Building a sustainable supply chain is more than simply reducing carbon emissions. It’s about environmental, social, and governance (ESG) practices that address a wide range of issues, including fair labor and human rights, access to resources, and pollution and deforestation.
To truly address these issues, companies must go beyond surface-level greenwashing practices and make more substantial changes to overcome obstacles hindering supply chain sustainability. Here is why sustainability has become so important for businesses and some key strategies to boost supply chain sustainability.
Making Sustainability a Business Priority
Regardless of your industry, you’ve probably considered taking steps to build a more sustainable supply chain. There are good reasons to do so. In fact, more and more businesses are making this a priority.
According to a recent CDP study, 95% of suppliers that demonstrate environmental leadership are considered more competitive. And joint research from NielsonIQ and McKinsey found that products made by sustainable companies experienced 28% sales growth over a 5-year period.
12 Strategies to Boost Supply Chain Sustainability
Supply chain sustainability refers to the impact a company’s operations have on society and the planet. Supply chain partners must balance their business objectives with their ESG practices to minimize their impact on the environment and improve sustainability. Here are 12 strategies businesses can use to boost supply chain sustainability.
1. Reduce Transportation and Logistics Emissions
The transportation sector relies heavily on fossil fuels, such as oil and coal, which emit greenhouse gasses and can’t be replenished. Knowing this, supply chain partners can make a significant impact on the environment by targeting their transportation emissions. This might involve using more regional warehouses, placing more strategic orders, and optimizing delivery routes.
2. Increase the Use of Renewable and Recycled Materials
Part of being a sustainable organization is investing in the circular economy, which involves efficiently reusing, repairing, sharing, and recycling products and materials. This process not only reduces waste in landfills but also preserves natural resources. For example, businesses can design and create more products made from repurposed products and be more intentional with processes when products are returned by consumers.
3. Boost Transparency
Creating supply chain transparency is challenging, but one benefit is that it can make the entire process more sustainable. For example, many businesses are now relying on solutions like RFID tags, which allow supply chain partners to track items through every stage of the supply chain. These can improve overall efficiency and reduce bottlenecks, which can lead to waste and higher emissions.
4. Improve Supplier Relationship Management
Businesses that want to boost sustainability across the supply chain will need to invest in more cohesive supplier relationships. For example, your business might have an excellent sustainability record, but this can be damaged if it is purchasing from a manufacturer that pollutes the environment or uses sweatshop labor. By engaging with suppliers and improving these relationships, you can boost sustainability.
5. Invest in Renewable Energy Sources
One of the biggest contributors to greenhouse gas emissions globally is energy production, specifically those coming from fossil fuels. You can mitigate some of this harm by switching to renewable energy sources that won’t produce greenhouse gases. Examples include solar power and wind turbines.
6. Implement Sustainable Policies
As a supply chain partner, your business will need to make more sustainable choices in everything it does. This will require a comprehensive approach to procurement, logistics, fulfillment, and disposal. You can make wide-sweeping changes by creating policies that address labor, vendor management, and more.
7. Create Sustainability Education Resources
One of the best ways to boost supply chain sustainability is to get buy-in from everyone. This includes all current employees, business partners, and even customers. Businesses can do this by creating educational resources that outline the reason sustainability initiatives are necessary and explain the roles and responsibilities of everyone involved.
8. Increase Collaboration
Businesses can collaborate to increase supply chain sustainability. For example, a group of warehouses or transportation businesses can adopt emissions standards or minimum waste production levels. Horizontal collaboration refers to collaboration among businesses at the same supply chain stage, whereas vertical collaboration refers to collaboration among businesses at different stages along the supply chain.
9. Invest in Green Technology Solutions
Green technology is a term that applies to various solutions, allowing your company to reduce its negative environmental impact on the planet. For example, a logistics company might choose to use electric self-driving vehicles to transport products for last-mile delivery or move items within the warehouse.
10. Reduce Waste
Globally, we produce roughly 2.01 billion tons of waste annually, a figure that is expected to increase by 70% over the next three decades. Your business can do its part to reduce waste by developing more sustainable packaging and addressing the amount of inventory that gets thrown in the landfill. For example, better reverse logistics processes can put products back into circulation instead of sending them into the trash bin.
11. Leverage Data & Analytics
There is more data available to businesses than ever before. The challenge is finding ways to make useful conclusions and predictions from that data. Fortunately, supply chain businesses can now perform complex analyses of their data to improve their sustainability strategies. For example, analytics can help predict and reduce future emission levels and help businesses design “cleaner” facilities.
12. Measure and Report Sustainability Performance
Businesses that want to improve their supply chain sustainability efforts will want to set goals, establish benchmarks, and begin tracking progress on various metrics. Creating regular reports can establish accountability and create more buy-in among workers and supply chain partners. These figures can also be shared with customers to show how the organization is working to become more sustainable.
While making your operations greener won’t happen overnight, the results will be worth it in terms of cost savings and corporate goodwill. These supply chain sustainability strategies can put your business on the right track to creating more ecologically friendly and equitable supply chains in the future.
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