Original equipment manufacturers, distributors and large retailers alike are keeping a watchful eye on the sustainability practices of their suppliers.
Supply chain sustainability is becoming an increasingly important factor for small and mid-size manufacturers, said Mark McDermid, senior manufacturing specialist for the Wisconsin Manufacturing Extension Partnership.
“Customers of most of our clients are starting to ask more and more precise questions about sustainable practices within their suppliers,” McDermid said.
Expectations among consumers and the investment community are the driving the forces behind the trend, according to McDermind.
“You have to be able to disclose how sustainable you are as a business in light of environmental and social threats,” he said.
The topic will be the focus of a panel discussion “Meeting Sustainability Expectations” at the WMEP’s Manufacturing Matters! conference on Feb. 23 at the Hyatt Regency Hotel in Milwaukee.
“Some customers are asking for some pretty precise information,” McDermid said. “We’ve seen examples of customers having some very specific kinds of sustainability goals. Some are even asking their suppliers to check with their own supply chain to see how sustainable it is. It can manifest itself in something as simple as a supplier qualification survey or as complex as a required third-party audit.”
It is also becoming more common for companies to have on-site visits from their customers who want to examine their sustainability practices.
“For some organizations, it’s becoming very expensive and very cumbersome,” said Randy Bertram, director of sustainability services for the WMEP. “It’s important for all manufacturers to not just arbitrarily respond to these sustainability reporting requests.”
The WMEP can assist clients through its sustainable product and process development service line, McDermid said.
“It can be as fundamental as a basic assessment of where you are and what your logical first step should be for sustainable practice to integrating sustainability into your business decision making systems at your company,” he said. “Sometimes customers are asking for more information than you want to give up, so it’s useful to step back and think about what are your customers’ objectives and how you answer certain questions can contribute to what you are able to for your customer outside of just supplying a product.”
Manufacturers know it’s important to respond to sustainability requests from their customers, but want to do so in a cost-effective manner, according to Bertram.
“What we have been able to do is help them not only comply but also discover the business reasons for it,” Bertram said. “If all they do is comply, they really aren’t any further ahead. The ones that take the next step and figure out how they can improve the results that they are being asked to measure are the ones that are going to gain a competitive advantage.”
Worldwide forces, such as a growing global population and an increased demand for certain products as more consumers achieve middle-class status, have put a strain on resources and created a need for more intense sustainability monitoring.
“There are a lot of influences in the market that are driving us down this path,” Bertram said. “Those companies that are able to adapt their products and services to meet those market needs should see growth.”
A focus on sustainability has become more of an expectation at all levels, McDermid noted.
“Once it was possible to differentiate yourself based on sustainable or environmentally preferable practices, but in a lot of markets right now you are out of the game if you don’t have at least basic sustainability,” he said.
Bertram also noted that a move toward more integrated reporting would make sustainable measures part of any financial audit.
“Companies should be thinking about how they should integrate sustainability into its management practices,” Bertram said.
To schedule a consultation on how the WMEP can help you better meet your customers sustainability expectations contact Randy Bertram at: [email protected] or 262.707.7775.