Integrated data management will boost supply chain transparency

Sustainability survey confirms need for integrated data management to boost transparent & sustainable supply chain

Eindhoven, Netherlands – There is growing awareness in business and society about sustainability risks related to the supply chain. The majority of companies is confronted with self-assessment questionnaires, audits and data exchange web platforms. The sustainability consultants of Philips Engineering Solutions issued a survey amongst companies in the high tech sector which confirms the increasing pressure on supply chain transparency. Companies that implement an integrated IT approach in data management will be able to deal best with this pressure.

Supply chain transparency

Much research is being conducted on supply chain risks. These risks are often related to sustainability topics. The BCI Supply Chain Resilience report 2016, for example, shows that new laws and regulations, health & safety incidents and energy scarcity are amongst the top 15 causes of supply chain disruption. The first two are also present in the top 15 of perceived risks by companies for the next 5 years.

The State of Sustainable Business 2016 report from BSR Globescan shows that working conditions, supplier transparency and supply chain traceability are ranked as the most important sustainability issues in the supply chain.

Source: BSR report The State of Sustainable Business 2016 page 26

The EY report, ‘The state of sustainable supply chains, 2016’, explains the main drivers for addressing sustainability in supply chain management. The license to operate is still the main driver but companies increasingly see opportunities as well.

Source: EY report The State of Sustainable Supply Chains 2016 page 18

These research findings are to a large extent confirmed by our survey on a sustainable supply chain.

Results survey sustainable supply chain

The survey was undertaken mainly amongst the members of Brainport Industries. 25 companies responded, mainly SMEs.

Type of information and ease of retrieval
64% of the 25 respondents receive sustainability-related information requests. The requests mostly involve information on the presence of hazardous substances and conflict minerals in the supplied goods.

Also, 64% of the respondents indicate that they can retrieve the requested information easily. When the information is difficult to retrieve it is due to lack of internal data collection systems, lack of available resources and/or dependency on their suppliers for getting the right information.

License to operate
64% of the respondents find supply chain transparency of strategic importance to the company. The main reason is the license to operate.

Why is supply chain transparency of strategic importance

Supply chain management efforts
76% of the respondents are actively working on supply chain transparency. Information is mainly collected from tier 1 (direct) suppliers. 20% of the respondents dive deep into their supply chain and collect even beyond their tier 2 supplier.

Enterprise Information Management (EIM) and IT systems are mentioned as the main approach to manage the information demand. But the everyday practice of information management can be unruly. Let’s have a closer look at sustainability data management:

Efforts to gain supply chain transparency related to sustainability

Silos in data management hamper supply chain transparency

When looking at the environmental footprint of (high tech) companies, the main contribution often lies in the supply chain (so-called scope 3). Environmental impact and sustainability risks (and opportunities!) thus both relate to the supply chain.

The associated data management, however, is often fragmented as it ‘organized’ via separate functions, e.g. quality (product compliance), procurement (supplier assessment or managing price volatility of sourced materials) or sustainability (environmental impact assessment). All these functions use different IT systems that are often not linked.

A sustainable supply chain will be boosted by data management synergies

IT systems that are not linked is not a problem as such for a sustainable supply chain but could cause unnecessary resource inefficiencies and compliance issues when internal and external data flows are not assessed and optimized from an integrated perspective.

E.g. when looking at the data flows associated with sustainable supply chain purposes such as managing RoHS compliance risks, price volatility risks and Life-Cycle Assessment, synergies in data management could be utilized when realizing that introducing standardized material IDs in the relevant IT systems would benefit all three purposes.

How can Philips Engineering Solutions boost your sustainable supply chain?

Our sustainability consultants offer a three-step approach:

Firstly, we provide insight into the main environmental hotspots of your complete value chain using Life-Cycle Assessments (LCAs). The analysis includes the entire supply chain, from raw material processing to manufacturing and product usage and disposal. We can help you to identify the materials in your supply chain that cause >80% of your environmental impact and >80% of your supply chain cost.
In addition, we have a systematic approach to identify which materials pose the highest risk to contain hazardous substances that are regulated via REACH and RoHS.
In consultation with the relevant internal stakeholders within your company, we subsequently asses the associated data flows and IT landscape and identify potential synergies within your overall data management.

For more information about sustainable supply chains please contact:

Michela van Kampen
Senior Consultant Sustainability
Philips Engineering Solutions