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10/26/2021

Gartner offers three-step plan for supply chain sustainability

Dan Berthiaume
Senior Editor, Technology
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Gartner recommends three actions to tackle the most important sustainable supply chain challenges (Source: Gartner, October 2021).

Supply chain organizations must take action and become more purpose-driven to successfully navigate challenges to the planet and profit, according to Gartner.

Gartner has identified three main actions that will help supply chains change from being part of the cause of disruption, climate change and employee fatigue to providing assistance to major sustainability issues.

Pivot to sustainable profit
“Sustainable profit” means focusing on the longevity of profit and making changes that allow an organization to continue conducting business successfully into the future. According to Gartner, sustainable profit consists of three main parts:

● Resilient profit: Supply chains must cope with the rising rate of disruption in the world, such as global chokepoints, shortages of materials and workers, and emerging risks.

● Durable profit: Supply chains must adapt to new realities to deliver long-term profit.

● Holistic profit: Supply chains must account for externalities that are a result of their activities and might affect other parties, such as their impact on air and soil quality.

“There are many examples of companies that have adopted a broader definition of profit to guide their organizations who now outperform their peers,” said Dana Stiffler, VP analyst with the Gartner supply chain practice. “Stakeholder groups such as investors, customers, suppliers and employees have all responded well to the new focus on truly sustainable profit.”

Make purpose personal
Gartner advises that a supply chain leader’s job is to make clear the connections between hard work, the company’s objectives, and bigger and more impactful aims. This approach is called “shared purpose.”

“There’s a clear business pay-off connected to shared purpose,” said Stiffler. “Gartner research sees a 26% increase in workforce health when work is personally relevant to an employee and 50% improvement in employee engagement when a company takes action on social issues.”

Build value-aligned ecosystems
A value-aligned ecosystem is a network of equal partners where all participants trade their capabilities through equitable value exchange. They differ from today’s popular supplier ecosystems in that there’s no dominant entity. Gartner predicts that ecosystems will become the prime competitive entity in the future.

A Gartner survey conducted between March and May 2021 among 400 companies in 18 industries found that the main current drivers of ecosystem partnerships are efficiency and service. However, in three years, the main drivers will be innovation and purpose.

“We’re not the first supply chain leaders to hear the scientist’s warnings, but we are the last that still have time to heed that code red for humanity. Because without action, the sustainability of both planet and profit are threatened,” said Simon Bailey, senior director analyst with the Gartner supply chain practice. “Leading organizations are rapidly increasing the number of ecosystem partners because they see value in being part of something bigger and leveraging novel partnerships, with new ways of working in value-aligned ecosystems.”

[Read more: Gartner: How to build a ‘fit’ supply chain]