Engaging the Sustainable Supply Chain Using Social Business Tools
Sustainability programs focus a great deal on individual company compliance to achieve particular goals or reporting deadlines. This is certainly important in the ever-growing world of regulations and government mandated programs. Carbon reporting, social performance, water management – these are all very important aspects of triple bottom-line programs and often are included in compliance activities or the focus to describe key performance indicators as so-called “Stage 3” monitoring activities which I discussed in Part 4 of our article series.
Not all sustainability objectives, however, can be met within the “four walls” of the organization. Certain key objectives require not only understanding what your direct organization is doing in key areas of sustainability, but also what the position of your value chain performance in those key areas. Known as “Sustainable Supply Chain” or “Sustainable Circles,” these new business constructs allow organizations to “roll-up” key performance areas across the triple bottom-line and report fully integrated positions in their sustainability programs.
Emergence of social business tools which allow for organizations to create “sustainable business networks” create new, real-time opportunities to proactively manage objectives across the supply chain. The idea that networks and value chains of businesses drive performance across an enterprise is not new and has been with us as a management science for about two decades. However the concept of sustainability across those value chains and social business networks as a means to communicate our own measures of sustainable performance is a fairly recent development over the past 2-3 years.
Figure 1: The idea of a manufacture having a number of suppliers in a business network with each other is the basis for the sustainable business network. (Source: Newport Consulting Group, GRC Expert).
Late last year, software maker SAP released its sustainable business network platform code named “Glass House” for use in a limited ramp-up deployment with selected customers. Already adopted by a large, global retail chain, the idea of connecting multiple organizations through a set of permissions – similar to “friending” individuals on social media platforms such as Facebook – allow for the governance of information sharing and metric exchange across multiple, complex supply chains.
Figure 2: A sustainable business network – as depicted in this example – allows visbility and transparency across the value chain (source: SAP Research)
Since organizations do not typically operate in only one supply chain – rather a complex integrated set of relationships – the sustainable business network concept is a valuable approach to address sustainable supply chain issues in an integrated and consistent manner. This can reduce the cost of sending and receiving multiple questionnaires, surveys, and communications if the instruments can be standardized across different value chains. Permissions to read responses can be granted by mutual acceptance between both companies similar to “linking” on LinkedIn or “friending” on Facebook between individuals or pages. Once the relationship is established the information sharing can begin and be managed centrally using on-premises or cloud-based tools.
Trade associations are another great conduit for gathering information which can be shared across value chains. Manufacturing associations have been doing this in quality areas for decades, and these best practices are moving into the area of sustainability and corporate responsibility at a quick pace.
Ultimately, the development of an information lifecycle which I proposed in my initial article of this series suggests a circular feedback input from Stage 4 to Stage 1. Usually this occurs on regular reporting and planning cycles, often annually but in some smaller companies and operating units a quarterly adjustment period is typical. This way the current progress of the organization can be examined, mapped to planned targets and revised (up or down) as needed.
Some best practices you can use when pursuing a sustainable business network approach:
- Look to trade associations. There definitely exist economies to scale when working across large value chains using disparate information forms. Trade associations and industry groups can help reduce redundancy and offer small firms “large company” capabilities.
- Understand the technology is here, the business protocol is evolving. Modernizing a sustainable business network is relatively new in the corporate world. As such technology providers are still learning what business protocols works and which do not, even though the underlying technology is quite mature.
- Ask yourself: will it work for me? Companies involved in government work or sensitive research and development programs may find the old-fashioned method of direct manual reporting offers less risk to their intellectual property than does participating in a broad industry group or value chain initiative. As such weight the benefits and risks of a sustainable business network.
- Once you broaden your optics, revisit your strategy. Gathering the kind of information a sustainable business network can provide can be a heady and revealing experience, of many different forms. As such, once a company is better informed it is well advised to revisit the merits and realism of its strategy, goals and key performance indicators so as not to be accused of making “green-washing” or “binding statements” out of either ignorance or intent.
Other Posts by William Newman
Sustainable Business Forum