When David Cameron said at the launch of the G8 in June that the UK would “drive a transparency revolution in every corner of the world,” it was the culmination of a series of conversations about what effect supply chains have on global business. While tax dominated the headlines, it’s the ideas on transparency in trade that will probably create a lasting legacy from the UK’s G8 presidency.
Gartner’s claim last week that supply chains are key to emerging market opportunities
was timely. CEOs of global companies, it says, should look to build supply chains with global scale but also with local flexibility. When taking Cameron’s transparency pledge into consideration, however, Gartner’s report fell short. Yes, emerging markets are a big opportunity. And yes, of course demand planning is key, but how can businesses cost-effectively mitigate supply chain risk?
Sustainability has an important role to play here, marrying ideas of transparency with metrics that are increasingly readily available and do not demand expensive consultancy fees to unearth. According to a Deloitte
report released earlier this year, energy data is one of the key elements of understanding the true nature of a business. Throw in other metrics around how a business handles its carbon emissions, water and waste and you have a more compelling picture of how responsible, and ultimately sustainable, a business actually is.
Why is this important? Being a responsible and sustainable business is increasingly recognised as a fundamental feature of modern business growth and profitability. Companies that act responsibly are less likely to get caught up in social and environmental issues and much more likely to maintain reliable supply, while protecting their customers from reputational damage. This is also a message being relayed by Richard Branson’s new project, The B Team
, educating investors and business leaders on the profitable benefits of social and environmental responsibility.
Ecodesk works with a number of businesses that operate in emerging economies, and is already working towards supply chain transparency with pharmaceutical companies GlaxoSmithKline
, which count among their suppliers many businesses in India, China and South America. These leading businesses are building their understanding of sustainability in their supply chain because they know this will ultimately enable them to drive efficiency, manage risk and drive new opportunity through better alignment with their business strategy.
For suppliers in emerging markets the message is simple. To maintain relations with international businesses be open about sustainability, publish data, use robust standards and methods and do as much as possible to dispel the risks associated, sometimes unfairly, with emerging market supply chains. For businesses looking to grow in these markets, consider sustainability performance as a key supply chain yardstick; it is perhaps one of the most accessible information sources that can help buyers and sellers determine responsibility and overcome what Gartner research vice president Mike Burkett referred to as “volatile demand and low maturity of supply chain processes.”
The Prime Minister was right to focus on transparency and align this to supply chains but the emphasis has to be on the businesses at the top leveraging their economic position to collect increasingly important, non-financial data. There is an opportunity here to not only develop strong business links but to drive, from the top down, a level of expectancy in emerging markets that will also have a positive effect on local communities and working conditions. This is where sustainability and transparency can forge a powerful alliance to reveal the true nature of suppliers. Without it, are these markets really worth unnecessary risk?
☛ Nick Murry is the chief sustainability officer of Ecodesk