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New thinking for sustainable supply chains: How strategic procurement is driving transformation
Geopolitical risks, skills shortages, digitalisation, rising customer expectations, resource scarcity and climate change require a rethink and new business models in the die casting industry. Nevertheless, the requirements of the German Supply Chain Act (LkSG) and the Corporate Sustainability Reporting Directive (CSRD) are often seen as mere bureaucracy rather than a guideline for the sustainable transformation of global supply chains. Yet without sustainability, there can no longer be a resilient supply chain. This is not only a moral obligation, but above all a strategic imperative for companies that want to be successful in the long term.
1. Rethink supply chains
Porter's Value Chain (1986) must be fundamentally rethought: The traditional process chain, from inbound logistics to sales, no longer reflects the areas critical to the success of modern companies. Without purchasing, IT and human resources, robust, global supply chains can hardly be organised today. Traditional processes that are primarily focused on efficiency and cost reduction are simply not sufficient to meet the many global challenges.
Schmidt & Felser (Germany in the efficieny trap) ) show that many companies are falling into an efficiency trap and thus jeopardising the quality of their product portfolio. The one-sided focus on efficiency undermines resilience and prevents companies from developing urgently needed, future-proof business models - a prerequisite for the long-term competitiveness of the German economy and the die casting industry in particular.
The cradle-to-cradle model (cardle-to-cardle model?) illustrates this connection: with classic circular measures such as recycling and reduction, companies often only try to be ‘less unsustainable’ - efficiency thinking does not allow for more. Although these approaches brought us benefits at the beginning of climate change, industries with a high carbon footprint, such as the die casting industry, are now faced with the challenge of developing business models that include more far-reaching R strategies such as rethink, reuse or upcycling. Reuse, for example, is a key measure that can reduce the carbon footprint by more than a third and help to significantly reduce plastic waste by 2040 (UNEP, 2023, Turning off the Tap). What applies to the plastics industry should also become a reality for the die-casting industry.
2. Strategic procurement as the key to sustainability
Villena & Gioia (A more sustainable supply chain) emphasise that strategic procurement plays a key role in the sustainable transformation. A future-proof supply chain must be consistently orientated towards sustainability, and this orientation begins with the selection of suppliers. Procurement is therefore much more than an operational function - it is an integral part of strategic corporate management, especially against the backdrop of growing requirements from sustainability legislation. Laws such as the LkSG or the CSRD are ‘doer laws’ and thus create the framework conditions for implementing ecologically and socially responsible supply chains in practice. However, this cannot be achieved without targeted measures in strategic procurement:- Close partnerships with suppliers: To build stable and sustainable relationships, companies need to work more closely with their suppliers. First-tier suppliers should be actively involved in the sustainable procurement strategy and objectives of the procurer. In this way, responsibility for sustainability management in the deeper supply chain can be transferred to the first-tier suppliers. This approach also strengthens a company's resilience with regard to the requirements of the EU Supply Chain Directive (CSDDD), as it scrutinises the entire value chain. Focusing on partnerships in this way promotes industry-wide sustainability standards and makes it easier for all stakeholders in the upstream supply chain to comply with sustainability criteria.
- ‘Partnership is the new leadership’: In addition to intensive partnerships with suppliers, international organisations and NGOs should not be neglected. They support procurement in collecting and securing data, something that traditional AI tool providers have not yet fully achieved. A new understanding of competition is needed: companies must also be prepared to work together with competitors in order to jointly build sustainable supplier networks. This is the only way to tackle long-term challenges such as climate change, biodiversity loss and raw material scarcity - issues of key importance for the die casting industry. Sustainable processes are not just a competitive advantage, but an indispensable prerequisite for securing the future of the industry.
3. Conclusion: Challenges and opportunities of the transformation
The sustainable transformation of supply chains in the die casting industry is undoubtedly challenging, but it also harbours enormous opportunities. Many companies are stuck in an efficiency trap and need to introduce innovative, sustainable processes to escape it. According to the IBM study ‘Beyond checking the box’ (2024), companies that successfully align their supply chains with sustainability are significantly more successful in the long term: they increase their sales and profitability compared to the competition, become more attractive as employers and reduce their operating costs - contrary to popular belief. In order to realise these strategic advantages, companies must recognise and promote the importance of strategic procurement in this transformation process.
This means that the die casting industry is at a decisive turning point: the reorganisation of supply chains and the implementation of sustainable procurement strategies are unavoidable. Strategic procurement is the key to the success of this transformation. Only companies that are prepared to leave pure efficiency thinking behind and make a real mindshift towards sustainable, innovative business will be able to master the challenges of the future and at the same time contribute to a more sustainable economy.
