How sustainability is inextricably linked to the bottom line

Our recent sustainability report examines how to evolve from supply chain management to supply chain development.

This is the second article of a 4-part series by PSFK that investigates the findings in our sustainability report.

In recent memory, the origins of a company’s products were a murky subject for consumers. Function was king, with a product’s supply chain a mere secondary consideration for consumers, if it was present at all. But this has been changing, as consumers, governments and companies demand details of the systems and sources that deliver goods.

Collectively they voice concerns about the entire life cycle of a product including its quality, safety, ethical production and environmental impact. Though addressing these larger challenges around sustainability is a daunting task, farsighted organizations are beginning to take a more proactive approach, directly addressing the new problems and opportunities presented by the question, “Where does this stuff come from?”

Yanrong Dong - PCH

One of the companies pushing the agenda of sustainability at a global level is PCH, a company that offers sustainable product development and supply chain management services for a diverse range of businesses. As part of a larger series on sustainability, PSFK is exploring the topic through the lens of the initiatives of PCH, specifically its manufacturing in China as detailed in its recently released sustainability report.

This article looks at sustainability in manufacturing and the supply chain, and how PCH’s initiatives are moving beyond supply chain management to supply chain development.

Sustained progress to improve working conditions in global supply chains requires engagement on all fronts. PCH has been working on a variety of initiatives to improve the overall development process. This is achieved by actively partnering with suppliers, using their own expertise and resources to develop suppliers’ abilities and make them more competitive.

The end result is not only a more sustainable model from the standpoint of environmental impact and labor, but ultimately a more profitable company. Terry Foecke, Head of Supplier Development of the Greentech Team at PCH, goes into more detail about how this strategy is applied:

“In the past, supply chain management meant checklists, scorecards and catching problems, not necessarily efficient progress. Now that the world is so complex, interconnected and fast, we need new approaches. PCH believes that good management is always achieved through good development, be it PCH employees, manufacturing partners or even clients.”

Terry Foecke, Head of Supplier Development, Greentech Team, PCH

In addition to simply being the right thing to do, Terry also believes that this type of ‘inclusive’ approach offers its own source of unique benefits. First and foremost, it inspires individuals to take ownership in contributing to a solution much larger than themselves. He continues:

“As we grow and learn together, there is less need for supervision, and more time to act as teachers and students to each other. When we learn together and develop our capabilities, we can harness energy and talents in new ways, enabling us to overcome challenges more creatively, quickly and sustainably. This is what supply chain development does. We work together and achieve better results.”

Of course, not all problems can be fixed overnight and each issue requires its own unique solution. However, it is important to have the correct systems in place to dynamically deal with problems as they arise. Sanno Lee, Greentech Program Manager at PCH, further elaborates:

“PCH and our suppliers are not just in a transactional relationship, we are in a partnership. PCH teams work with factories, using our own expertise and resources to develop our suppliers, helping them become more competitive. We not only upgrade their production capabilities and production management skills, but we also work together to improve factories’ competitiveness in other areas, e.g., improve their energy efficiency and relationship with their workforce. We expect this will build a strong, long-term relationship with our suppliers whereby we will develop together.”

Xiaolin Wang - PCH

Sustainability is a growing expectation in the minds of consumers, as they are increasingly compelled to purchase from companies that are able to develop a global supply chain in an efficient and ethical way. Although the challenges associated with this are complex, the forward-thinking companies that take on this task will be providing benefits for both the workers who manufacture a product, and the consumers who ultimately buy that product.

This article was originally published on PFSK on 4th December, 2014. More on this series is available here.

Images by Gareth Brown