sustainable supply chain

Budgeting, Planning & Forecasting

- 3 min read

Making your Supply Chain more sustainable

Businesses are focussing on Supply Chain sustainability, not just because of COP26 but also because it matters to bottom-line profitability and shareholder and marketplace perception. Sustainability is becoming one of the central axes in global businesses and Supply Chain operations. Its adoption, however, is not easy to achieve.  

This article explores the complexities of adopting sustainability as part of Supply Chain and the necessity for businesses to do so.  

Why is sustainability an important conversation today? 

The third decade of the twenty-first century began with a global focus. Supply Chain leaders now need to search for and implement immediate actions to make their Supply Chain organizations more sustainable in the coming years. Many modern companies have a united fundamental goal to create sustainable, reliable, and environmentally friendly Supply Chains. This way, organizations can minimize waste and promote healthy and safe working conditions. 

The modern consumer goes beyond questioning whether a company’s financial profits are adequate because they are also interested in the provenance and sourcing of materials, what methods they were produced by, and staff working conditions in production locations.  

This new vision exposes productive organizations to endless social, environmental, and economic risks. They do not know if Supply Chain partners expose them to hazards that risk short-term corporate reputation and their hard-earned historical reputation. 

By managing and improving environmental, social, and economic performance throughout their Supply Chains, organizations can:  

  • conserve resources 
  • optimize processes
  • uncover product innovations 
  • save costs 
  • increase productivity 
  • promote corporate values.  

Today, increased environmental awareness guides consumers’ decision-making. Brands must ensure sustainability becomes the focal point for coming years because the Supply Chain interacts with the entire organizational environment, including:  

  • customers 
  • suppliers 
  • workers 
  • shareholders 
  • regulators 
  • financial partners. 

How can organizations begin to implement a sustainable approach to Supply Chain? 

While more organizations enhance their sustainability programs to encompass suppliers, they still struggle with the practical implementation. The Sustainable Development Goals Report 2021 finds that organizations are talking about Supply Chain sustainability more than ever and making firm progress on appointing expectancies for suppliers. However, they are not yet meeting these expectations with specific measures that place sustainability performance at the center of their Supply Chain.  

Bringing in more ethical and sustainable Supply Chains improves regulatory compliance, enhances branding and business reputation, reduces waste and overheads, and assures commitment to ethical and environmental sourcing. 

To design and operate sustainable chains, we must make a paradigm shift based on the definition of a successful company.   

A sustainable Supply chain operates within limits imposed by the environment and society and considers the objectives set by owners or shareholders. The sustainable chain efficiently adapts to a more circular economy. This business strategy separates production from primary resources because it is fed by renewable, recyclable, rebuilt, or biodegradable materials for its operation. 

However, it is vital to recognize that there is no ideal model for sustainability.  Each organization and each Supply Chain must find their own way to adapt based on the availability of resources and the unique characteristics of their processes and materials. From an executive level, reducing carbon footprints is achievable by awareness of a business’s environmental and social impacts. This also goes a long way to creating a healthy environment in which companies can thrive. 

In order to help organizations find a clear route to sustainability and put these ideas into practice, the adoption of a digital transformation initiative can be vital. With a Decision-Making Platform in place, businesses gain greater visibility through data to enhance their ability to plan and model with flexibility and speed. A digital solution in this space also provides insight into the impact sustainable strategies will have on the wider business, protecting the bottom-line and adding a data-led, strategic approach to operations. 

Organizations must commit to sustainability 

Many businesses emphasize sustainability in their Supply Chain by integrating environmentally friendly and socially conscious procedures; for instance, using renewable clean energy in their manufacturing facilities. The efficient use of natural resources, the conservation of fossil fuels, and the mitigation of pollution are critical areas of focus. Commitment to sustainability is a decisive element for the organization’s health, avoiding legal or image problems in the marketplace. 

Values must be lived and incorporated into everyday actions. The actions and decisions of the company’s top management must be consistent, facilitating operations inside and outside the organization and allowing end consumers to evaluate and judge the organization’s technical and moral quality. This commitment to transparency must be part of the organization’s daily ethical conduct and must exist within the policies and standards that guide the organization’s principles. 

Developing a Supply Chain that considers sustainable sources and champions human rights, ethical behavior, and working under fair trade models are fundamental principles for proper decision-making with long-term vision and maintaining customer loyalty. 

A purpose-driven sustainable Supply Chain within the organization needs to be efficient, effective, and beneficial to broader ecosystems. Incorporating sustainability into a company’s supply chain is complex, but failure to do so may prove the most considerable risk of all. Businesses must ask themselves, are they genuinely committed to Supply Chain sustainability and bringing well-being to the environment, the organization, and society? 

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