According to the World Economic Forum, supply chain sustainability is the key to achieving the world’s climate goal. Only eight supply chains across major industries account for over 50% of global greenhouse gas emissions.
With the growing eco-consciousness, supply chain sustainability has become a priority for many organizations. Today, sustainability isn’t a mere social responsibility — it has become a strategic imperative that shapes how the market perceives your company.
Case in point: A recent study by NielsenIQ and McKinsey established that products with eco-friendly claims averaged 28% sales growth over a five-year period, outperforming the 20% growth of products that made no such claims.
Why Supply Chain Sustainability Matters
While your business operations must run smoothly to remain efficient and profitable, integrating sustainability at every step is now essential. The growing awareness of climate emergency is driving changes in consumer behavior. People are concerned about their carbon footprints and want to reduce them.
In a recent survey, 29% of all U.K. customers stopped buying from companies with ethical or supply chain sustainability issues. Meanwhile, 35% of consumers are willing to pay slightly more for an environmentally-friendly product over a cheaper alternative.
The trend is clear. Your target market is likely paying attention to your company’s impact on the environment and has sustainability criteria you need to meet. If your supply chain doesn’t meet these criteria, they may not hesitate to pick a provider that does.
Beyond the Rise of Climate-Conscious Consumers
Apart from appealing to changing consumer preferences for sustainable products, adopting sustainable practices can help your company:
- Minimize resource waste, optimize energy use, and adopt efficient processes to cut unnecessary expenses.
- Align with customer values and showcase environmental responsibility to enhance brand reputation.
- Stand out from less sustainable competitors and attract environmentally conscious consumers.
However, sustainable supply chain management is complex.
Key Sustainability Issues in Supply Chains
There are several sustainability issues in supply chain management, but let’s focus on the most common ones.
Environmental Impact and Carbon Footprint
Typically, the supply chain encompasses all activities required to transform raw materials into finished products and deliver them to the end users. Every step — from sourcing and procurement to manufacturing and distribution — has some environmental impact and can increase carbon footprints.
| Supply Chain Activity | Environmental Impacts |
| Raw material extraction | DeforestationLoss of biodiversityWater pollutionSoil degradationResource depletionCarbon emissions from machinery |
| Material processing and manufacturing | Air pollutionWater and energy overuseChemical runoffsHigh energy useCarbon emissions from machinery |
| Transportation and logistic | Significant emissions for fossil fuel-powered vehiclesOil spillageHabitat disruption from infrastructure development |
| Warehousing and storage | Land use changeEnergy consumption |
All these activities can result in negative environmental and social impacts.
Resource Waste and Inefficiencies
Roughly 8% of global stock ends up as waste, with $163 billion in inventory discarded every year. Producing this excess stock wastes resources such as raw materials, water, and energy, intensifying the depletion of natural resources. What’s more, disposing of the unsold inventory can contribute to landfilling or incineration, which leads to greenhouse gas emissions and pollution.
Besides overproduction, inefficiency in supply chain processes puts unnecessary strain on the environment. Inefficient use of resources, such as water, energy, and raw materials, not only increases operational costs but also contributes to their overuse and eventual depletion. Notably, energy efficiency alone accounts for 55% of the solutions for achieving net zero by 2050.
Lack of Transparency and Ethical Sourcing
Many supply chains suffer from a lack of visibility into their processes, such as the origin of their raw materials or the sustainability of production methods. Some suppliers may engage in over-extraction of resources, deforestation, or unsustainable farming practices. Without clear visibility, you can’t accurately assess or reduce the negative impacts of your supply chain.
Solutions for a Sustainable Supply Chain
Addressing supply chain sustainability issues requires a comprehensive strategy. Fortunately, several proven practices can help make supply chains sustainable.
Reducing Carbon Emissions with Green Logistics
One of the most effective ways to create sustainable supply chains is to adopt green logistics to reduce carbon footprint. There are several ways to approach green logistics.
- Optimize transportation routes to reduce fuel consumption.
- Transition to electric or hybrid delivery vehicles to lower greenhouse gas emissions.
- Incorporate renewable energy into warehouses to enhance energy efficiency and reduce waste.
- Explore carbon offset programs to compensate for unavoidable emissions.
Implementing Circular Economy Practices
The circular economy focuses on minimizing waste and maximizing resource reuse. In the supply chain, you can design products with recyclability in mind, reduce overproduction, and ensure end-of-life recycling or repurposing.
For example, if you’re an electronics manufacturer, you can benefit from take-back programs. That is, you collect used electronics, refurbish them, and resell them. This practice reduces your company’s dependence on virgin raw materials to lower the environmental footprint.
Investing in Supplier Partnerships and Ethical Sourcing
Unsurprisingly, suppliers play a huge role in your company’s supply chain sustainability. You want to set clear sustainability standards for your suppliers. Prioritize suppliers who understand the importance of ethics and follow environmentally friendly practices.
Establish long-term partnerships to jointly invest in sustainable technologies and share sustainability goals.
Enhancing Transparency with Technology
One key element of sustainable supply chain management is tracking sustainability metrics. With the right technology, you can have visibility into all your supply chain activities to identify areas that require sustainability efforts. You’ll analyze sustainability metrics like water consumption, energy use, and waste production to incorporate environmental awareness in your operations.
Whether you want to understand the context of your assets in motion, track their location, monitor utilization, or analyze other important parameters within your supply chain, Surgere is the ideal option for your business.
We combine industry expertise and cutting-edge IoT technology solutions to help you gain real-time visibility into your supply chain. With these insights, you can make data-driven decisions to reduce environmental impact while driving meaningful improvement to efficiency and productivity. Contact us today to learn more about how Surgere can help you achieve your supply chain goals.
