A large number of South African companies are not implementing sustainable strategies as a key performance indicator.
A study done this year found that most companies don’t have any measures regarding the impact of their supply chains and operations on the environment, nor do they plan to introduce any of these measures within the next 12 months.
The Supply Chain Intelligence Report is an annual, independent and international study into the supply chain and logistics practices of emerging economies around the world. Over 200 senior company officials participated in an in-depth survey. All major industries in the country were represented.
One section of the survey focused on what business in South Africa is doing to ensure environmental sustainability. A list of several KPIs (Key Performance Indicators) around environmental sustainability was drawn up and respondents were asked to indicate whether any of the KPIs from the list provided ‘are or will be forming part of [your] supply chain measurement metrics within the next 12 months.’
The percentage of companies not considering the following environmental KPIs currently, or in the future included:
- Energy consumption from supply chain operations: 51.1%
- Carbon dioxide emissions from supply chain operations: 51.9%
- Water consumption from manufacturing operations: 46.2%
- Delivery time lost due to traffic congestion: 46.6%
- Employee safety and stock security compliance: 12.9%
- Infrastructure simplification – reduction of the physical footprint of the supply chain, such as warehouse space: 23%
- Reverse logistics – the reprocessing of materials, packaging or products that can be recycled or used: 34.6%
No measures in place, none planned
A total of 41.3% of the companies that took part in the survey did not have or plan to introduce metrics to measure their impact on the environment. This is startling considering the long publicised and growing concern about the environment globally.
Respondents were then grouped according to their level of complexity and capability (using the Complexity Masters Theorem developed by Deloitte in 2003). The Complexity Masters stood out against the total sample, with 88.6% of these companies having planned or already introduced metrics to measure their impact on the environment. This progressive behaviour could be partly driven by their global complexity and the fact that they are required to conform to certain standards in international markets. Perhaps the Complexity Masters are more sensitive to consumer expectations and know that legislation is bound to change in the short to medium term.
Measures of success, acceptance and ways of doing business are rapidly changing to incorporate sustainable practices, which are considered to become a major component of competitive advantage. The Complexity Masters in South Africa have made strides in adopting the necessary strategies, pre-empting an inevitable change in legislation. However over 40% of South African companies have not, and this does not bode well for their own sustainability.
By Gerhard Sagat
Director, Terranova Research