Supply Chain Bosses Would Sacrifice Profit for Sustainability

Despite navigating widespread uncertainty and complex economic climates, supply chain bosses would be willing to sacrifice an average 5% of profits for sustainability. 

The survey, conducted by Celonis, asked 500 chief supply chain officers (CSCOs) across multiple sectors about their approach to building stronger supply chains.  Of all the respondents, 53 per cent identified digital supply chain transformation as an area of competitive advantage, 72 per cent expect their workflows to be automated over the next three to five years, 51 per cent would choose to sacrifice profit in aid of sustainability, and 71 per cent said their company planned to “aggressively move to carbon neutral”.  

Changing Values  

The survey shows that CSCOs are embodying sustainability as a key business value and are willing to adapt their workflows and supply chains in order to accommodate greener growth.  
 
Respondents were asked to expand on their sustainability plans. Some of the key areas CSCOs identified as having potential for improvements in sustainability include procurement and sourcing, energy efficiency, circular economy practices, use of organic and recyclable materials, establishing net zero targets, and improving water management.   
 
“What’s really interesting is this delta between 91 per cent of businesses saying they plan to implement sustainability initiatives, but when it comes to practical measures like setting KPIs it’s just 20 per cent,” says Ian Thompson, vice president for Northern Europe at Ivalua. 
 
“Whoever holds the gold makes the rules, and I think procurement holds the gold. From a supplier’s perspective, if your customer is driving the agenda, it will make a difference. That’s why procurement people almost have a responsibility, as a community, to get this right. We have a lot of power when we make our buying decisions.” 
 
For business leaders, simply claiming that you are invested in sustainability and want to reduce your emissions isn’t enough; people are far more perceptive of greenwashed policies today compared with a few years back. Understanding why companies are able to commit to sustainability without knowing how to put the key KPIs in place is essential for green growth.  

Sustainability Barriers

Celonis’ survey explored the challenges businesses face when working with suppliers to increase sustainability. Over half of respondents noted a lack of understanding around supplier innovation capabilities, a lack of visibility into tier two and three suppliers, and poor data quality as key barriers.  
 
The desire of businesses wanting to green their supply chains is there, the next step is to address the market failures which prevent these organisations from developing and achieving key KPIs by making the green choice the easiest and most cost effective.