Sustainable Supply Chains

By Mahendra Shelke, Head - Logistics & Supply Chain, LANXESS

Today, when we talk about the importance that Supply Chain Management has gained in the business; it is no less than any other critical function of the business. Thus, it can be easily termed as one of the most critical business functions; any disruption in Supply Chain can have a huge impact on the business. The Chemical industry is no exception to this rule. The major challenge that chemical companies face in their entire supply chain is- facing disruptions, related to topics which were not so significant in the past decades. Companies are, thus, looking to develop sustainable supply chains to ensure business continuity.

Safety and Compliance

Safety and Compliance are the two important keywords which are the need of the hour in the current business scenario and are absolutely non-negotiable.

Compliance: Not only the local but also the global rules and regulations have become increasingly critical in supply chain management. Non-compliance here could surely mean trouble! As we find in India, government agencies across the globe come up with regulations which have a direct impact on supply chain. This is more dynamic NOW than it was before.

For example, given the stringent US Customs and Border Protection Regulations, companies need to know that if any vessel carrying export material to any other country happens to pass through US ports, it needs to submit the required notifications with the US Customs. One miss and this would result in seizure of the cargo! And this, resultantly, would mean major disruption in the customer’s supply chain, posing a big question mark on the company’s reliability as a supplier and leading to a huge financial impact.

The same is also true for inbound supply chain. A non-compliant supplier can put your entire supply chain under serious risk. A regular check on environmental, labour and employment, technical regulations and compliances with your supplier, could help in minimizing risks of non-compliance. In the chemical industry, like-minded companies are coming together to find a collaborative solution for creating standards for sustainable supply chains. Together For Sustainability (TfS) is one such initiative which addresses this topic. Suppliers are audited for various parameters viz. management, environment, Health and Safety, Labour and Human rights and Governance. These certified suppliers, in turn, become the organizations’ ready partners for sustainability in supply chain.

Companies need to make sure that they have effective and robust compliance programs to enable better control and visibility into supply chain, thus, allowing smoother operations and movement of goods.

Safety:

Realizing efficiencies – a focus on realizing efficiencies in the supply chain can reduce a company’s supply costs. Strong labor, health and safety practices are the key drivers of cost efficiency as the reduction in accidents is a creation of cost efficiency.

Transportation safety is gaining increasing importance in the chemical supply chain. With your material on the road, there is a lot at stake apart from just meeting the customer delivery timelines. One accident leading to a chemical spill, could spell T-R-O-U-B-L-E for the company. The entire organization’s reputation and image is at stake. It is not only the time and money lost in the incident but also the credibility of the company which can come under scrutiny in such situations.

Drivers – Key Stakeholders in the Supply Chain

When we talk about creating efficiencies by reducing accidents, one of the most important factors in achieving this is ‘THE DRIVER’ of our vehicle – unfortunately, the most neglected human resource in the entire logistics arena!!! They are mostly taken for granted and at times, companies overlook their contribution in the
supply chain.

There is surely a need to develop an air of acceptance for drivers as a key stakeholder in our supply chains and give them the due credit.

Our roads are increasingly becoming battlefields where the winners (who arrive home safe!) would be the ones who have the right ammunition. For the drivers, the right training on ‘Defensive Driving’ serves that purpose. Companies have started realizing the importance of hiring highly skilled drivers. For the chemical industry, trainings on dangerous goods transportation, etc. are a must-have today. The key objective of such training is to inculcate a positive and responsible attitude towards safe driving, keeping in mind the needs and necessities of the drivers to carry out accident free operations.

Motivation is also a major factor when we think about bringing in the best out of these drivers. Employee recognition programs, driver performance evaluation and the recognition schemes could act as a huge motivation for the drivers.

As rightly commented by Jim Collins in Good to Great, “Great vision without great people is irrelevant”, we surely want our key stakeholders in the Supply Chain to be the great ones!

Conclusion

To develop Sustainable Supply Chains in the ever dynamic safety & compliance environment, organizations today not only need the knowledge and ability to implement what is in the immediate visibility, but they must also have the capability to scan the skyline for the rapidly emerging requirements.

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