The variety of posts on the topic of sustainable global sourcing is a proof of the field’s exponential expansion. Companies with a global supply chain have been accused of ignoring a wide range of environmental and social problems. These include, for example not adhering to environmental rules or having bad working conditions.
Although initially reluctant, major corporations like Pfizer, Puma, and H&M have recently begun to prioritize social and environmental sustainability. Despite the short-term worries about inflation and the higher cost of living, any firm must prioritize long-term sustainability in its global sourcing. This is because most of the biggest, most long-lasting dangers that businesses face today are influenced by environmental variables.
Many factors, including extreme weather, climate action failure, natural resource crisis, biodiversity loss, and human environmental harm, were already affecting us before the COVID-19 pandemic and continue to have the potential to represent a substantial danger to long-term corporate stability. These five environmental variables are among the top global risks according to the World Economic Forum’s global risk for the next decade.
The number of publications covering topics like corporate social responsibility (CSR), sustainability, and supply chain management has skyrocketed in recent years. This reflects the widespread belief that a firm can only be as sustainable as its supply chain. However, one key question is how widespread CSR practices have been and what effect they will have on the long-term sustainability of businesses’ global sourcing strategies.
What is sustainable sourcing?
The concept of sustainability has emerged as a central concept in global supply chain management. The term “sustainable sourcing” refers to the practice of incorporating environmental and social considerations into the selection of suppliers. Sustainability sourcing is a business strategy that aims to improve environmental and social objectives while also fostering long-term relationships with suppliers.
The key to implementing sustainable sourcing practices is to focus on a single aspect at a time, rather than trying to tackle all of sustainability at once. During this time, the business can compile sustainability metrics and continue expanding its roster of eco-friendly vendors. Even if a simple scoring system is added to a company’s platform for procurement and sourcing for products, the results can be very positive.
In a more competitive market, businesses are more likely to make international purchases so they can take advantage of the cost savings offered by different countries. It stands to reason, then, that businesses can save money by purchasing on a global scale as opposed to just a national or regional scale. This argument, however, is not limited to considerations of the economy. The effects on society and the environment are also significant.
Assumption about sustainable global sourcing
The conventional assumption holds that a sustainable procurement process should prioritize local suppliers over those further afield. This misconception and its’ rapid spread are not hard to understand. Transporting goods over long distances have an effect on the environment because it takes energy (often fossil fuel), which uses up resources and releases carbon dioxide.
Also, unlike domestic manufacturers, some overseas counterparts are not bound by the same regulations, making it harder to ensure a consistent level of quality in the products they supply. Assumptions like this seem to be most common in the food industry. Even in this field, though, it’s easy to oversimplify by assuming that goods bought from local suppliers are better for the environment.
Is sustainable global sourcing really achievable?
Procurement, like sustainability, is a multifaceted endeavor that requires organizations to think about a wide range of issues. With so many things to consider, the most eco-friendly choice is not always the most convenient. For many supply networks, this means adopting an efficient CSR initiative and collaborating with the right people.
Recent research has demonstrated that corporations are just as successful at meeting social and environmental compliance requirements regardless of where they source their components. In a global sourcing context, this means that other things, like the quality of the product, are more important than the location of the suppliers if you want to be sustainable.
We could also assume that business size would be a significant factor in determining sustainability success because large companies are more likely to adopt robust CSR initiatives. Expertise in procurement and the real goals of the purchasing department are two other factors that can help explain sustainable success.
The Guardian covered Tesco’s sustainable procurement approach and how it prompted improvements in the company’s supplier network in an interview with Giles Bolton, the ethical trade director at Tesco. According to Bolton, Tesco realized several years ago that it couldn’t afford to only buy through brokers in the UK due to concerns over the environment, quality of products, and employee treatment.
The outcome was a major shift in how Tesco obtained bananas. The store didn’t make itself more sustainable by limiting the number of suppliers it worked with. Instead, it did so by reaching out to more suppliers across the globe.
It is possible to source globally in a sustainable manner, as shown by Tesco’s success. In fact, if properly handled, international partnerships might help businesses exert more control over their environmental impact when purchasing commodities.
Summing it up
References
ET2C (2022) Sustainable Global Sourcing ET2C International.5 October 2022 [online]. Available from: Sustainable Global Sourcing
Jiang, Y., Jia, F., Blome, C. and Chen, L. (2019) Achieving sustainability in global sourcing: towards a conceptual framework. Supply Chain Management: An International Journal. [online]. 25 (1), pp.35–60. Available from: Achieving sustainability
The Editorial Staff (2014) How global sourcing can be good for sustainability SUPPLY CHAIN MINDED.30 March 2014 [online]. Available from: Sustainability
Von Haartman, R. and Bengtsson, L. (2013). Global sourcing’s impact on sustainability: Vile or virtue?. In POMS-Production and Operations Management Society, Denver, USA, May 3–May 6, 2013.
Vurro, C., Russo, A. and Perrini, F. (2009) Shaping Sustainable Value Chains: Network Determinants of Supply Chain Governance Models. Journal of Business Ethics. [online]. 90 (S4), pp.607–621. Available from: Sustainable Value Chain