Companies Urged to Keep Supply Chains Clean - Or Else

Sept. 2, 2008 - A new Ernst & Young report warns companies against relocating their manufacturing operations to certain developing countries - because lower environmental standards put them at risk for sinking reputations and costly product recalls.

The report explains that companies are at risk of losing control of manufacturing standards and, as a result customers' confidence, by introducing more complex global supply chains.

What's more worrying is the report found that though there is high level of confidence that companies can address sustainability issues within their supply chains, very few are actually delivering on their stated commitments.

"Despite widespread recognition of sustainability as a significant opportunity and threat, only 12% of those polled rated it among their top three supply chain priorities," the report states.

For many companies, fuels costs have forced them to rethink their traditional supply chain models, siting factories closer to the end markets where their products will be sold.

Some other key findings of the report include:

• 63% of respondents see green supply chains as a path toward revenue growth by selling surplus efficiency allowances under the EU Emissions Trading Scheme.
• 71% see reputation and brand as the areas where sustainability issues will provide opportunity.
• 63% have already implemented labor standards into their supply chains.

To download the complete report,click here (PDF).