Do We Need New Metrics for Measuring Supply Chain Sustainability?

Published : November 26, 2014

measuring-supply-chainThe impact that the operations of a given business have on the world around them and their own potential for longevity are tricky to measure at best. Sustainability metrics provide a natural "yardstick" to refer to, but problems are cropping up as the insights they produce tend to be too short-sighted for a climate that is more complex or too varied in method from one company to the next.

Supply chain management may be accurately reporting metrics—more than 90% of the world's largest 250 companies, according to Cory Searcy and Payman Ahi of The Guardian— but if those metrics are problematic reference points in the first place, it's challenging to leverage them into positive changes.

Looking to the Ripples

Existing metrics lean towards the initial, immediate impact of a company on its own resources— much like a stone thrown into a pond.

There is an initial splash, of course, but the real impact is seen in the ripples that extend outwards.

Sustainability expert Robert Kropp notes in a GreenBiz article that sustainability metrics often fail to consider contextnot just the amount of a resource a company uses from one year to the next, but rather that amount in the context of available local or worldwide stores. Kropp explains that new, context-based metrics offer a more accurate snapshot of sustainability, rather than a pigeon-holed view of a company looking in on itself.

Once these new metrics are obtained, they can be used as a tool to tighten up waste throughout business processes, from supply chain management to delivery of finished goods or services.

A Need for Regulation

Further complicating a 'meeting of the minds' on a wider sustainability scorecard is the lack of consistency between the same theoretical metrics from company to company. If one company measures their carbon output by in-house manufacturing alone while another incorporates total carbon output including off-site component creation, the first will have an artificial "lead" that isn't truly accurate.

Searcy and Ahi note that their recent study of corporate sustainability practices turned up more than 2,500 metrics in use, including 113 on energy-related topics alone. While companies are still able to measure their own internal progress with these mismatched metrics, the broader goal—accurate comparisons throughout an industry— remain nearly impossible to manifest.

Overall regulation or an industry-wide agreement on what constitutes various metrics would help establish a baseline for everything from cost/profit ratios to tax credits to governmental oversight.

Transparency for Businesses and Consumers

In addition to the obvious benefits that common metric parameters would provide within an industry, they would also offer a benefit to consumers— curtailing false or misinformed marketing from businesses touting incomplete metrics.

When a company enacts expensive and far-reaching sustainability efforts, getting upstaged by rivals spotlighting similar (yet less labor-intensive) works can diminish the benefits of those efforts. On the consumer side, common metrics provide bullet points and information that can be useful in making informed purchasing decisions. These points can also be incorporated into advertising, packaging and more to help form a comprehensive sustainability and eco-responsibility approach across a brand's entire manufacturing or service line.

While the numerous metrics that are currently in use are a great start to building accountability and a broader outlook, there is clearly a need to hone them in the modern business climate.

As the sustainability of global resources come under increased scrutiny, accurate data and metrics stand to become one of the most valuable tools for supply chain management, company leaders and even the end consumer.

Properly studied and leveraged, a consistent, context-based metric framework may expose vulnerabilities and areas in need of improvement. These metrics are also likely to emerge as the best option for accurately viewing the true impact of sustainability, both within a company and within an ecosystem.

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Topics: Supply Chain Logistics

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