5 Reasons Why Sustainable Supply Chain Matters for Your Business

Sustainable supply chain is the process of managing the environmental, social and economic impacts of your business activities along the entire value chain. It involves sourcing, producing, distributing and disposing of goods and services in a way that minimizes negative impacts and maximizes positive outcomes for people, planet and profit.

Key Takeaways

Sustainable supply chain is the process of managing the environmental, social and economic impacts of your business activities along the entire value chain.

Sustainable supply chain can benefit your business in terms of cost reduction, customer loyalty, talent attraction, innovation and global impact.

Sustainable supply chain can be implemented by following these steps: assess your current situation, set your vision and objectives, engage your stakeholders, implement best practices, monitor and report, and review and improve.

Sustainable supply chain best practices include ISO 14001, SA8000, Fairtrade, LEED, LCA and Circular Economy.

Why should you care about sustainable supply chain?

Here are five benefits that you can gain from adopting this approach:

1. Reduce costs and risks: By optimizing your resource use, eliminating waste, improving efficiency and quality, and complying with environmental and social standards, you can save money and avoid potential fines, lawsuits, reputational damage and operational disruptions.

2. Enhance customer loyalty and satisfaction: Customers are increasingly demanding products and services that are ethically sourced, environmentally friendly and socially responsible. By meeting or exceeding their expectations, you can increase your market share, retention rate and profitability.

3. Attract and retain talent: Employees are also looking for employers who share their values and contribute to a better world. By offering a meaningful work environment, fair wages and benefits, and opportunities for learning and development, you can motivate your staff, reduce turnover and improve productivity.

4. Innovate and differentiate: By embracing sustainability as a core value and a strategic driver, you can foster a culture of creativity and collaboration, generate new ideas and solutions, and create a unique value proposition for your customers and stakeholders.

5. Contribute to the global goals: By aligning your business goals with the United Nations Sustainable Development Goals (SDGs), you can demonstrate your commitment to addressing the most pressing challenges facing humanity and the planet, such as poverty, inequality, climate change and biodiversity loss.

How can you implement a sustainable supply chain?

Here are some steps that you can take:

Assess your current situation: Conduct a sustainability audit or assessment to identify your strengths, weaknesses, opportunities and threats in terms of environmental, social and economic performance along your value chain.

Set your vision and objectives: Define your sustainability vision, mission, values and policies, and establish SMART (specific, measurable, achievable, relevant and time-bound) goals and indicators to track your progress.

Engage your stakeholders: Communicate with your suppliers, customers, employees, investors, regulators, communities and other relevant parties to understand their needs, expectations and feedback, and to involve them in your sustainability journey.

Implement best practices: Adopt or adapt existing standards, frameworks, guidelines and tools to improve your sustainability performance in various areas, such as sourcing, production, distribution, consumption and disposal. Examples include ISO 14001 (environmental management), SA8000 (social accountability), Fairtrade (ethical trade), LEED (green building), Life Cycle Assessment (LCA) (environmental impact) and Circular Economy (resource efficiency).

Monitor and report: Measure, analyze and report on your sustainability performance using quantitative and qualitative data, such as carbon footprint, water footprint, waste generation, energy consumption, employee satisfaction, customer feedback and social impact. Use credible reporting platforms or formats, such as Global Reporting Initiative (GRI), Carbon Disclosure Project (CDP), Sustainability Accounting Standards Board (SASB) or Integrated Reporting ().

Review and improve: Evaluate your achievements and challenges, identify gaps and areas for improvement, celebrate successes and recognize contributions, learn from best practices and case studies, seek external verification or certification if applicable, and plan for continuous improvement.

Tips

Start small and scale up: You don’t have to transform your entire supply chain overnight. You can start with one product, service, process or supplier, and gradually expand your scope and ambition.

Collaborate and learn: You don’t have to do it alone. You can partner with other organizations or networks that share your vision and goals and learn from their experiences and expertise.

Be transparent and accountable: You don’t have to be perfect. You can be honest about your challenges and limitations and show your willingness to improve and grow.

Sustainable Supply Chain: A Growing Global Demand

Sustainable supply chain management (SSCM) is the practice of integrating social and environmental considerations into the procurement, production, distribution and disposal of goods and services. SSCM aims to create value for customers, stakeholders and society while minimizing the negative impacts of business activities on people and the planet. SSCM is increasingly important for businesses that want to gain a competitive edge, enhance their reputation, reduce costs and risks, and meet the expectations of customers and investors who demand more transparency and responsibility.

Why is Sustainable Supply Chain Management Important?

According to a report by Harvard Business Review, many multinational corporations (MNCs) have pledged to work only with suppliers that adhere to social and environmental standards, and they try to cascade good practices throughout their supply networks. However, the reality is that their suppliers, especially those at lower levels of the chain, often violate sustainability standards, exposing MNCs to serious financial and social risks. Therefore, MNCs need to emphasize social and environmental responsibility at every level of the supply chain and give their procurement officers better training and incentives to pursue supplier sustainability.

How Big is the Global Supply Chain Management Market?

The global supply chain management market was worth roughly 16 billion U.S. dollars in 2020, and it is expected to grow to 37.4 billion U.S. dollars by 2026. The global supply chain management software market also expanded more than twice over the last decade. These trends indicate that supply chain management is a vital service for the functioning of the global economy, and that there is a growing demand for software solutions that can help businesses optimize their supply chain performance.

What are the Challenges Facing Supply Chain Management?

However, supply chain management also faces many challenges in the 21st century, such as disruptions caused by natural disasters, geopolitical conflicts, trade wars, pandemics, cyberattacks and climate change. The COVID-19 crisis has negatively impacted supply chains across industries, affecting operations, costs, quality, delivery and customer satisfaction. According to a survey by Zippia, 87% of supply chain professionals reported that their operations were affected by COVID-19 in 2020. The most common stages along supply chains that experienced significant disruption were manufacturing (49%), sourcing (43%) and logistics (40%).

How to Build More Resilient and Sustainable Supply Chains?

To overcome these challenges and build more resilient and sustainable supply chains, businesses need to adopt best practices such as:

Diversifying their supplier base and sourcing locations
Increasing their visibility and traceability across the supply network
Collaborating with their suppliers and customers to share information and resources
Investing in digital technologies that can enhance efficiency, agility and innovation
Implementing circular economy principles that reduce waste and emissions
Aligning their supply chain strategy with their corporate social responsibility goals
Engaging with stakeholders and regulators to promote ethical and environmental standards

By following these best practices, businesses can not only mitigate risks and improve performance, but also create value for themselves and society. Supply chain sustainability is not only a moral duty, but also a strategic opportunity for businesses that want to thrive in the global market.

Frequently Asked Questions

Q: What is sustainable supply chain?
A: Sustainable supply chain is the process of managing the environmental, social and economic impacts of your business activities along the entire value chain.

Q: Why is sustainable supply chain important?
A: Sustainable supply chain is important because it can help you reduce costs and risks, enhance customer loyalty and satisfaction, attract and retain talent, innovate and differentiate, and contribute to the global goals.

Q: How can I implement a sustainable supply chain?
A: You can implement a sustainable supply chain by following these steps: assess your current situation, set your vision and objectives, engage your stakeholders, implement best practices, monitor and report, and review and improve.

Q: What are some examples of sustainable supply chain best practices?
A: Some examples of sustainable supply chain best practices are ISO 14001, SA8000, Fairtrade, LEED, LCA and Circular Economy.

Q: Where can I find more information or guidance on sustainable supply chain?
A: You can find more information or guidance on sustainable supply chain from the references listed above or from other reputable sources, such as industry associations, academic institutions, consulting firms or non-governmental organizations.

References:

https://www.unglobalcompact.org/what-is-gc/our-work/supply-chain

https://perspectives.eiu.com/sustainability/sustainability-missing-link

https://www.wipo.int/publications/en/details.jsp?id=4229

https://www.un.org/sustainabledevelopment/sustainable-development-goals/

https://www.sa-intl.org/index.cfm?fuseaction=Page.ViewPage&PageID=1689

https://www.fairtrade.net/

https://new.usgbc.org/leed

https://www.lifecycleinitiative.org/starting-life-cycle-thinking/life-cycle-approaches/life-cycle-assessment/

https://www.ellenmacarthurfoundation.org/circular-economy/what-is-the-circular-economy