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Leading Sustainability Consultancy Emphasizes the Importance of Value Chain Management

| Sunday October 30th, 2011 | 0 Comments

The Tomorrow’s Value Ratings  (TVR) is out with some surprising findings about the state of sustainable business. TVR is an annual assessment of corporate sustainability practices among leading companies worldwide. It is run by corporate sustainability agency Two Tomorrows and it aims to further the debate on sustainable business. This year’s ratings rated 92 companies and notes several trends:

  • Innovation is the cutting edge of sustainability
  • Leaders consider the whole value chain 
  • The very best companies are embedding sustainability in core decision-making 
  • Some companies are just repackaging business as usual, but the leaders address the sticky issues
  • Paucity of targets is symptomatic of a lack of direction

During the research for the TVR ratings, MinGu Jun, Divisional Director of Two Tomorrows Asia writes in The Guardian that they saw some distinct changes in supply chain management. Jun stated that some of the best examples of supply chain management is now found in Asian companies. Jun writes that:

“Sustainability is no longer merely a box-ticking exercise required by large western companies; it is a shared-value practice whereby the Asian manufacturer has clear business incentives to be more sustainable.”

Jun elaborates that the last decade saw enormous effort put into control structures in the West – these acted to mitigate risks, thereby protecting brand reputation. All of these included things like third party audits, regulations, standards on environment, safety and human rights. In Asian companies however, supply chain management is moving away from these regulatory aspects towards mutual growth concepts. This means that leaders are pushing on “shared business models and revenue-sharing models, collaborative efforts to streamline production and logistics for cost savings, and providing strong incentives for good performance in sustainability.”

Companies like Toyota, Hyundai Motor Company (HMC) and Samsung are leading the way in finding sustainable solutions for their supply chain. HMC has a supplier support programme called Win-Win and this was designed to increase supplier’s economic stability through various financial initiatives. This program also helps their suppliers with cost cutting, among other things. Samsung has a Partner Collaboration Centre directly under their CEO and they have seven key programmes for mutual growth.

According to the research done by the TVR team, there are plenty of approaches to overall sustainability. This sort of value chain management where companies help their suppliers to form a new level of partnership might be a new bread of stakeholder engagement. Value chain management definitely has far reaching impacts on the supply chain as it increases the level of accountability and also puts an emphasis on personal relationships between the supplier and customer.

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