Supply Chain Management: The Role of Engineers in Sustainability
Supply chain sustainability is a vital but exceedingly complicated element of corporate responsibility. Creating supply chains that are both economically and environmentally sustainable is challenging because it involves so much more than simply implementing green procurement strategies that support the traditional bottom line. Engineering managers who want to foster sustainability can run into numerous roadblocks related to supplier practices, local law, cost and stakeholder buy-in.
Sustainable supply chain management (SSCM) is a complex framework that looks at supply chain management through a tri-fold lens of economic stability, environmental responsibility and social equity to guide engineers in their sustainability efforts. It is essentially a profit-, planet- and people-driven SCM strategy that integrates strategic, social, environmental and economic goals through thoughtful process coordination.
WHY MORE ORGANIZATIONS ARE EXPLORING SUSTAINABLE SUPPLY CHAIN MANAGEMENT
According to an article released by the Institute of Business Logistics and General Management, stakeholder demand and external pressure often drive organizations’ initial forays into sustainable supply chain management. Customers, shareholders, politicians and environmental groups hold organizations accountable for the role, however indirect, their procurement processes play in raw material depletion, pollution, climate change and human rights abuses. Changing government regulations and market forces may also prompt organizations to look at the environmental impact of their supply chain processes, policies and partnerships.
While some engineering managers may feel strong-armed into adopting sustainable practices, they soon discover that their initial forays into planet- and people-driven SCM produce unexpected results. Sustainable supply chain management can, for example, reduce overhead and increase profitability when environmental improvements reduce resource usage and waste along the supply chain, lowering the cost of manufacturing processes. Organizations that commit to working with diverse, environmentally conscious vendors who use natural resources wisely may also have a competitive advantage — especially if their target demographic is Millennials. Research shows this group is willing to pay more for products produced and sold by companies that share their values.
SSCM can also lead to increased supply chain reliability. Half of the companies in the world deal with supply chain disruptions and about a quarter of those disruptions are the result of sustainability issues, according to Sandra Gray, leader of the Private Equity Sustainability Solutions sector at EcoVadis. To create and maintain a sustainable procurement network, engineering managers must be acutely aware of their organizations’ SCM policies, procedures and processes. Additionally, managing supply chain risk is easier because SSCM is data-driven and the capacity for continuous improvement is built into the framework.
THE ENGINEERING MANAGER’S ROLE IN FOSTERING SSCM
Sustainable supply chain management is only possible when competent, qualified leaders work to change organizational values and adopt a collaborative attitude toward procurement. Engineers have to not only embrace SCM sustainability as a value but also sell internal stakeholders on the idea, promote it in their decision making and support vendors in their sustainability efforts.
Implementing SSCM is a process that, depending on stakeholder and supplier support as well as the availability of sustainable resources, can unfold slowly. The most effective implementation plans take a comprehensive, multistep approach to sustainable supply chain management to ensure efforts to increase sustainability do not lead to procurement disruptions or production slowdowns.
Seven steps engineers and engineering managers can take to foster sustainability in supply chain management include:
PREPARING TO LEAD
COMPLETING A THOROUGH SUPPLY CHAIN ASSESSMENT
Before making any changes to SCM sustainability practices or policy, engineers should look closely at domestic and global supply chains to assess risks, environmental performance, human impacts, waste, financial challenges and operational efficiency. This kind of thorough appraisal often reveals hidden ways organizations can achieve a balance between economic and strategic objectives and environmental and social responsibility.By incorporating supply chain management principles, engineers can make informed decisions that promote sustainability and efficiency in the supply chain.
COURTING INTERNAL STAKEHOLDER BUY-IN
Achieving specific supply chain sustainability goals typically requires some degree of top-down investment. When engineers understand the nuances of their organizations’ supply chains and have an actionable roadmap for sustainability improvement, they can approach c-suite leaders for support with a compelling business case for action. The Sustainability Accounting Standards Board has standards for developing reports for executives and investors outlining corporate sustainability performance indicators along the value chain, and according to the United Nations Global Compact’s Supply Chain Sustainability report, the primary business drivers of SSCM include brand value protection, increased productivity, decreased social supply chain disruption and cost savings. Adopting sustainable supply chain management processes can also make it easier for organizations to meet evolving market expectations.
ADOPTING THE RIGHT SCM TECHNOLOGY
There are many established and emerging technologies engineers should explore in their efforts to promote and support sustainable SCM processes. AI and machine learning, for example, can streamline or even automate planning, demand forecasting, synchromodality and collaborative shipping, which can optimize supply chain flow and reduce greenhouse gas emissions in the process. Likewise, on-demand 3D printing lets vendors and organizations print components or inventory as needed, reducing the environmental impact of shipping while lowering warehousing costs. And blockchain can increase overall supply chain transparency, making it easier to track sustainability across supplier networks.
ENCOURAGING SUPPLIER BUY-IN
Consumer-focused companies and retailers significantly influence supplier practices because of their purchasing power, and engineers should create a Supply Chain Code of Conduct for suppliers that incorporates environmental and social responsibility guidelines. Achieving supplier buy-in and supporting suppliers in their sustainability efforts is an important piece of achieving lasting supply chain management. Some, for instance, may need help creating attainable sustainability goals and best practices. It can be equally important for organizations to hold non-compliant suppliers accountable.
COLLABORATE WITH COMPETITORS
Every organization shares a portion of its supply chain with competitors, which means they can increase their influence through strategic sustainability partnerships. Partnering with competitors to develop best practices in supply chain management and pressure suppliers to abide by them can streamline SSCM implementation. Additionally, this willingness to collaborate — particularly when it comes to advancing sustainability goals and protecting the environment — can also enhance an organization’s reputation with the public and regulating bodies.
TAP INTO THE POWER OF DATA
Data science can give organizations a clearer window into SCM metrics than ever before but many do not tap into the full potential of the information they collect. With the right data pipelines in place, engineers can track the progress of sustainable supply chain goals the same way organizations track financial objectives. Several global bodies offer measurement frameworks for assessing sustainability in supply chains. This comprehensive guide, for example, lays out a step-by-step approach to SSCM implementation and tracking while this assessment tool lays out a framework for integrating sustainability into supply chains and measuring results.
THE BIGGEST SSCM CHALLENGE ENGINEERS FACE
Engineers seldom deal directly with all the vendors in their supplier networks and may have little insight into vendor sustainability practices. A survey by The Sustainability Consortium found that fewer than one-fifth of respondents had a complete view of their supply chains’ sustainability. Half reported they couldn’t identify current supply chain sustainability issues. Suppliers of manufactured commodities have their own supply chains and may also subcontract out portions of larger orders to other suppliers, making it hard to know what an organization’s true sustainability impact is lower in the supply chain.
When vendors share an organization’s values, they may make a concerted effort to work with subcontractors who already meet specific sustainability requirements or agree to participate in sustainability programs. But lower-tier vendors may not have the resources or knowledge to conform to environmental and social responsibility requirements — or any incentives to either comply with a sustainable business code of conduct or meet less formal sustainability standards. Audit programs can help but sometimes the best approach involves totally redesigning upper-level supply chains with environmental management or corporate social responsibility in mind.
HOW STEVENSONLINE’S M.ENG.EM CAN HELP ENGINEERS FOSTER SSCM
Taught by Stevens’ world-class educators and groundbreaking researchers, the Master of Engineering in Engineering Management with a focus on supply chain management is an interdisciplinary, cross-industry degree because it has to be. Engineering leaders need both a deep understanding of the technology involved in engineering projects and the management processes through which organizations utilize technology. Fostering sustainability in supply chains requires an amalgamation of management, operations and engineering competencies — all of which students hone in a flexible, online program that takes, on average, one and a half years to complete.
Apply online now to join this program, and you can start applying what you learn to your organization’s SSCM efforts in just a few short months.