With industry leaders focusing on more sustainable practices, supply chains are expected to adopt new technologies that adhere to client demands. For example, as consumers become increasingly environmentally conscious, they expect the corporations they purchase from to do the same.
A sustainable supply chain requires effort across the board, writes Edwin Lopez in Supply Chain Dive. It is an all-hands-on-deck effort with everyone involved, from manufacturing, packaging, logistics, and post-use. Every step in the supply chain requires an intentional approach to achieve sustainability. Imagine the impact the Walmart supply chain has across the globe – and how its focus on sustainability could drive others to do the same.
What is Sustainable Supply Chain Management?
Sustainable supply chain management equips organizations and supply chain managers to thoughtfully influence the supply chain. By providing a framework to set goals, adhere to standards, measure progress, and adjust goals, sustainable supply chain management creates a mechanism to help organizations better identify opportunities to improve. Goals are set at an individual business level rather than pushed down from any oversight organization, allowing businesses to craft tailored targets that make the most sense for their operations.
Overall, McKinsey & Company describes a sustainable supply chain as one that can be measured in both economic and social impact, ensuring affordable, reliable, and ethical supplies.
Instilling corporate social responsibility into the supply chain is an ongoing process, reviewing each supplier to ensure products and raw materials are handled, created and shipped effectively. For example, in the food supply chain, this is everything from ensuring handling is compliant with all local laws to verifying that shipping is both efficient and maintaining perishables correctly. This also includes any packaging and disposal the consumer may have to contend with later.
Why is Sustainability Important?
Meeting customer demand is just one benefit for businesses striving for sustainability. Organizations that employ an intentional Environmental Management System (EMS) can bolster compliance, prevent pollution, preserve resources, uncover new markets, boost efficiency and cut costs. And, pursuing sustainability can improve employee morale, boost company image with the public, regulated industries, lenders and even investors, and enhance employee awareness of environmental and sustainability issues.
At an industry level, seeking sustainability can also improve supply’s continuity, as businesses innovate and source new partnerships, ultimately diversifying the supply sources. Innovation can also extend to how to certify products or processes in pursuit of a more sustainable process.
Finally, on the broadest level, everyone stands to benefit when a business engages in the supply chain, as it can often mean making a real environmental impact an organization cannot accomplish on its own. For example, a business’ supply chain introduces an average of 5.5 times more greenhouse gas emissions than the individual business operation, according to environmental disclosure platform CDP. When businesses champion sustainability, they can reduce greenhouse gas emissions, protect water resources and minimize deforestation.
How Can We Make a Supply Chain Sustainable?
To stay competitive, businesses will have to adopt sustainable supply chain solutions; however, large-scale organizational change takes time and effort. Companies can begin with several key steps:
- Establish a business case. By outlining clearly how a sustainable supply chain can bolster risk management and efficient, as well as influence the industry, strategy, and stakeholders, businesses can more quickly achieve buy-in.
- Benchmark industry standards. Understanding suppliers and practices across the industry can help establish more widespread codes of conduct and sustainability initiatives across the industry.
- Align stakeholder expectations. Ensuring stakeholders and business leaders are aligned is critical to ensure the right company standards are established.
More specifically, businesses can then break down their supply chain into four specific areas:
- Manufacturing and Production. These early stages offer ample opportunity to improve efficiency and eliminate waste.
- Packaging. Businesses can turn to packaging for several ways of promoting sustainability. First, the packaging itself should enable reduced waste, by using recycling materials, eliminate unnecessary packaging and ensuring sustainable post-use disposal. Second, packaging can, in some cases, include technology that enables more transparent tracking.
- Logistics and Transportation. Today, software advances allow businesses to maximize route efficiency, decreasing mileage and therefore cutting fuel use and emissions. Fleets can also embrace recycling oil and tires to reduce pollution and expenses.
- Post-Consumer. While packaging choices can guide some of the post-consumer areas, a business can also help with disposal by offering take-back programs, supporting or facilitating donation options, and contributing recycling or composting collection.
Examples of Sustainable Supply Chain Management
Many businesses have already begun pursuing a more sustainable supply chain, including retail giant Walmart. The company has been pursuing transparency by setting and tracking goals through the CDP’s supply chain program.
Cosmetics leader L’Oreal set a goal to reduce emissions in its full value chain by 25% by 2030. To achieve this, the company is leveraging CDP data in the purchasing process and collaborating with suppliers.
Smartphone manufacturing Samsung selects its suppliers based on a wide range of factors: “environment, health and safety (EHS), labor and human rights, and Eco-Partner status. Initial screening is followed by on-site assessments, confirmation of regulatory compliance, affirmation of human rights practices, and evaluation of competition relative to the suppliers’ operational territories,” according to CSO magazine.
When organizations commit to sustainability in the supply chain, they drive better business results, and better results for the planet and its people as well.