State of Supply Chain Sustainability 2022
Implications of the State of Supply Chain Sustainability 2022
Out of the Covid-19 Crisis Came
Opportunity
For the second year in a row, we observed that roughly 80% of
respondents reported that the global pandemic did not slow their
firms' supply chain sustainability efforts. This surprising result
left us puzzled until we explored it more deeply this year. It turns
out that the supply chain crises triggered by the global pandemic
actually brought new scrutiny, but with it also new resources and
opportunities. As one executive told us, the pandemic provided
"air cover” to take on projects that otherwise might not have been
possible. Many firms utilized the opportunity presented by the
crisis to make bold moves to improve their firm's supply chain
sustainability to, if nothing else, mitigate risk of disruption and
improve their supply chain resilience.
A Steadily Increasing Heat with
Occasional Flare-Ups
Every dimension of supply chain sustainability that we studied
has shown an increase over the three-year period of observation.
That data point alone speaks to the urgency of these issues. But,
perhaps, more surprisingly, the heat ebbs and flows with time. In
this case, the surge
in commitment to social issues that we saw in
2020 plateaued, and environmental issues, which slowed down in
2020, came back strong in 2021.
The resurgence of interest in environmental SCS dimensions in
this year's data implies that firms whose focus in recent years was
on social issues should take a longer view to the re-emerging focus
worldwide on water conservation, natural resource conservation,
and climate change mitigation. Importantly, supply chain
sustainability itself does not appear to be a zero-sum competition
between environmental and social issues. Rather, pressure on
dimensions in both categories appears to be rising, with rates
of acceleration periodically fluctuating between the two. The
aphorism "A rising tide lifts all boats" is popularly attributed to
John F. Kennedy in the context of economic policy. However, the
same may apply to SCS priorities as well. In the three years of this
study, we have only seen a rise in the aggregate pressure on firms
to improve their supply chain sustainability, and we see no reason
why this would decrease anytime in the near future.
Change Is the Only Constant
We observed that how firms prioritize different components of
supply chain sustainability has changed over time and differs by
geographic location-most markedly between the Global North
and the Global South. We've also observed that the tools firms use
to improve supply chain sustainability are evolving.
While it is possible to infer what causes different dimensions of
supply chain sustainability to rise and fall in importance, this is
perhaps of lesser managerial relevance than simply to know that
it happens-and to put that state of constant flux on management's
radar. Unidimensional visions of supply chain sustainability
investments that seem right to founders, or right for the customer
base at a particular moment in time, do not seem long for this
world based on what we have observed in three years of this study.
Instead, our results suggest that firms must be ready to adapt their
sustainability efforts to their contexts.
This implies that firms should be aware that as sustainability
priorities change over time, their SCS efforts or profiles that
attract and win business may not do so every year-even with
the same customers. The data we've collected shows clear
evidence of change over time in how firms prioritize the different
dimensions of sustainability, especially in international contexts.
Therefore, supply chain managers working with overseas vendors
and customers would be wise to keep in mind the different
prioritizations of SCS dimensions we see across various regions
as they forge and maintain those relationships.
The mercurial nature of the hierarchy of SCS priorities, however,
is underscored by the magnitude of the danger we face from not
addressing or ignoring our sustainability challenges. That is, the
effort to make our supply chains more sustainable may take place
on different "fronts”, of which any or all may intensify or abate
over time, but the gravity of the danger we face by neglecting
sustainability on any front is immense and omnipresent. Thus,
firms that fail to pivot accordingly do so at their own peril; they
risk losing not only their competitive advantage, but they also
contribute to a much larger and existential risk for our shared
planet.
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