Sustainability is one of the latest buzzwords that seems to be on the tip of every executive and manager’s tongue in the engineer-to-order manufacturing industry.
However, unlike other trendy jargon, such as “synergy” or “proactive,” implementing sustainable policies and practices – especially in your supply chain – go a long way to streamlining operations, cutting costs and ensuring the long-term viability of your enterprise. By building a more sustainable supply chain, engineer-to-order manufacturers can position their enterprises for long-term success.
What is supply chain sustainability?
Since the beginning of modern-day commerce, a supply chain has been crucial for companies that use raw materials and parts in the production process. For engineer-to-order job shops, the supply chain is the backbone, as these companies are reliant upon creating a finished good with items sourced from a wide range of locations across the country and world.
This means maintaining such factors as cost effectiveness, delivery times, technical quality and overall reliability are important to ensuring sustainability in the supply chain. In partnership with UN Global Compact, Ernst & Young recently released the “The state of sustainable supply chains” which highlights the shifting view of more than 100 sustainability, supply chain and procurement specialists from 70 companies globally.
“Now more than ever, companies are creating sustainable supply chains to minimizing risks.”
Writing in the publication, Mathew Nelson, global climate change and sustainability services leader at EY, noted that, now more than ever, companies are creating sustainable supply chains by minimizing risks and adopting commitments to human rights, ethics, the environment and communities.
“The result of the study show that leading companies are deriving numerous business benefits from embedding sustainability in their supply chains,” Nelson wrote in the report. “These benefits include product differentiation, increasing market share and growing consumer support.”
After compiling the result of the survey, the publication identified six key themes that arose regarding sustainability in the supply chain:
1. Supply chain sustainability is a pressing matter
According to the study by EY, executives across every industry and sector agree that improving supply chain sustainability is an urgent matter that can no longer be ignored.
2. Most sustainability efforts are primarily driven by risk mitigation
While environmental and human rights are top priorities for executives and managers who want to create more sustainable supply chains, financial, operational and regulatory risks are the main motivators for implementing more sustainable measures.
3. Supply chain sustainability is reliant upon industry and sector
Companies in different sectors and industries will naturally need to implement uniquely tailored strategies and key performance indicators to ensure they’re reaching their sustainability goals.
4. Creating partnerships ensures open communication
Instead of attempting to single-handedly overhaul a supply chain, leading companies are increasingly partnering together with suppliers to shoulder the burden of establishing more sustainable supply chains.
5. Technology provides the tools necessary for implementing these changes
The source noted that transparency and traceability were the two driving challenges companies needed to overcome to truly become more sustainable in their supply chains. Technological solutions offer the best options to reduce the inefficiencies and cost of procuring parts and materials.
ETO sustainability best practices
According to Industry Week, sustainability measures begin with the supply chain. The source recommended several best practices that engineer-to-order manufacturers can implement to create a more sustainable supply chain, including:
- Aggregate all the supply chain intelligence into a single repository. Although this might be tough since a single supply chain can involve many different parties, using a specialized MRP system can make this much easier than it was even a few years ago.
- Review and analyze the available information to eliminate the worst suppliers and focus on the best ones.
- Introduce sustainability requirements and incentives into supplier contracts.
- Track and monitor supplier performance, checking which ones are being compliant and which ones are approved and even preferred.
- Utilize financial and operational data for a more informed decision-making process, using a customizable enterprise resource planning solution.
EY noted that companies can implement several initiatives to create a more sustainable supply chain. As noted by the source, one of the most significant ways to boost sustainability in the custom-design supply chain is by employing the right technological solutions. One such answer is a specific enterprise resource planning system for engineer-to-order manufacturers. With greater access to the real-time financial data covering the costs, orders and arrivals of the various materials shipped through the supply chain, custom-design job shops can prioritize and expedite the delivery of these required goods.
Total ETO provides managers at custom-design manufacturers with the real-time capabilities to align resources across the entire operation, which creates a better system for integrating sustainable criteria into the procurement process. In addition, Total ETO streamlines information between engineers and purchasing, minimizing the bottleneck between these two, often siloed, departments. This data allows for easy supplier performance reviews. With greater ability to share records and data, engineer-to-order manufacturers can keep track of where they are sourcing their materials from, which allows the companies to remain transparent and keeps their supply chain traceable.