Article

Supply Chain Risk and Sustainability: Potential for Partnership

2011-06-10 · By Dr. Christopher Coles

Markets and Value Chains, Private Sector and Markets Programme, Overseas Development Institute Uncertainty abounds. The global climate is changing – catastrophic ... cropping up with alarming frequency. Weather patterns are increasingly unpredictable; rains fail or floods destroy whole settlements. Commodity prices are rising; energy and fuel costs are increasing, (oil-based) fertiliser is increasingly expensive and…

Markets and Value Chains, Private Sector and Markets Programme, Overseas Development Institute

Uncertainty abounds. The global climate is changing – catastrophic …

cropping up with alarming frequency. Weather patterns are increasingly unpredictable; rains fail or floods destroy whole settlements. Commodity prices are rising; energy and fuel costs are increasing, (oil-based) fertiliser is increasingly expensive and water is becom… Volcanoes are closing European airports on an annual basis. A polit…. It’s getting a bit risky out there.

If I am the managing director of a large global company with diverse and remote supply chains, what do I do on Monday morning in order to mitigate risk? If I’m a gambler perhaps I’ll wait and see, preparing to respond should the worst happen. If I have less of an appetite for leaving things to chance, I may take a more proactive stance, seeking alternative products and suppliers and controlling changeability through analysis, planning and automation.

What is certain is that action is no longer optional. After all, outside my day job I’m a consumer too. Only yesterday my kids were nagging me after a school assembly ‘revealed’ to them that their dad may be responsible for dead parrots somewhere in South America and child labour in East Africa. Eco-labels and other certification schemes (one of our main tools for managing supply chain risks) are so numerous that our customers complain of confusion and suppliers tell us what a huge burden they place upon them.

But, parables aside, the point is that consumers are becoming increasingly concerned with how, where and by whom our products and services are produced – about safety, transparency, traceability and ‘fairness’. Add this to the growing risks and uncertainty and the private sector playing field is rapidly changing like never before.

The most agile companies will build resilience into their networks by investing in closer, longer-term relationships with their suppliers and reorganising supply and distribution chains. Thus competitiveness will become a function of preparedness to avoid risks or to deal with those events that are unavoidable.

So there has never been a better time for the development community to engage with companies and the corporate agenda in order to help the private sector deal with the fast-changing and volatile operating environment. The former is well-placed to provide the insights and guidance required by the latter in order to negotiate ever more complex certification, policy and legislation. And we have the technical knowledge and experience to help organisations secure supply through social and environmental sustainability in value chains.

Businesses are good at doing business. So let’s move the focus away from ephemeral projects that typify ‘Corporate Social Responsibility’ programmes, and instead communicate and measure the fundamentally positive role that core business activities can play – through innovation, leadership and generation of value and employment.