Sustainability has become an important corporate goal, especially in global supply chain operations. Each stage, process, and component in a supply chain can affect the “triple bottom line” — profit, people, and the environment. If a company wants to be successful in the long run, it should prioritize managing the social, environmental, and economic impact of its supply chain.
Sustainable supply chain management (SSCM) integrates environmentally and socially responsible practices into supply chain operations — from sourcing raw materials, using labor, employing workforce, and transporting goods to reusing and recycling products and materials.
Every organization is unique, and leaders and decision-makers must find the best ways to improve their business’s performance and resilience while also optimizing the use of their resources. In fact, these are what compelled 84% of surveyed chief supply chain officers to plan and invest in climate adaptation and mitigation measures.
What are the benefits of a sustainable supply chain?
Sustainable supply chains are not only essential for protecting the environment, but they also help businesses:
Reduce costs. Many businesses might be hesitant to pursue sustainability initiatives because of the perceived costs, but the ROI paints a better picture. For instance, the restaurant industry faces issues about throwing out uneaten food. Until recently, modern technology made it possible to recycle food into fuel by collaborating with a biological waste company and recycling food into fuel. Research showed that food wastes can now be converted into environment-friendly fuels such as biomethane, biohydrogen, bioethanol, and biodiesel.
Another example is Nike. The brand uses “Flyknit,” where it uses “automated, high-tech knitting technology to ‘weave’ the shoe’s upper half into one piece instead of several pieces that are stitched together.” In a research by Deutsche Bank, the Flyknit technology reduced labor costs by up to 50% and cut material usage by up to 20%.
Manage risks. Supply chain sustainability is linked to how a company mitigates risks across various risk management. Risk assessments help organizations better understand the impact of their supply chain operations to their company's bottom line.
Enhance company reputation. Businesses are perceived as more appealing to customers and would-be employees when they’re more socially and environmentally conscious. More consumers in the US, for instance, now prefer to buy sustainably than going for brand names.
Create business opportunities. The sustainability value chain in transportation alone is poised to generate at least US$2.3 trillion by 2030, with investors expected to add US$4 trillion more in creating and scaling up decarbonization businesses. Having certification in ISO 14001 (international standards for environmental management systems), for example, can also help businesses attract more partnerships.
Sustainability's cornerstone is data.
Leaders and decision-makers need to consider an enormous number of factors to move toward a more sustainable supply chain — the estimated costs, available resources, and supplier networks, to name a few. There’s too many information to analyze and doing so can be time-consuming and overwhelming.
Data and advanced analytics can enable businesses to make timelier and more effective business decisions to achieve sustainability goals. Analytics can uncover actionable insights and inspire innovative ways to embed sustainable practices across the supply chain. In fact, 62% of surveyed global, mature enterprises and nearly half of companies across the world are already using analytics to advance their sustainability initiatives and support their triple bottom line. Research shows that those who have used analytics to improve processes have seen a 39% reduction in wastes or emissions.
Sustainability in supply chain is no longer optional.
Fortunately, there’s a growing number of businesses taking sustainability seriously. As of February 2022, over 4,500 businesses around the world have earned the B Corp certification, reflecting the strict performance, accountability, and transparency standards in their operations, such as employee benefits, charitable contributions, supply chain management, and input materials.
For companies that haven't yet made the switch, now is the perfect time to start. Investing in sustainability initiatives is not only the right thing to do, but it can also help businesses save money, improve their brand, and create a happier and healthier workplace.
Download our infographic to know more about the importance of incorporating sustainability to your supply chain, its benefits to businesses, as well as the number of companies who took the challenge of making our planet a better place.