Is your company putting a strategic priority on supply chain sustainability? You’re not alone — 73% of supply chain leaders report that sustainable practices are very important to their operations, and more than 95% say they’re making sourcing decisions based on sustainable goals.
Many companies, however, find it difficult to meet their goals. The gap between what executives put down on paper and delivering the outcomes required can be significant and require a change in the way you operate and manage your network of suppliers.
A sustainable supply chain requires you to track and monitor how goods and materials move through your supply network, focusing on:
- Environmental impact
- Supply chain transparency
- Social and ethical responsibility
- Economic responsibility
The obvious place to start is with emissions. Scope 1 and Scope 2 emissions are generally the most controllable. Scope 3 emissions extend across your suppliers, transportation, and distribution, and it’s where the most impact shows up. However, it’s also the place where most organizations have the most trouble getting consistent data to change outcomes.
This article will highlight the challenges and provide proven strategies to help you meet your sustainability goals.
What Is a Sustainable Supply Chain?
A sustainable supply chain considers the environmental, social, and economic (ESG) implications of goods and materials and how they move through the system. Building a sustainable supply chain is a noble goal, but it often competes with other priorities like cost and quality.
A green supply chain management requires several key components to make a measurable change. Using renewable energy, optimizing transportation, and implementing circular economy principles to minimize waste can deliver quantifiable results. But social responsibility is also a part of a sustainable supply chain, as it ensures workers throughout the supply chain have safe working conditions, fair wages, and fair treatment.
The three core elements of supply chain sustainability include:
- People: Everyone across the supply chain must be treated fairly.
- Planet: Environmental impact must be evaluated.
- Profit: Long-term financial viability must be part of the equation.
Companies can claim they have a sustainable supply chain only when they meet the requirements of all three of these elements.
The Importance of Sustainable Supply Chain Management
Sustainable supply chain management can have a big impact on your bottom line.
- Risk mitigation: Sustainable supply chain management reduces the risk of exposure to regulatory violations, environmental incidents, and labor abuse.
- Cost efficiency: Sustainable practices improve asset utilization, optimize packaging, and reduce dwell time to lower fuel usage and other similar expenses.
- Brand and investor confidence: Applying ESG principles can help attract investors and satisfy stakeholders looking for measurable outcomes.
- Customer confidence and loyalty: There are rising expectations about what your customers want in a supply chain, with about half saying that environmental factors affect how they trust a brand. A sustainable supply chain can help improve consumer confidence and brand loyalty.
- Resilience: A sustainable supply chain is often more agile, transparent, and better equipped to handle disruptions.
Supply Chain Sustainability Issues and Challenges
Perhaps the biggest challenge in managing supply chain sustainability is getting at the data you need. Without end-to-end visibility across your supply network, it’s impossible to accurately monitor your environmental impact. The further down the supply chain, the harder it becomes. For example, you don’t have direct access to Scope 3 emissions data to monitor the indirect greenhouse gases from sources you don’t own or control. Yet, this is typically the largest portion of your carbon footprint.
The solution? Better tracking and monitoring across your supply chain. Surgere’s supply chain sustainability software aggregates data from AI, IoT, and RFID tracking to report sustainability metrics. Predictive analytics provides deeper insights and recommendations for improvements.
Best Practices for Achieving Supply Chain Sustainability
With end-to-end supply chain visibility, you can assess where you are now relative to your sustainability goals and measure the impact of any operational changes you make. With this data, you can:
- Set goals and establish benchmarks: Evaluate your current data and define improvement targets.
- Optimize transportation and logistics: Improve route efficiency and fuel consumption.
- Reduce packaging and improve circularity: Minimize waste with optimized packaging and use reusable or recyclable materials.
- Engage with suppliers for ethical sourcing: Collaborate with suppliers to reduce emissions and employ responsible labor practices.
- Reduce waste: Manage product returns, refurbishment, and inventory to avoid waste.
- Boost energy efficiency: Create efficient warehousing and lot layouts for efficiency and use renewable energy wherever possible.
- Leverage technology integration: Automate the measurement and reporting of your carbon footprint and other sustainability metrics. For example, blockchains for supply chain transparency can improve traceability across complex supplier networks.
Examples of Supply Chain Sustainability Practices and Use Cases
Making a measurable impact requires focusing on specific areas. For example, if you are trying to cut emissions and reduce costs, you might take a deep dive into logistics. This could include:
- GPS tracking and IoT sensors to sync truck arrivals with dock availability, reducing dwell time and idling in yards
- Dynamic routing to make in-route adjustments based on fuel efficiency and real-time traffic, utilizing predictive load balances to reduce carbon emissions
- Optimizing reverse logistics and backhaul opportunities to avoid empty miles
- Monitoring temperature variation in transit to avoid spoilage and waste
Often, it takes a combination of actions to make a meaningful contribution.
Build a Sustainable Supply Chain Strategy
A sustainable supply chain strategy may start with goals, but you’ll need to take action to get results. This can prove to be challenging as transportation, sourcing, waste management, and energy use interact in ways that are not always predictable. The data you need to manage things across your supply network is also often incomplete, meaning you may make important decisions based on partial information.
Surgere helps businesses audit, track, and report supply chain data to help them meet their sustainability goals. Continuous, sensor-driven data collection provides auditable, real-time monitoring, and AI-driven analysis uncovers areas for improvement. Contact Surgere and start building a more sustainable supply chain.
