with effluent handling and disposal facility, should also be verified thoroughly before awarding business. Additionally, each outsourcing site should be supported with necessary periodic training by EHS function of the principle company on Safety, Chemical / Fire Handling, Mock Drill, etc. This ensures that outsourcing partners also follow safe practices and the common objective of Sustainability is aligned for both parties.
Sustainable procurement means looking beyond the traditional financial evaluation and involves taking into consideration the organization’s environmental goals and social benefits. The decision to buy must be based on a thorough life cycle cost evaluation of a product or service being purchased, its impact on the environment, and all associated social risk and benefits.
Companies should adopt a comprehensive and overarching approach towards Sustainability that should broadly cover guidelines to suppliers, measure baseline supplier performance, develop training and capacity-building programs, drive performance improvement, organize annual supplier meets, and establish rewards and recognitions.
Sr. Vice President – Supply Chain
Piramal Pharma Solutions