A new report from the World Economic Forum identifies 31 proven practices to help companies achieve a "triple supply chain advantage" of increased revenue, a reduction in supply chain cost and added brand value.
The practices also help companies shrink their carbon footprint and contribute to local development, including the health, welfare and working conditions of the communities in which they operate.
Beyond Supply Chains – Empowering Value Chains reveals that companies included in the analysis have improved their competiveness through increases in revenue (5%-20%), a reduction in supply chain costs (9%-16%) and a boost in brand value (15%-30%). Their operational risks were also reduced. The practices, which span product design, sourcing, production and distribution through to the end of the product lifecycle, can help companies shrink their carbon footprints by 13% to 22%.
The report, written in collaboration with Accenture, outlines 31 practices that can help companies realize the “triple supply chain advantages” were identified through interviews with 25 corporations – including Nestlé, SAB Miller and UPS – non-government organizations and other sustainability experts.
“Part of the difficulty to date has been the decision-making process itself as it relates to sustainability,” said Wolfgang Lehmacher, Head of Supply Chain and Transport, Mobility Industries, World Economic Forum. “Our hope is that this report will empower companies to act now and place an emphasis on the maintenance and creation of responsible supply chains.”
SABMiller’s brand, Eagle beer, produced by Nile Breweries Uganda, is one example of how local sourcing can help gain advantage for communities. In 2001, SABMiller decided to launch Eagle as a low-cost beer, and source the sorghum used in its production from local farmers. As part of their smallholder relationships, Nile Breweries committed to longer term contracts and price agreements. Over 20.000 farmers are now part of the supply chain for Eagle, and the brand represents more than 50% of Nile Breweries’ sales. For farmers, the success of Eagle means more stable income and access to medical care and funding to achieve their own growth goals
“We are committed to accelerating growth and social development in our value chain. We have hundreds of thousands of customers and suppliers that are small-scale businesses at the heart of their communities,” said Anna Swaithes, Head of Water and Food Security Policy at SABMiller. “Supporting them to prosper is a key part of our business strategy.
“Sustainability must become a higher priority in supply chain management, given the scarcity of natural resources, rising commodity prices and greater consumer expectations for responsible sourcing and production. Those who act now and capture the market opportunity of more sustainable supply chains can differentiate themselves and generate higher margins,” said Mark Pearson, Senior Managing Director, Accenture Strategy. “This is not about trade-offs; it is about behaving in a socially responsible way that can also deliver a competitive edge.”
In addition to outlining practices that others have successfully used, the report also offers guidelines executives can apply to evaluate the value-creation potential of their organizations’ supply chain practices and prioritize sustainability investments. It also provides guidance for businesses looking to engage in ethical commerce.
The World Economic Forum is an international institution committed to improving the state of the world through public-private cooperation in the spirit of global citizenship. It engages with business, political, academic and other leaders of society to shape global, regional and industry agendas.
Incorporated as a not-for-profit foundation in 1971 and headquartered in Geneva, Switzerland, the Forum is independent, impartial and not tied to any interests. It cooperates closely with all leading international organizations (www.weforum.org).