Supply chain of any business is a well-articulated network which includes all the activities and facilities of the business involved in delivering, producing, developing and sourcing products.
Supply chains have come into focus by many business organisations due to the high level of money and resources involved and on most occasions are often a source of avoidable waste.
Due to the unnecessary waste associated with supply chain, it is imperative for its sustainability. To achieve a sustainable supply chain, businesses should measure the societal and environmental effects of their products throughout their lifecycle.
The Importance of the Sustainability of every Business Supply Chain
Supply chains are a primary contributor to carbon waste emissions hence, providing a huge opportunity for improvement within any sensible business. Improving a business supply chain by developing measurable goals to curtail effects of their products on the environment and society can restore employees, investors and consumers’ confidence. This step helps to improve the responsibility of the company in its effort towards building a more sustainable supply chain.
Sustainability in its entirety has become a cognate corporate goal across industries, setting a standard for businesses to compete at a global level on sustainability. A business/company is said to have achieved a sustainable supply chain if it possesses the ability to attain a complete standardised supply process without having any effect on the society and or environment. This act is imperative because the sustainability of supply chain is to minimize if not completely eliminate the impact of the factors that affects the society which can include deforestation, depletion of the ozone, global warming and pollutants.
What is Supply Chain Sustainability?
The primary goal of every business supply chain is to minimise environmental and societal harm resulting from factors which include production of waste, water usage and energy consumption while having a positive impact on the communities and people and around their company’s operations.
The effectiveness of every company’s’ supply chain management should focus on firstly the continual improvement of the whole supply chain, then we can talk about process optimisation, cost reduction, speed of delivery and the reliability of the process. The worlds’ efforts on supply chain sustainability lays emphasis on environmental and societal friendly goals improving and optimization of resources and ensuring the ROI is retained or if possible increased at the same time. Sustainable supply chain management starts right from the beginning of production which is from the procurement of goods and services to the delivering of the finished products at the right time.
Sustainable supply chain is a strategic business decision that every forward-thinking company should make, these decisions can include the sustainable raw material sourcing, manufacturing process, packaging, and optimized, responsible delivery of finished products. Well-articulated management of supply chain consider corporate social responsibility which drives green operations hence results in an improved supply chain and saving cost in the long term.
How to Develop a Sustainable Supply Chain
It is imperative for a company that takes developing a sustainable supply chain important the needs to identify the supply chain management primary problems. One of such problems most businesses encounters is material wastage. When a company develops a means to reduce waste, they’re some steps towards enhancing their supply chain.
An enterprise can curtails waste by simplifying the complete supply chain into single identifiable units after which the company can lay emphasis on using a circular supply chain which involve the reuse of the bye products from the raw material into the manufacturing process all over again. The beauty of this is that it creates a balance by equating input to output hence maximizing profits as well as reducing harmful effects on environment and the society at large.
Behavioural changes is another important step that business management need to adopt in order to develop a sustainable supply chain. Every business owner must clarify the goals and objectives of the business to its employees as well as the help necessary to achieve such goals and objectives. Capacity building and trainings are some of the proven ways to adopt behavioural changes. These trainings and programs can include awareness on energy efficiency, women empowerment, creating awareness on waste management, women health and labour rights.
Another important element of developing a sustainable supply chain is managing sustainable procurement. Sustainability in the supply chain improves by bringing in sustainable targets in the procurement process. Sustainable procurement is imperative because it helps in understanding of the daily involvement with suppliers. This can be achieved by conducting regular audits of suppliers, setting up a code of conduct for suppliers. When both are adopted rightly, it helps in the proper evaluation of suppliers. There are tools that companies can also take advantage of in order to help develop a sustainable procurement model. Some notable options are category risk evaluation, sustainability scorecards, self-assessment questionnaires and corrective action plans.
Enhancing Supply Chain Sustainability
The practical, sustainable supply chain begins with sampling the whole supply chain. To enhance sustainability in supply chains, business managers need to assess opportunities as well as risks. It is essential to prioritise work if any business manager want to achieve a sustainable supply chain.
One of the keys for developing sustainability in the supply chain is by setting smart objectives and goals. Multi-tier collaboration with suppliers to gain a vivid view of the full supply chain is an integral element in sustainable supply chain. Clarifying these goals and objectives and maintaining transparency with employees, suppliers and clients is important. Business can also address challenges to sustainability, labour practices and managing waste by closely working with suppliers.
Fundamentals of Supply Chain Sustainability
The three major or primary elements to consider when developing a sustainable supply chain include:
• Social Responsibility: The impact of a company of its society can be referred to as social responsibility. Developing a sustainable supply chain requires being socially responsible. This can include morals, ethics, principles and philanthropic expectations of the society from the company. Social responsibility can be achieved when every individual involved in the supply chain is treated equally and fairly coinciding with the requirements of human rights.
• Societal and Environmental Awareness: production or manufacturing processes which is an integral part of supply chain generates harm effects on the environment. In order to build a more sustainable process, businesses need to prioritise the reduction in the production of these harmful objects. Being societal and environment aware or responsible involves the protection of the society and environment from the harm caused from the manufacturing, transportation, packaging, storage and other supply chain related activities.
• Financial Responsibility: For every business, the financial aspect is very important. Being responsible financially help to eliminate monetary losses that are caused by reckless or unnecessary spending. Financial awareness also helps in addressing the financial needs of the business. Financial responsibility helps in taking adequate financial decisions on financial markets which can include financial institutions, business partners, shareholders, customers, employers, clients, domestic institutions and employees.
The Benefits of Supply Chain Sustainability
The benefits of supply chain sustainability cannot be overemphasised, it goes beyond greenhouse restoration. Supply chain sustainability is essential in cost optimisation and improving productivity. Though taking proactive steps in favour of the society and environment is imperative, businesses should lay more emphasis on sustainability generally.
Some other important benefits of a sustainable supply chain may include:
Supply Chain Sustainability Trends Post Covid
Over the years and in future, innovation will continue to drive supply chain sustainability
Among the trends smart businesses seem to adopt since the emergence of Covid is the circular economy. Circular economy is a business model that is designed to eradicate pollution and waste out of goods, services and systems like supply chains. This is often achieved by building products that has little of no societal and environment effect, products that are disassembled easily, products that can be reused or remade easily and products that last longer.
While besides the circular economy, companies seem to follow the data-driven supply chains model. This trend ensures that businesses take advantage of cloud-based supply chain execution systems that provide detailed analytics and may even pull data from equipment sensors and other Internet of Things (IoT) devices.
The benefit or importance of this trend is that it enables companies a deeper insight into their day to day operations making it easier to locate industry proven strategies as well as implement these strategies and monitor them accordingly in order to improve their business sustainability.
Covid has had one of the most devastating effect on every aspect of human life as well as economical activities. The supply chain is not exempted from it either. The Covid 19 pandemic has affected every single aspect of the supply chain including sourcing and end product delivery. It is imperative to say the pandemic will and has changed the trends in the sustainability of the supply chain of every business. The pandemic tested the resilience of companies financially, organizationally, operationally and commercially.
As Covid puts the global supply chain into disarray, prices rose high and inventories ran short. In spite of these, smart business owners didn’t resort back to the fundamentals of supply chain rather they adopted strategies that helped in making their supply chain more sustainable. This approach contributed immensely to the survival of these businesses and gives them an edge over their competitors.
In the wake of Covid, businesses negotiated the economic challenges of the pandemic, by remaining ever committed to adopting sustainability into their supply chains.
This resulted into a worthwhile investment, enabling companies that prioritised values such as employees’ rights, labour rights, as well as environmental and societal protections across the base of their supply. This step helped to overcome the Covid storm better than focusing only on profit maximisation.
About the Author
Charlotte de Brabandt
Member of the ISM Thought Leadership Council
Charlotte de Brabandt is a world-renowned Technology and Negotiation Keynote Speaker & Host with ample global industry experience in the field of automotive, timepieces, technology, pharma, consumer goods and medical devices, looking after the Supplier Sustainability Program in her previous role. She’s a published author, TEDX speaker, ISM 30 under 30 Megawatt Winner and a key member of the (ISM®) Thought Leadership Council.