Even the most thoroughly vetted and resilient supply chains must contend with patchwork legislation, shifting tariffs and unforeseen supply chain disruptions. Weighting the scales in favor of sustainability requires a delicate balance of the practical, profitable and prudent, especially on a global scale. While “tricky” is an apt description, approaching the challenge through the three Ts of sustainable supply chain management — traceability, transparency and trust — can make it much less daunting.
What Are the 3 Ts of Sustainable Supply Chain Management?
1. Traceability
How many materials, components and parts comprise finished goods? It varies, of course, but the answer is often in the thousands.
Consider an MRI machine, for example. These highly complex medical technology systems include tens of thousands of discrete parts ranging from superconducting magnets and power systems to imaging and data processing components. Even a rudimentary smartphone may include over a thousand components such as printed circuit boards, semiconductors and display assemblies. Knowing where those inputs originate and how they change hands throughout the product lifecycle is vital for an original equipment manufacturer (OEM).
Without the ability to trace products from point to point along the supply chain, it’s nearly impossible to assess the environmental risks of sourcing, from destructive mining practices and carbon dioxide–belching manufacturing processes to labor violations buried deep within Tier 3 suppliers. Full traceability becomes exponentially more difficult the further upstream you go.
Thorough traceability for a more sustainable supply chain is certainly achievable, provided the right tools and disciplines are in place:
- End-to-end visibility with full insight into every tier of the supply chain
- Item-level tracking to trace individual components or batches
- Real- or near–real-time data for continuous updates on material flows and other supply chain disruptions
- Verification and validation through audits, certifications or third-party monitoring
- System interoperability and common data standards across suppliers, geographies and platforms
- Alignment with the reporting requirements of regulatory bodies
2. Transparency
While traceability is about knowing where materials and components originate and how they flow through the supply chain, transparency is about one’s ability to show others that data — verifiable traceability — is showcased in a way that is intelligible and meaningful to stakeholders.
Regulators in the European Union and elsewhere are mandating greater supply chain visibility. “I wasn’t aware” is rarely a good defense, no matter how far removed a supplier is from having a directly managed relationship with an OEM. Investors are looking for hard numbers when it comes to progress being made on a company’s environmental, social and governance (ESG) goals. Business partners are making decisions with sustainability in mind because, as the saying goes, you are the company you keep. And customers have their own brand reputations to consider as they choose between competitors. (A sustainable and ethical supply chain outweighs hazy and wasteful in an era of growing scrutiny). Where traceability builds internal confidence, transparency builds external credibility.
Companies can influence transparency in a variety of ways, including:
- Proactive disclosure that goes beyond compliance reporting
- Straightforward communication grounded in verifiable data that speaks to progress and roadblocks with equal candor
- An inclusive view of stakeholders that includes policymakers, communities, customers, business partners and investors
- Exceeding ethical and regulatory expectations and taking responsibility for one’s actions
3. Trust
If traceability is about knowing, and transparency is about showing, then trust is about believing. Traceability and transparency build trust, perhaps the most valuable commodity any company possesses. But it doesn’t happen overnight.
In sustainable supply chain management, trust is both a product and a process whose foundation lies in credible evidence, verifiable data, ethical action and clear, continuous communication. Without trust, supplier relationships can get mired in micromanagement, compliance checks and remedial actions rather than mutually beneficial goals and innovation. Wary and weary of trying to ascertain truth versus hyperbole, customers and investors may buy or invest elsewhere. Traceability and transparency may even be perceived as greenwashing if the base they’re built on is suspect.
Trust is not given, it’s earned — with factors like these laying the foundation:
- Consistency, reliability and following through on ESG commitments
- Credible third-party validation and certification such as sustainability ratings and independent audits
- Strong, collaborative supplier relationships beyond the transactional (especially critical in high-risk regions)
- Ethics and integrity embedded in every aspect of the company
- Exceptional response, even — or perhaps especially — in times of crisis
Outsourcing With the 3 Ts in Mind
Fortunately, you don’t have to start from square one when it comes to sustainability and ESG strategizing. If you’re ready to outsource and want to do so with sustainability in mind, select a supply chain management partner who acts as an extension of your values, not just your operations. Choose one for whom traceability, transparency and trust are inextricably woven into a sustainability ethos that permeates practice and process.
A principled supply chain partner with deep knowledge, global capabilities, forward and reverse logistics expertise and strong relationships can help you build a more ethical, sustainable supply chain without losing access to the materials, parts and components you need to keep production flowing. Learn how to advance sustainability across your supply chain and explore other key focus areas for boosting resilience in the whitepaper, “Reengineering Your Supply Chain.”
About the Author
Casey Swanson has been with the company since 2013 and serves as Senior Director of Supply Chain Management Services for Shyft Global Services, driving supply chain management excellence and operational efficiency. He earned his Project Management Professional (PMP)® certification and previously held roles with Northrop Grumman and the US Air Force. With a robust background in process optimization and program management, Casey is dedicated to simplifying complex logistics operations and implementing innovative solutions that drive efficiency.
