A Tough Sustainable Supply Chain Conundrum
At last week’s Sustainable Best Practice Exchange, Shaun McCarthy of the Supply Chain Sustainability School posed us a very interesting conundrum:
You have two options for your main raw material:
A. a high sustainability, high cost supplier;
B. a low sustainability, low cost supplier.
Which do you choose?
I’m sure most readers of this would instinctively plump for A. We should be rewarding those who make the effort to address sustainability seriously, and as that supplier increases its volumes, prices should drop.
Shaun, however, argued for B(-ish). His thinking is that going for A risks keeping sustainability in a high cost niche while everybody else goes for B and nothing changes. He would go for B but insert contract requirements for them to improve their sustainability over time. Then you – and the rest of the market – will end up with two sustainable suppliers who will compete on sustainability and price.
I’ve been mulling on this ever since and am struggling to go 100% for either argument. What do you think?