Does a Sustainable Supply Chain Matter?
By Rose Morrison, managing editor of Renovated
Supply chains have become a more significant focal point for businesses and consumers. You see news about them daily, with disruptions causing backlogs and product shortages.
Something else you often hear about is sustainability. In the 21st century, people have learned about eco-friendliness and implemented practices. How do supply chains and sustainability go together and why does it matter?
What Is the Supply Chain’s Status Today?
The pandemic sent the world into disarray and caused many of today’s issues. Local regulations and worker resignations limited normal business activities and slowed productivity in many industries. Other significant events include Russia’s invasion of Ukraine in February 2022, the 2021 Suez Canal container ship incident and the Colonial Pipeline ransomware attack.
Those issues, combined with the pandemic, wreaked havoc worldwide. The global supply chain is steadily recovering in 2023. When will things return to normal? A 2022 study by Carl Marks Advisors reveals that about 53% of business leaders believe the supply chain will normalize in the first half of 2024. Around one-quarter of respondents said they expect normalcy toward the end of 2023. The last few years have been a struggle and have emphasized the need for sustainability.
Photo credit: Bundesarchiv, Bild 183-W0414-0006 / Häßler, Ulrich / CC-BY-SA 3.0
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Why Are Sustainable Supply Chains Important?
Sustainable supply chains are critical because of what’s happening worldwide. A top focus of people and companies lately has been climate change. You can already see its effects with volatile weather, rising ocean temperatures and increased droughts.
These factors have caused organizations to rethink their operations from a financial and social standpoint. You can see the importance of sustainability in the supply chain with these aspects:
- Emissions: Emissions have been a primary contributor to global warming. Many companies use long-haul trucks and machines that require heavy amounts of fossil fuels. Burning diesel and gasoline leads to tailpipe emissions and pollution. Reducing pollution contributes to better air quality and improved health of workers and the community.
- ESG scores: Environmental, social and governance (ESG) scores have been a driving factor in pushing sustainability. Companies like Bloomberg track thousands of businesses worldwide to examine how they contribute to the environment, whether positively or negatively. That data becomes public to investors who decide if they want to keep investing in the organization.
- Consumer demand: Investors are driving the sustainability train because they see how the tide is turning with consumers. The modern customer is more intelligent regarding sustainability decisions. A 2021 study found that 85% of people have gravitated toward sustainable purchases in the past few years.
How Can Businesses Improve Their Supply Chain’s Sustainability?
Sustainability has shown its importance in the last couple of years alone. How can businesses improve their supply chains? These five strategies can make you a more viable company in the modern supply chain.
The first step in making the supply chain more sustainable is to map it out. Examine your chain from beginning to end and find the weak links. What processes make your operations inefficient or unsustainable? Once you find the space for improvement, set goals for your business to flip the script.
One way to change your supply chain map is to make it circular. Many supply chains are linear, from manufacturer to supplier to business to consumer. However, circular supply chains extend the life cycle of products after consumers have completed using them. This strategy reduces waste and improves environmental impact.
Fuel consumption is necessary worldwide because it keeps businesses operating and keeps houses warm in the winter. However, emissions are problematic, especially for heavy machinery and long-haul trucks. One way to increase sustainability is by reducing fuel consumption.
Recently, electric vehicles (EVs) have risen in the market as automotive companies see their potential for the future. They can also be helpful inside warehouses. For example, more facilities are starting to use electric forklifts. These machines have a long operating life of 14,000 hours, an improvement from the 10,000-hour life of diesel forklifts.
Another critical factor in sustainability is the suppliers you work with. It takes a concerted effort from all parties involved to create a sustainable supply chain, from the manufacturer to the retail stores and restaurants.
Making a sustainable supply chain means finding suppliers with similar views about environmental impact. Businesses that care about renewable energy and carbon footprints are more likely to have long-term, productive relationships. Review your partners and be transparent with clients about your sustainability expectations. Communication is vital in ensuring solid rapport.
Another way to make the supply chain more sustainable is to shorten it. Reducing the roadblocks your products have to go through produces lower costs, shortened lead times and less environmental impact. Shortening the supply chain can mean numerous things for your business.
The first strategy is to choose suppliers close to home. International companies may provide better costs, but domestic ones cut your wait times significantly. Choose businesses as close to your operations as possible. Selecting local suppliers will have less environmental impact through transport than a company from across the country.
Another tactic you can try is consolidation. How many links are in your supply chain from beginning to end? One company’s delay can cause a ripple effect for every business involved. Consider consolidating your suppliers into as few as possible. You’ll benefit from better lead times, so you don’t have to worry about managing multiple vendors.
Millions of people daily rely on packaging to deliver and receive packages, whether for commercial or private use. Paper and cardboard are the two materials most used in the shipping industry, contributing a lot of waste. In 2020, the European Union saw nearly 33 million tons of paper and cardboard waste.
Nowadays, there are more sustainable options companies can use for shipping. You can increase sustainability by searching for green materials. For example, businesses have started to use biodegradable packaging peanuts. New York’s Department of Environmental Conservation banned styrofoam in 2022, so these alternative packaging materials have become more prominent. Other sustainable options include mushroom, seaweed and cornstarch packaging.
Increasing Supply Chain Sustainability
Life has changed drastically for people and businesses since the pandemic. Many people are focusing more on improving their personal and professional lives. One way they’re trying is through sustainable practices. These five strategies show how you can be greener in the supply chain and open a brighter future for your business.
About the Author
Rose is the managing editor of Renovated and has been writing in the construction industry for over five years. She’s most passionate about sustainable building and incorporating similar resourceful methods into our world. For more from Rose, you can follow her on Twitter.