Inbound Logistics | June 2022

to leverage the connectivity we provide,” he says. “It’s a partnership platform.” The Higg suite of tools was first created by the Sustainable Apparel Coalition, but has expanded to related vertical markets

and a commitment that by 2030, 30% of its line-haul trucks will use diesel- alternative fuel. “We have an obligation, a responsibility, as the biggest in this space to do something about it,” says Stephan Schablinski, vice president, operations excellence-GoGreen, at DHL Supply Chain. More organizations are turning to their procurement teams to examine supplier ESG practices. “Several decades ago, the role of procurement was primarily focused around unit cost reduction and saving money,” says Omer Abdullah, co-founder of procurement intelligence firm The Smart Cube. “But in recent years, procurement has become far broader to encompass aspects of innovation, quality, and sustainability.” These efforts are driven partly by outside pressure. “Stakeholders ask not only about their operations, but also their suppliers’, so it’s no longer acceptable to say you only focus on your own operations,” says Miguel Cossio, procurement research director and analyst, supply chain, at Gartner. “That’s where the procurement function becomes critical to the puzzle.” Companies are prioritizing these efforts, starting with suppliers that have the greatest impact on their businesses. They’re educating and motivating suppliers with summits; writing ESG requirements into contracts; adding sustainability to cost, quality, and delivery in supplier performance evaluations; and offering incentives such as better payment terms.

to provide information about their suppliers, who provide information on theirs, and so on. “This entire process takes a lot of time and is based on a collaborative spirit among all the supply chain partners,” says Sayan Debroy, associate vice president and supplier risk intelligence expert, The Smart Cube. Companies are also identifying sub- tier suppliers with blockchain, bill of lading data, and trade data. John Armstrong, chief technology officer of Higg, a software platform that offers insights into materials, products, factories, and stores, cites the importance of network size in the same way that transportation technology providers do. “While the Higg Index is exclusive to us, we’re starting to host other companies’ carbon and traceability tools

such as toys and home goods. Collaboration is a common

denominator throughout many supply chain ESG initiatives. It’s necessary for building the large networks organizations need to do everything from reducing GHG emissions to eliminating suppliers with unfair labor practices from their supply chain. “Radical collaboration is the future,” says Armstrong. “If you’re not radically collaborating, you probably won’t have relevance in a few years. “The needs are too extreme, the data is too huge, and the supply chain is too complicated,” he adds. n

Since the start of the pandemic, my firm’s commitment to supply chain sustainability has:

Breakdown of respondents by how their firm’s commitment to supply chain sustainability has changed since the start of the pandemic.

Not Sure 9%

Decreased 9%

Same 46%

Increased 36%

Businesses use a range of tools and strategies to help them better understand supplier impact on their ESG goals, whether the issue is sustainability or social responsibility. Many start by

mapping out the supply chain. With the help of technology, organizations ask Tier 1 suppliers

Source: State of Supply Chain Sustainability 2022 study, MIT Center for Transportation & Logistics and CSCMP

June 2022 • Inbound Logistics 39

Powered by