Today, more and more companies are taking responsibility not only for the economic outcomes of their operations but also for their social and environmental impact. Sustainability is no longer limited to internal operations; it requires an end-to-end approach that covers the entire lifecycle of products and services.
At this point, the supply chain plays a critical role in turning sustainability goals into action. Poorly managed supply chains carry significant risks, while conscious and strategic steps can create strong opportunities for companies.
In this blog post, we outline 7 key steps for companies that want to place sustainability at the center of their supply chain, examining this journey from decision-making to monitoring and continuous improvement.
1. Demonstrating Commitmen
A sustainable supply chain requires strong commitment that starts at the highest level of the organization and extends across all levels. This commitment shows that sustainability is not the responsibility of a single team but a company-wide approach.
Adopted sustainability principles should align with company culture and be based on globally accepted standards. It should be clearly stated that these principles apply to everyone and that a sustainable supply chain can only be achieved through the collective ownership of all employees.
Commitment must be communicated clearly, transparently, and concretely by senior management. Why a sustainable supply chain matters and what it means for the company should be expressed in a clear and consistent way.
To ensure organization-wide adoption, various communication channels should be used, such as:
- Internal newsletters
- Emails
- Short videos
- Messages from the CEO or senior management
It should be emphasized that sustainability must be integrated into all operations, and suppliers should be invited to share this vision and collaborate accordingly.
2. Establishing Policies
Creating a sustainable supply chain policy involves integrating commitments into company strategies, departmental objectives, and daily operations. This process should be approached holistically.
Priority areas should be identified in line with the company’s goals and fields of activity. Sustainability priorities differ by industry. For example, environmental impact may be more prominent in construction, while social and ethical risks may be more critical in the pharmaceutical industry.
Points along the supply chain where products or services create environmental and social impacts should be analyzed, and areas with the greatest impact should be prioritized.
Relevant managers should be involved in the policy-development process so that sustainability goals are addressed from a shared perspective. This approach helps ensure stronger implementation in practice.
When setting targets, it is important that they are:
- Realistic and measurable
- Defined within a clear timeframe
- Aligned with product groups and supplier capabilities
3. Defining Processes
To put a sustainable supply chain approach into practice, policies and processes must be clearly defined.
Procurement contracts should be reviewed and revised in line with sustainability principles. Clear and transparent Supplier Codes of Conduct should be established.
Measurable criteria should be defined to ensure policies can be effectively implemented. To monitor these criteria, data related to targets should be collected from suppliers. To ensure comparability, data should be collected using:
- The same format
- The same software
- The same calculation methods
Audit tools should be identified or developed to measure suppliers’ social and environmental performance. It should be clarified whether audits will be conducted internally or with external support.
In addition:
- Performance criteria and their weights should be defined
- Supporting infrastructure should be established
- Leaders and teams responsible for managing the process should be assigned
- Job descriptions should be reviewed
Potential risks throughout the supply chain and their possible impact on the company should also be identified at this stage
4. Supplier Segmentation
To use resources effectively in sustainable supply chain initiatives, suppliers should be systematically segmented.
Suppliers may be classified based on criteria such as:
- Industry
- Purchase volume and value
- Company size
- Continuity of the business relationship
- Provision of critical materials or services
In organizations with a large supplier base, focus should be placed on suppliers with the highest strategic importance and risk. For this purpose, a supplier risk map should be created.
Rather than setting uniform targets for all suppliers, specific goals should be defined based on suppliers’ capabilities, needs, and efficiency levels.
As a result of communication and collaboration with suppliers, defined targets should be:
- Achievable
- Realistic
- Designed to improve efficiency and service quality
5. Auditing
Monitoring and evaluating supplier performance in line with sustainable supply chain objectives is critical to maintaining a healthy supply chain.
Suppliers’ environmental and social performance can be audited separately, or sustainability criteria can be integrated into existing audit processes.
Regular audit plans should be created based on the supplier risk map. Suppliers should be encouraged to actively participate in the audit process, including conducting self-assessments to evaluate their own performance.
Results from different audits should be consolidated and shared with suppliers. Areas for improvement should be identified, and roadmaps should be created accordingly.
Audit frequency should be reviewed regularly, and follow-up mechanisms should be established.
6. Improvement
Based on audit results, suppliers’ current performance should be clearly identified and shared transparently. Development areas should be defined, and action plans should be created to support improvement.
To increase supplier contributions to a sustainable supply chain, suppliers should be included in improvement programs. These may include:
- Training programs
- Consultancy services
- Introduction of new technologies
- Sharing best practices
Tools that support capacity building should be defined and actively supported. The importance of the social dimension of sustainability should be emphasized, and the benefits of improvement efforts should be clearly communicated.
Improvement actions identified through audits should be monitored regularly. Additional actions should be defined for suppliers that consistently underperform or show limited willingness to improve.
7. Performance Evaluation
The success of sustainable supply chain initiatives is measured by regularly evaluating whether defined targets have been achieved.
These evaluations should consider:
- Target achievement rates
- Performance indicators
- Accuracy of the data used
The current situation should be compared with defined targets, and gaps should be analyzed. When necessary, targets and strategies should be reviewed and updated.
Performance evaluation results should be shared transparently with all stakeholders. Reports should include key sustainable supply chain performance indicators.
To increase motivation, incentive mechanisms may be used for suppliers that perform well and demonstrate strong collaboration. Through supplier days or events, social, environmental, and governance expectations should be emphasized, clearly stating that suppliers who meet these criteria gain a competitive advantage.
Sustainable Supply Chain Management with JetSRM
A sustainable supply chain approach requires decisions to be based on reliable data. JetSRM enables structured tracking of supplier applications, bidding processes, and contract information, helping ensure that data used in sustainability assessments is more organized and comparable.
AI-powered features within JetSRM help identify missing or inconsistent data at earlier stages. As a result, decisions made within the scope of sustainable supply chain management are based on clearer and more reliable information.
To learn more about JetSRM, feel free to contact us.
