Supply chain sustainability (SCS) is an all-inclusive view of supply chains that addresses their environmental, social, economic, and legal impact. The principle behind SCS is that businesses have a social responsibility toward the entire planet and its inhabitants. SCS helps businesses build positive brand awareness and improve long-term profitability.
The importance of a sustainable supply chain
Consumer companies’ supply chains account for over 80 percent of all greenhouse-gas emissions and more than 90 percent impact on land, air and the associated ecosystem. Conversely, a sustainable supply chain ensures that businesses comply with rules and regulations, practice and support international sustainable business principles to help reduce negative environmental effects.
In addition, most consumers prefer sustainable, eco-friendly products. 62% of eco-conscious consumers in the UK and US believe that these products are better for their health. 66% of consumers will spend more on products if they are from a sustainable brand.
SCS aims to create products and services that provide environmental, social, and economic value to everyone involved in the supply chain. The following measures can help you achieve sustainable supply chains:
- Assess how sustainable your supply chain is. Engage a third party to audit and implement best practices to improve your sustainability efforts.
- Keeping SCS as the main goal, create goals in key areas – such as policies, product design, supply chains, labor management, and environmental health – that reflect global standards and government regulations.
- Coordinate with stakeholders to make your supply chain greener or more transparent. Insist on a common code of conduct that adheres to SCS practices and standards. Combine everyone’s values, goals, and expectations in this regard.
- Rethink product design and manufacturing to make the supply chain green and sustainable.
- Establish a green supplier network by getting your suppliers on board with your SCS plans or opting for green suppliers who ensure ethical sourcing and transparency.
- Make your inventory sustainable by complying with all storage and warehouse regulations.
- Train all employees in compliance processes.
- Establish safe, fair labor practices to foster goodwill among your employees and in the communities around your business.
- Plan for reverse supply chain activity, such as reclaiming products to be upgraded, refurbished, recycled or disposed of.
- Use sales and operations planning (S&OP) to manage sustainability costs, implement SCS strategies, and drive performance by conducting audits and using software tools that track progress.
- Use predictive analytics to forecast likely demand, ensure optimal supply and manufacturing processes, and avoid rework and waste. Utilize technology to make manual processes accurate or sustainable.
- Use new materials and designs that help make packages lighter and smaller to save space in shipping containers and trucks, and reduce the need to recycle or eliminate packaging materials. Track and consolidate shipments from and to multiple destinations.
- Optimize routes to reduce the environmental impact of transportation and distribution. Use advanced analytics to update routes in real time, avoid traffic congestion, etc.
- Utilize technology to predict external risks that affect supply chains, plan contingency measures, and lessen their impact.
Brands with strong SCS initiatives
Patagonia, an American outdoor clothing company, took a stand against chemically intensive cotton by switching to organically grown cotton in 1994. The Campbell Soup Company saved $4.5 million by reducing package sizes.
British-Dutch consumer goods company Unilever has been a frontrunner in SCS initiatives since 2000, when they restructured their supply chain. Clothing retailer H&M publishes their suppliers’ details on their website to ensure supply chain transparency.
Companies have undertaken various SCS activities, by focusing on customer experience and using digital supply chain technologies. As consumers are more conscious of how goods are sourced, manufactured, and distributed, you will need superior strategy, combined with apt technological solutions, to build ethical, responsible, and sustainable supply chains.