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Supply Chain Sustainability: An Integral Part of Reputational Risk

sustainability balancing actHANNAH WIKUM
RGL Logistics

This blog post originally appeared on RGL's blog.

In today’s fast-paced, global environment, supply chain sustainability has become increasingly important in the minds of businesses and consumers. Stakeholders and clients demand transparency, ethics, and sustainability, and they are not afraid to hold businesses accountable for their shortcomings.

Companies must be cautious in establishing their supply chains — or risk being held responsible for unethical problems that may result from carelessness. For example, the collapse this spring of a garment factory in Bangladesh forced several Western fashion companies to implement new supplier standards to minimize the damage to their image. It's clear that poor supply chain partners are risks to your company's brand.

The spread of globalization and technology will continue to put pressure on businesses to clean up their supply chain. The question becomes: How do you balance sustainability and profit, and what is the risk of failing to find that balance?

Balancing Sustainability and Profit

You do not have to choose between sustainability and profit, although the balance can be diffcult to manage. Building a sustainable supply chain simply makes good business sense. Whether it is reducing waste or conserving energy and resources, creating a sustainable supply chain is the key to the future success of your company. Sustainability is here to stay; it is something that must be incorporated into your supply chain to compete effectively going forward.

Sustainability is not just a long-term ideal. It is a concept with observable results that can increase productivity and cut costs in your supply chain. Businesses that put work into creating socially and environmentally sustainable supply chains have been proven to have many competitive advantages in areas such as production efficiency and supplier management skills. These businesses also tend to be more profitable.

The Trickle Effect of Sustainability

By choosing to engage in sustainable supply chain practices, companies make a positive difference not only for themselves, but also for their suppliers and customers. Companies can use their power to administrate policies to suppliers and to send better products to their customers.

Establishing supplier policies also ensures that suppliers are on board with company sustainability goals. It's important for suppliers and companies to agree on a common vision that way, the supplier will not make ethical mistakes that the company will be held responsible for. In addition to being more environmentally and socially responsible, sustainable supply chains also reduce reputational risk for businesses.

Ready to learn how you can create a sustainable supply chain? This anonymous self-assessment from the United Nations Global Compact will show how your company rates and how you can improve.

Hannah Wickum works for RGL, a progressive logistics firm based in Green Bay, Wisconsin.  RGL challenges its customers to ask “what if” to deliver simplicity, speed, and waste reduction to their supply chains. This post appeared originally on RGL's blog.

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Topics: Construction Transportation Leadership / Strategy Manufacturing