Inbound Logistics | January 2023

GREENLANDSCAPE

The world of supply chain management is ever-evolving, and there is increasing emphasis on sustainable and compliant ESG practices. Company leaders should do all they can to strengthen and improve their supply chains by assessing their ESG risks, engaging with suppliers, and developing systems to monitor and manage their supply chains. These best practices provide signicant ways to implement ESG, whether you are just starting out or optimizing a long-running plan. While you can enact these ESG principles to improve your own operations, remember to use ESG to build relationships with suppliers and partners rather than just create restrictions so you can drive innovation for a better world. Supply chain leaders may be surprised to nd that when they partner with their suppliers to do better, they achieve more across a variety of metrics. n

Despite having contracts, some suppliers might not clearly understand how to approach ESG integration, so be sure to resolve any questions or obstacles they might have. Concurrently, companies can include reward incentives in the procurement process that prioritizes suppliers with higher ESG metrics/commitments. 5. Create incentives to improve ESG supply chain performance. Internally, company leaders can motivate the workforce by offering incentives for achieving both long- and short- term ESG objectives. Identify rewards that employees nd valuable, and communicate openly about the goals and progress toward achieving them. Not only does this show internal contributors and external stakeholders how important ESG responsibility is to the company, but it also enables the company to achieve its targets more quickly and effectively.

ignorance of what is taking place. Company leaders should strive to improve the traceability and transparency of their supply chains. This may involve creating tighter relationships with suppliers, being more heavily involved in oversight and management, and making data regularly available to stakeholders and the public. Additionally, utilizing technology to track and manage supply chain data enables quicker access to up-to-date information and protects against “greenwashing” and “wokewashing” claims. 4. Impose ESG supply chain requirements through formal contracts. To guarantee control over supplier operations, companies may need to implement formal contracts with their suppliers. The agreements should clearly outline the ESG standards to be kept and the repercussions for failing to meet the requirements.

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January 2023 • Inbound Logistics 87 ICC =inventory carrying costs C =capital T =taxes I =insurance W =warehouse costs X =shrinkage S =scrap O =obsolescence costs R =recovery