Sustainable Supply Chain: 5 Methods and 4 Frameworks to Implement

A sustainable supply chain management is rapidly turning into a requirement for companies, for cost savings as well as carbon footprint reduction.

Supply chain management is the proactive pursuit of the most effective design and execution of a company’s supply chain, including everything from product development to end-user delivery. Businesses frequently use specialized software to manage not only the flow of supplies or products but also related data and finances in order to accomplish this effectively.

Sustainability in supply chains is becoming an important issue for businesses. This is largely due to the new & expanding legislation related to supply chain sustainability and growing demand from consumers for sustainably produced goods.

Companies that prioritize sustainability in their supply chains help themselves and their stakeholders and the greater good of society and the environment. Climate change is just one example of how companies are beginning to see how major climate changes and rising resource scarcities challenge their ability to keep operating as usual.

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Five Most Common Benefits of Sustainability:

Save cost in the long term: Establishing emission targets with suppliers and providing them assistance in identifying improvement opportunities significantly reduces energy costs across the supply chain.

Branding: Consumers care more than ever before. They care about the origins and conditions of the goods they purchase. Consumers may be willing to pay a premium of 2% to 10% for items that reveal their whole production chain, according to a study conducted by MIT’s Sloan School of Management.

Stronger relations with investors: Institutional investors know the reputational risk associated with unsustainable supply chain operations. This is a key focus of investor relations efforts.

The media have highlighted many reckless supply chain practices in recent years. In some situations, this negatively impacted the company’s stock price.

Corporate culture: Demographers have found that millennials, in particular, are looking for a deeper sense of meaning in their jobs. Sustainability is crucial in shaping a company’s culture and values, which affects the company’s capacity to attract and keep talented personnel.

Compliance: To achieve the United Nations’ 2030 deadline for meeting Sustainable Development Goals, like providing clean water to all, governments around the world are legislating greater sustainability in the supply chain. Pharmaceuticals, electronics, and handling conflict minerals are just a few examples of the broad scope of government restrictions.

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The biggest barrier to sustainable supply chains is cost. Smaller businesses have a particularly difficult time affording the initial sustainable practices expenditures.

If a transformation has to happen on a large scale, it will require affordable alternatives.

Sustainable Methods for the Supply Chain

Sustainability is now fundamental to the supply chain structure of many firms. According to CDP’s report, its members have begun to incorporate environmental data into their procurement tools and processes. They evaluate suppliers based not only on price but also on environmental parameters.

Some other CDP participants include those requiring environmentally-focused performance in bid and contract documents. Some companies offer sustainability training to their procurement managers and suppliers to aid the sustainability movement.

Incorporating these four practices into supply chain will help the companies achieve ES framework:

Procurement: Most businesses first examine their energy and water procurement, followed by the procurement of sustainable materials to utilize in their goods.

Operations: Throughout the supply chain, look for opportunities to improve operational processes or steps in order to save time and money.

Upcycle: Make sure the data can be upcycled and reused, so the IT teams never have to totally discard anything.

Communication: Measure the success of projects in the first three areas, and bolster any connected efforts by sharing data and insights with customers, supply chain partners, and other stakeholders.

Cloud-based supply chain execution systems with in-depth analytics are used in data-driven supply chains. These systems may also draw data from equipment sensors and other IoT devices. A company can gain better insight into its operations, allowing it to discover, implement, and track initiatives for achieving sustainability.

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