Lower costs with higher margins. Faster time to a more diversified market. Local sourcing and distribution in compliance with increased and multi-national regulations. With the demands facing medical device manufacturing growing in number and complexity, a sustainable supply chain may not immediately present itself as a priority. But strategic implementation of a well-planned sustainability program is quickly becoming essential not just for corporate responsibility, but also for an organization’s profitability.

Sustainable supply chain management is the art and science of marrying ethically and environmentally sound practices with those that support robust and long-term financial growth, and ensuring these practices are infused into every stage of a product’s lifecycle. Traceability is essential from product design to disposal, and every step in between: procurement of raw materials, fabrication, packaging, storage, transport, and distribution.

The United Nations 2030 Sustainable Development Goals outline an ambitious vision of a fundamentally transformed global community in which industry, government, the academic community, and the private sector collaborate to bring about a world free of poverty and inequity, its people and resources flourishing in peace and security. It’s a pretty tall order: “We can be the first generation to succeed in ending poverty; just as we may be the last to have a chance of saving the planet. The world will be a better place in 2030 if we succeed in our objectives,”¹ the agenda states.

What does this mean for medtech?

While the industry’s supply chains most obviously include water, energy, and waste management, this is only part of a larger picture. Conditions that respect human dignity and equality, sustainable sourcing that fosters environmental integrity, and conscious transport of materials and finished goods are integral to medtech’s efforts to uphold the Sustainable Development Goals with a sustainable supply chain.

The Sustainability-Profitability Connection
Once viewed as a largely optional, philanthropic endeavor, supply chain sustainability is increasingly recognized as being just as vital to a corporation’s cash flow as its carbon footprint.

The most immediately apparent connection between sustainable practices and business benefit is that reduced energy and resource consumption eliminates waste on both the physical and fiscal level, boosting earnings and the ecosystem. Beyond the obvious, however, lies a wealth of both long-term and short-term benefits to medtech companies willing to make the connection:

• The rise of environmentally conscious consumers and shareholders bolsters the bottom line for companies making a commitment to a sustainable supply chain. Michael Hozik of the Georgetown Environmental Law Review noted the impact of just one segment of the consumer population on sales as they relate to environmental responsibility: “Just over the span of one year, millennials willing to pay more for products and services from companies committed to positive environmental and social change increased from 55 percent in 2014 to 72 percent in 2015.”² Moreover, the example of leading companies shows that good supply chain management can increase shareholder value.
• The increasingly significant role of social media in building a platform for organizational transparency and the global availability of news that is immediate as well as interactive will only serve to fuel consumer and investor demand for corporate social responsibility in coming years. Social media discussions and the proliferation of viral footage generate awareness and mobilize movements that can profoundly influence purchasing decisions.
• Implementing practices that ensure a sustainable supply chain is advantageous from the perspective of public relations. A corporate image built on social responsibility will continue to drive value as the concepts of stewardship and global citizenship take on greater significance. Corporate branding and values, as well as consumer confidence and loyalty, are all protected and enhanced with the implementation of a comprehensive sustainability program.
• Governmental regulations continue to trend toward expanding incentives for the implementation of sustainable practices, while upping fines for environmental transgressions. And while it’s true that Europe is ahead of the curve on legally mandating sustainable supply chains, and other industries outstrip medtech with regard to sustainability, the trajectory has been set. Medtech organizations can enjoy short-term benefits and set the stage for long-term advantages by embracing sustainability now.
• Supply chain sustainability is a critical component of risk management. Reducing risk in the event of emergency situations or changes in governmental regulations can mitigate financial loss due to litigation, clean up, containment, or penalties.
• Improved working conditions can reduce turnover as well as improve product quality and the reliability of the supply chain.
• The drive for greater supply chain sustainability spurs process and product innovation as empowered suppliers uncover opportunities for developing sustainable products and services.

All of these factors, combined with reduced costs and enhanced efficiency and productivity, equal a healthier bottom line for corporations willing to embrace sustainability. Indeed, according to a Harvard Business School study originally published in 2011 of 180 U.S. companies, “businesses classified as ‘high sustainability’—those that had voluntarily implemented sustainability practices—were found to outperform those classified as ‘low sustainability.’”³

For medtech, implementing a program to ensure a sustainable supply chain is not without its challenges, but the payoff, particularly for establishing a comprehensive approach to sustainability, makes it well worth the effort. In their article on strengthening healthcare’s supply chain, Ebel, Larsen, and Shah observe that “supply chains now account for…more than 40 percent of medical device costs. The annual spending is so vast—about…$122 billion on devices—that even minor efficiency gains could free up billions of dollars for investments elsewhere. In fact, if the sector adopted straightforward advances well established in other industries, we estimate that total costs (from the supply chain and external areas, such as patient care) could fall by $130 billion.”⁴

This presents a tremendous opportunity, as the money saved could be re-invested into capital improvements, investment in new technologies or companies, M&A investment, and increasing product offerings.

How to Increase a Supply Chain’s Sustainability
Clearly, companies no longer must choose between profit and planet, so how does medtech begin to implement practices that create a sustainable supply chain? The kind of comprehensive program that leads to enhanced public relations and a better bottom line includes the following initiatives:

• Embrace innovation. It’s said that necessity is the mother of invention; as a sustainable supply chain becomes more desirable and necessary, medtech companies have the opportunity to redesign products, processes, and business models to support sustainability as part of their culture. 
• Communicate sustainability as a core value for your company. Educate your organization about the importance of sustainability and how it impacts the organization as a whole, as well as the lives of each individual—from the CEO to the newest intern. Corporate social responsibility needs to be woven into the fabric of your organization’s culture, which means every employee needs to carry that same vision.
• Develop relationships with your suppliers. It’s vital that suppliers understand why sustainability is important, and have a clear and confident plan for how you can work together to achieve your organization’s goals. While corporate responsibility as a value needs to start from the top, it won’t take root if it’s imposed from on high by executive order with no follow up or support. In order for sustainable practices to be maintained on all levels, organizations must shift from merely conducting transactions to nurturing supportive relationships and partnerships.
• Don’t try to go it alone. There are governmental and non-governmental organizations (NGOs) whose mission is to help organizations be more sustainable. Partner with them and make use of the many resources they can offer. Apply for government support through grants and certifications—you’ll earn free publicity along the way. In an interview with The Harvard Business Review, Peter Senge, author of “The Necessary Revolution,” noted that NGOs are a prime source of information that may otherwise not be available to your organization. “No business knows what Oxfam knows about the plight of farmers or what WWF knows about biodiversity and watersheds. The best businesses don’t just hire the sharpest people; they also keep expanding their expertise by partnering with NGOs that have deeper and broader knowledge.”⁵
• Don’t reinvent the wheel. Where others, such as the CPG and retail industries, have already forged paths into sustainability, follow their lead. Learn from their efforts, mistakes, and successes, and apply those lessons to your own organization within the medtech industry.

It’s been said that there’s nothing more powerful than an idea whose time has come. Sustainability is just such an idea. It’s the way our industry­—and the world—is moving. Medtech organizations have the opportunity now to get ahead of the curve and reap the significant financial and public relations benefits of implementing a comprehensive program to strengthen supply chain sustainability. It’s a pivotal point in the industry’s history, and organizations that rise to the challenge and opportunity to integrate sustainability into every level of their operations will find themselves, and the world, richer for it. 

References

1. http://bit.ly/mpo0617sc1
2. http://bit.ly/mpo0617sc2
3. http://bit.ly/mpo0617sc3
4. http://bit.ly/mpo0617sc4
5. http://bit.ly/mpo0617sc5

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Marissa Fayer is a 17-year medtech executive, entrepreneur, and philanthropist whose mission is to advance growth and prosperity for organizations and the communities in which they operate. She is president of Fayer Consulting LLC, a business owner with Arbonne International, and the CEO of the non-profit HERHealthEQ.  Her expertise and vision connect organizational optimization and development with responsibility to bring about a more giving global community with health and opportunity.