Many companies have undertaken efforts to reduce their energy usage and put in place policies to support environmental initiatives within their organization. However, those efforts represent only a fraction of the possible environmental impact. Fundamental change requires an in-depth analysis of the entire supply chain.
In this article, we will examine the role of sustainability in supply chain, examples of how companies are making a difference, and the best practices for improving sustainability.
What Is Sustainability in Supply Chain?
Sustainability in the supply chain is the management of a company’s environmental and social responsibilities throughout its entire supply chain. This includes reducing the use of natural resources, encouraging ethical sourcing and eliminating violations of human rights, and minimizing waste and emissions. Companies that implement sustainability in supply chains can reduce their carbon footprint.
What makes a business sustainable and profitable? Investing in renewable energy sources and reducing waste can have upfront costs, but these business practices can make a significant difference in both the social impacts and the bottom line.
Let’s look at a couple of real-life examples.
Sustainability in Supply Chain Examples
Balancing environmental responsibility and revenue goals is possible. Many companies find that sustainable supply chain practices not only reduce greenhouse gas emissions and wasteful practices but also save money. Here are some examples of companies that made the shift:
- A company was able to save more than 2.7 million trees by optimizing packaging, managing its waste stream, and increasing asset management.
- A carpeting and tile manufacturer employed a closed-loop recycling system to reuse products and implement bio-based products, resulting in a 96% reduction in supply chain greenhouse gas emissions.
- One food and drink company invested in a more sustainable supply chain, including sourcing materials, manufacturing products, packaging, and logistics. They are on track to reduce emissions by 20% by 2025, 50% by 2030, and 100% by 2050.
Best Practices for Supply Chain Sustainability
Many business leaders have put meeting environmental standards and social responsibility at or near the top of the agenda. Improving sustainability in supply chain requires a proactive approach and a commitment. Here are some of the best practices industry leaders are deploying to meet their corporate goals.
Discuss Your Long-Term Sustainability Goals
As organizations discuss their long-term sustainability goals, it’s crucial to take a critical look at the entire supply chain from end to end. Companies need to document the impact on the environment at every stage of the supply chain from raw materials to manufacturing to packaging and shipping.
Identify Weak Spots in Your Current Sustainable Practices
This analysis often uncovers weak spots in your current practices. Some of these can lead to quick gains, such as using more recycled materials, improving production processes to reduce waste, or shifting procurement to suppliers that employ higher sustainability measures.
Other weak spots may take longer to fix but yield significant results. For example, deploying asset tagging for everything in your supply chain can optimize operations and minimize waste, such as reducing lost items and tracking returnable containers. IoT devices can generate data to provide insight into asset performance and usage patterns.
Map Out Your Supply Chain Sustainability Efforts
With an understanding of your current environmental impact, companies need to set goals for various elements of the supply chain. These goals should encompass the entire chain, including first-tier suppliers and supply networks.
Supply chains today are often quite complex. You need a firm understanding of current conditions to measure your efforts over time, including:
- Energy consumption
- Carbon emissions
- Ethical sourcing
- Waste generation
Create a baseline measurement for current impacts and then track how your efforts align with your goals.
Work With Suppliers That Promote Environmental Responsibility
Supply chain leaders in sustainability work directly with their suppliers to make sure they are also deploying best practices, such as energy-efficient manufacturing, responsible waste management, and sustainable sourcing of raw materials.
Best practices include establishing criteria for the vetting and selection of suppliers in terms of their sustainability practices.
Use Sustainable Materials With the Least Environmental Impact
Using recycled materials and practicing closed-loop manufacturing and processing will also reduce the environmental impact. Biodegradable and recycled packaging reduces the reliance on raw materials and waste.
Another example is employing package specification management to optimize packaging. By packing more materials into fewer containers and getting more products on trucks, you reduce the number of trucks on the road. Since transportation is the largest contributor to greenhouse gases, reducing the miles driven can help increase sustainability in supply chain management and yield cost savings.
Reduce Your Energy Consumption
Conducting energy audits and setting energy reduction goals can also help. The more efficient you are, the less resource you use.
However, sustainability requires improvements across your supply chain in a variety of ways. For example, many companies track inventory but fail to track returnable containers. This leads to increased costs to replace containers and more energy consumption to produce them.
For the past few years, companies have touted their purchase of carbon offsets to demonstrate their environmental efforts. However, offsets don’t stop emissions from entering the atmosphere or energy from being consumed. Today’s sustainability leaders are moving past offsets to make fundamental changes to their supply chain to create long-term improvements to require sustainable practices that lower energy usage.
Provide Employee Training on Environmental Sustainability
Meeting sustainability goals requires emphasizing the importance of sustainability in supply chain management across the organization. Improving your efforts requires training employees on your goals and how the work they do impacts these goals.
With increased environmental literacy, employees are more likely to be aware of the impact and make better decisions. Often, the best suggestions for how to reduce the environmental impact can come from frontline employees, especially if you give them the data they need to assess performance.
Achieve Sustainable Supply Chain Management With IoT Technology
IoT sensor-based technology can manage assets more closely. When you always know the location of your inventory and returnable containers, you can dramatically reduce cardboard use. And provide full visibility into your supply chain.
Surgere is a software-as-a-service (SaaS) company that deploys solutions to solve supply chain challenges, including environmental sustainability in supply chain. By leveraging IoT technology and RFID, Bluetooth, UWB, and WiFi tagging along with hardware and software, you can get real-time intelligence across your entire supply chain.
The environment can no longer support inefficient supply chains. Surgere helps companies transform their operations for sustainability and profitability. Contact Surgere today and let’s talk.