Creating a strong and reliable supply chain is a fundamental aspect of many businesses, but more often than not, sustainability is a supplemental factor in this process rather than a priority. However, according to global management and consulting firm McKinsey, supply chains account for more than 80% of consumer company’s emissions¹, and apart from the obvious environmental implications of this statistic, there are financial repercussions as well if sustainability is placed on the back burner.

Consumers today are increasingly aware of the importance of sustainable and ethical conduct in the businesses they purchase from², a trend which is likely to strengthen further in upcoming years. While it is often mistakenly viewed as an additional cost to incorporate into a company’s operations, sustainability is actually an opportunity to improve a company’s efficiency and reduce waste, which translates into financial benefits.

A truly sustainable supply chain goes beyond just efficiency and waste, however, integrating three main factors: social responsibility, environmental responsibility and financial responsibility. This comprehensive approach encourages a broader perspective that includes environmental stewardship, ethical sourcing, stakeholder collaboration and long-term resilience. By building your company’s supply chain around these principles, not only will you minimise your environmental impact, but you will also enhance your brand reputation, reduce risks and create long-term value. Here are five steps you can take to ensure that your company is on the right track to forming a sustainable and resilient supply chain:

1.) Assess the Sustainability of Your Supply Chain: In order to develop a sustainable strategy moving forward, the first step is to assess the current state of your supply chain. This can be done by creating a detailed map of the flow of goods from the manufacturer to the consumer and identifying what areas can be improved in relation to sustainability and responsibility, i.e., reducing waste and resource consumption, or improving efficiency, social responsibility and ethical practices.

Software mapping technology can be used to facilitate this process and provide your business with a detailed picture of your supply chain at every stage. The data provided will help you to identify pain points, set benchmarks and establish a clear baseline to measure your progress.

2.) Reduce Waste in the Supply Chain: At the end-of-life stage, many products end up as waste. Try to identify ways to reduce that waste or eliminate it, for example, providing product recycling tips or the option to return the goods to the manufacturer to repurpose or reuse. Transportation is a significant area of waste in many supply chains, which can often be reduced by using technology to optimise transportation, such as 3D loading software to get the most out of your cargo space or route optimisation software to improve delivery efficiency for both you and your suppliers.

Another problematic cause of waste can result from what is known as ‘the bullwhip effect’³: when retailers are overly reactive to demand and boost their expectations because of it. Even a small signal in the market can create a domino effect as it passes down the line from consumer to retailer to distributor to wholesaler, leading to either an excess or a shortage of inventory. To combat this effect, keep clear lines of communication with your supply chain, reduce reactive purchasing behaviours and avoid relying on short-term data.

3.) Encourage Collaboration and Engagement with Suppliers: Although many companies do not have control over their entire supply chain, you can still do your part to encourage and reward sustainable actions from your suppliers. A great way to do this is to make sustainability a regular topic of your conversations and to recognise any sustainable efforts that are made through social media or other forms of marketing.

It is important to actively foster long-term partnerships that are based on shared values and continuous improvement. Collaboration on sustainability initiatives with your company may provide incentive and encouragement for suppliers to participate.

4.) Implement Sustainable Procurement Practices: Develop and implement sustainable procurement policies for your company that prioritise environmentally friendly and socially responsible suppliers. If you are choosing a new supplier, take into consideration factors such as their carbon footprint, water usage, waste management and fair labour practices. Suppliers who have achieved ISO 14001 certification⁴ are much more likely to maintain strict environmental standards throughout their operations. Regardless of certification, however, it is important to regularly monitor and audit suppliers’ performance to ensure that they continue to meet your company’s sustainability criteria.

5.) Promote Transparency and Traceability: One of the main barriers to creating a sustainable supply chain is the lack of visibility into the sub-tiers of supply chains. Implementing systems and technologies that enable you to track and monitor the origin and lifecycle of your products and materials can help you to identify and address any potential risks or non-compliance with sustainability standards.

Consumers appreciate transparency in a company, so use this to your advantage by communicating your sustainability efforts and progress to your customers, employees and partners through marketing and social media, as this will build trust and enhance your brand reputation as a responsible business.

Author: Shirley Carruthers - Content Creator at ParkerSteel Limited

References:
1.) mckinsey.com
2.) deloitte.com
3.) gsb.stanford.edu
4.) bsigroup.com