DEVELOPING SUSTAINABLE SUPPLY CHAINS EFFECTIVELY

Discover how to monitor and drive ESG performance across your entire Supply Chain

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The growing call for Supply Chain Sustainability

In the B2B world, Supply Chains can account for more than half of a Buyer Organization’s revenues. Sustainability is a universal value and a key step in value chains, making a Buyer Organization as sustainable as the last of its supplier.
ESG Supply Chain reporting and supplier due diligences are a growing trend internationally (e.g. the German Act on Corporate Due Diligence - also known as LkSG). The financial system is increasingly adopting “Supply Chain Finance” tools that incorporate indicators on the ESG performance of a Buyer’s supply chain.


Supply Chains are largely characterised by the presence of Small and Medium-sized Enterprises (SMEs) - in some cases, spread globally - with limited reporting capabilities and different levels of sub-suppliers (system integrators, raw materials, ecc.), making the effort on Supply Chain Sustainability monitoring even more challenging.
Nowadays, Buyer Organizations need to be in control of their suppliers’ sustainability and this implies measuring it and constantly stimulating improvement throughout their entire Supply Chain. Suppliers’ engagement on Sustainability requires data and digital tools to manage constantly updated visibility on their ESG performance and CO2 emissions, and monitoring of improvement initiatives within a broader supplier risk management framework.

Delivering a Sustainable Supply Chain Journey

Best in class players are quickly moving from ESG score calculations to risk monitoring in a changing environment. Indeed, the ESG Supply Chain requires a gradual evolution of the adoption of ESG practices by the supplier base, continually raising the standard, in accordance with the best international practices (ISO, GRI, SDG, CDP, GHG Protocol). Strong collaboration among corporate functions and “co-opetition” with industry players, ESG scores benchmarking by supply categories, ESG Assessment Visits by independent third parties and supplier training are all part of a successful Sustainable Supply Chain journey.

SUSTAINABLE SUPPLY CHAIN MODEL

Defining a sustainable Supply Chain model is the most important activity, mapping sustainability requirements, defining metrics for creating of a sustainability score, assessing benefits, setting up the approach to provide guidance to vendors. Reply can help you use an approach shared by the industry, or define a new one.

SUPPLIERS’ ESG MEASUREMENT

After defining a solid model, it is critical to gather information and measure it. This is a time-consuming activity, and should be viewed as a “journey” rather than a single step. For this reason, the Industry-standard approach may be the best one, since it makes it possible to leverage a standard approach shared with other companies in the same industry.

SCORE FEEDBACK SHARING

The Sustainable Approach aims to continually improve the sustainability of the Supply Chain. For this reason, it’s important to develop a workflow to share score feedback with your entire supply chain, in order to propose a solid path to improvement to suppliers.

MONITORING OF IMPROVEMENT ACTIONS

The obvious next step after sharing feedback is the verification of any improvements in the whole supply chain. For this reason, it is necessary to build a plan in order to monitor and track these improvements.

SUPPLIERS REWARDING

The sustainable approach is a win-win methodology. You will get better results if you reward suppliers who invest with you in a sustainable approach. Rewarding the best suppliers in this sustainable journey will guarantee you the best results.

Reply’s approach to a Sustainable Supply Chain

Reply is constantly engaged in discussions on the many Sustainable Supply Chain regulations and frameworks being discussed across industries. Among others, Reply has contributed to the industry workgroup for the “ESG Supply Chain Guidelines” in the broad B2B industrial sector. This includes the knowledge of the next generation of top-of-the-line digital technologies that support Sustainable Supply Chain implementation and integrate with existing ERP, Supplier Relationship Management and Procurement systems. Reply has also developed specific procurement and sustainability solutions that can be easily integrated in an existing IT landscape, according to the so-called Composable Supply Chain technology pattern.

Interested in finding out more about Reply's support for a Sustainable Supply Chain?