Supply – or value?
Traditionally, or at least post-industrially, supply chains have been viewed through the lens of efficiency. Manufacturers look to get raw materials at the best price, process them in the most cost efficient way, and market them on to their customers at a keen, competitive price.
That sounds great, right?
Well, yes and no.
One of the problems with traditional supply chain thinking is there has not been enough value placed on natural capital — the Earth’s natural resources — and externalities — unintended side-effects of activities like raw material extraction. Fossil fuels are the obvious example of this. We may think the price of oil and gas is high, but the cost nowhere near reflects the environmental damage they continue to cause, nor the fact that they are non-renewable and will one day leave us high and dry.
Another huge issue with modern supply chains is their complexity. If a company is creating a physical product, how far back can we trace the component materials? Relatively cheap labour markets and high volume shipping (thanks to undervalued fossil fuels) mean that processing and manufacturing can take place anywhere in the world. This leads to situations like Argentinian pears processed in Thailand for the UK market. The more economically astute may well mount a spirited defence of such practices, but we’re with Chris Packham on this one. It’s absurd, and kind of depressing to eat a plastic-packed pear that’s been to more countries than we have rather than pick and eat one here in the UK.
So how can companies do better?
It’s important, first of all, to think about value. Value is not found necessarily in the lowest cost raw materials and components. Value takes into account the full picture of natural capital and externalities. Value is not found in the cheapest labour either. Value lies in the recognition of great social harms that come from exploiting labour and the need to ensure safe and equitable working standards and respect for human rights everywhere in the world.
Traceability, transparency and adherence to standards are becoming more and more essential to product and service sales. Reframing your supply chain as a value chain helps you see beyond the financial bottom line and make authentically sustainable decisions about procurement and sourcing.
At Grain we can help you analyse your supply chain and build a strategy that generates value through sustainable practices. We offer guidance and tools on choosing supply chain frameworks and platforms appropriate to your industry and location. We can advise on codes of practice and alignment with standards that are the right fit for your niche. We can assist with upstream value as well, providing advice and solutions on open and closed loop recycling, remanufacture, repairability and other best practices.
Whether you are constructing a complete circular economy model for your business, or would simply like to make your value chain more sustainable, get in touch.
To find out how we can help your business with its sustainable supply chain, get in touch on +44 20 8187 7040, email email@example.com, or book in a chat.