Green Supply Chain Sustainability Strategy
What Is Sustainable Supply Chain and Its Importance?
Sustainability has never been more critical than it is now. As the climate crisis grows in magnitude, more attention is being paid to the actions of businesses. According to the U.S. Environmental Protection Agency (EPA), households and businesses contribute 13% of greenhouse gas emissions.
Supply chains make the most significant impact on emissions. Developing an environmental supply chain is the most effective way of reducing a business’s carbon footprint.
But what makes up a sustainable supply chain, and what can businesses do to incorporate sustainability in the supply chain?
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Sustainable Supply Chain Defined
The supply chain comprises all the facilities involved in turning a raw material into a shelf-ready product. Most companies have traditionally focused on increasing quality, reducing costs, and bolstering speed as part of their supply chain management strategies.
However, modern companies have shown that sustainable supply chain management can be implemented without compromising the three traditional optimized management goals.
The importance of sustainability in supply chain construction and management cannot be understated. Making changes to create a green supply chain has real business benefits. It’s not an either/or situation.
Some sustainable supply chain examples could include working with green manufacturers, optimizing the network, and more climate-friendly packaging.
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The Importance of Sustainability in Supply Chain Management
Going green is vital for obvious reasons. With the effects of climate change growing, businesses must play their part to create a better world for all through sustainability in the supply chain.
From a marketing standpoint, customers also demand that the businesses they patronize go eco-friendly. For example, 66% of consumers said they actively search for sustainable fashion products, with the number rising to 75% among millennials. These trends have been replayed through industry after industry.
While many have viewed the concept of supply chain sustainability as a box-checking exercise, there are real business benefits to investing in the green supply chain.
Building a supply chain based on eco-friendly values creates more partnership opportunities with investors, other businesses, and the general public. It’s a constant focal point that will not go away anytime soon.
Your green credentials can also improve your online and offline reputation. It legitimizes your organization as a forward-thinking brand concerned with the world around it.
At the supply chain level itself, understanding what is sustainability in supply chain management can help improve productivity while saving money. Using sustainable techniques throughout a business’s supply chain can increase efficiency.
One of the best sustainable supply chain examples is global retailer Nike. They changed how they made their shoes to reduce their energy output by 50%, experienced a 50% reduction in labor costs, and a decline in material use of 20%. Naturally, it bolstered their margins and became a model for other brands to do the same.
Investors are also increasingly turning to green additions to their portfolios. For example, only 2% of investors focused on the green sector in the UK. Ten years later, 9% of new investors chose a green or ethical fund for their portfolios.
It is clear that even if business owners have no personal interest in the environment, the consumer and investor landscapes are changing. Failing to take into account these trends will lead to businesses being left behind.
How Can a Supply Chain Be Sustainable?
Sustainable supply chain management is not a matter of pressing a button. Every aspect of the supply chain presents opportunities to initiate positive change.
Companies need to think about their emissions, material usage, and work conditions. Addressing these steps can enable you to become ESG compliant and guarantee lasting change throughout your network.
Procurement
Procurement represents the beginning of the supply chain. Businesses must think about the materials they use, where they are transported, and how they are used.
- Materials – Consider if existing materials can be changed. For example, is it possible to eliminate plastic for something more sustainable? Fast food chain McDonald’s outlets have already replaced plastic straws with paper straws.
- Target Suppliers – Measuring the emissions of your suppliers is another excellent starting point. Replacing polluting suppliers with ones that have the same values as you can slash your emissions or at least encourage them to make changes.
- Energy/Water Usage – Look into energy and water usage within the procurement process. Are your operations using the latest techniques to reduce how much energy is spent on the procurement stage?
Procurement is often one of the most polluting stages of the manufacturing process. Obtaining the raw materials or components needed to create a saleable product requires examining what you are using and who you are working with.
Operations
Review the operational processes and steps across your organization to get more efficient. Pay particular attention to resource usage. Reducing resource usage is key to creating a sustainable supply chain.
- Combine Operations – The fewer steps within the supply chain, the more efficient it becomes. For example, combining facilities or switching to a supplier that can cover multiple steps is an easy way of reducing emissions.
- Become More Energy–Efficient – Replacing old equipment with energy-efficient equipment, or changing to a supplier that already has, can help slash consumption throughout your supply chain. It can also lower your operational costs.
- Replace Fossil Fuels – Analyze the types of fuel used throughout the operational stage of the supply chain. Rather than opting for oil and gas-based processes, look for partners who use solar and wind power.
- Purchase Carbon Offsets – When all else fails, purchasing carbon offsets is an easy way of balancing out your business’s emissions.
The operational phase of green supply chain management can cause many headaches. Many organizations are shocked at how much this part of the supply chain contributes to their carbon footprints.
Retirement
Retirement refers to how you deal with products at the end of their lifespan. If a business’s products find their way to a landfill site, this is an example of a lack of sustainable supply chain management. Ensuring products are retired sustainably is another way of creating a sustainable supply chain.
- Recyclables – Creating products consisting of a higher percentage of recyclable materials helps consumers prevent unnecessary waste.
- Marketing – Raising awareness by actively speaking to consumers about how they can recycle their used products can help educate a business’s customer base on sustainability.
- Design – Designing products that can be upcycled and reused is an example of how product development contributes to green supply chain management.
Addressing retirement typically requires a full-scale rethink of what a business sells and how its products play into reducing emissions and waste.
Data and Communication
The data and communication aspect unifies the previous three elements of the sustainable supply chain concept. Revealing the results and demonstrating to consumers that your business is taking steps to become more sustainable is crucial to making the greatest impact.
- Data Gathering – Create a system that gathers essential data on a business’s climate impact. Gathering information throughout the supply chain with solutions from TradeBeyond is one way to manage this.
- Publishing – Reports should be published regularly on the effects of the green approach to supply chain management. Openness and transparency are critical to building customer trust.
- Working with Partners – Communicating your values to partners throughout the supply chain and your expectations can help initiate change, among others.
Measuring your impact is critical to any sustainability campaign. Become a data-driven business and create visual reports that everyone can understand.
Take Your Supply Chain Management to the Next Level
Building a sustainable supply chain requires a serious shift for any organization. It could include changing suppliers, relocating production, or even wholesale changes to existing products to make them more sustainable.
To make the correct decisions, you need a supply chain management solution that gives you unrivaled control over your supply chain.
Working with retailers, brands and importers headquartered in North America, Germany, Austria, Switzerland, Hong Kong, Taiwan, and China for over 20 years in 50 countries, TradeBeyond empowers buyers and suppliers by streamlining their daily efforts from product ideation to production, and beyond.
Integrate TradeBeyond Cloud into your business and gain unparalleled critical path management tools and vital insights into every link in your supply chain. To find out why major brands and retailers rely on TradeBeyond Cloud, request your free demo now.