In today’s world, it’s crucial for businesses to be socially responsible and accountable. Customers are becoming increasingly conscious about how companies operate, which has led to many businesses focusing on being sustainable. This has implications for supply chain management as supply chains, normally, make up most of a organisations emissions, and supply chains that are more sustainable tend to be more effective. This article will explain the effect of sustainability on supply chain management and give examples of how companies can make their supply chains more sustainable.
What does sustainable supply chain management mean?
A sustainable supply chain is one in which all stakeholders – including employees, customers, and suppliers – have been considered and have been given the opportunity to thrive. There are many aspects that may be considered when defining a sustainable supply chain and there is no one-size-fits-all.
How is supply chain sustainability measured?
There is no single way to measure supply chain sustainability. A company may focus on a single aspect of sustainability or they may try to address all of these aspects in a balanced way. At 4C, we take a holistic approach: by using our Prosperity framework we explore the Ethical, Environmental and Economic elements of a client’s supply chain. One of the most commonly used metrics when measuring supply chain sustainability post COP26 is the carbon footprint. The carbon footprint is a metric that attempts to measure the total amount of carbon emissions that a product or process produces and is broken down into Scopes 1, 2, and 3. Other metrics which are commonly used in supply chain sustainability include waste metrics, such as the amount of waste produced, and social metrics, such as the average wages of employees. There are many different tools that supply chain professionals can use to assess their supply chain and determine how sustainable it is.
Supply chain strategies for being more sustainable
The first step to improving supply chain sustainability is understanding the current state of your supply chain and supply base. Assess all the different components of your supply chain – from the raw materials being purchased to the delivery of the final products. This will enable you to identify areas where your supply chain can be improved. Methods such as a life cycle assessment to determine the environmental impact of your supply chain will give a deeper dive into certain areas. Focus on high-impact areas – once you’ve identified areas of your supply chain that need improvement, you’ll need to prioritise them based on which areas will have the greatest positive impact on your supply chain sustainability. Start with the areas that will have the highest return on investment. For example, if the materials being purchased are less sustainable than other materials or suppliers, you may want to first focus on improving your sourcing strategy.
Some organisational and operational strategies to be more sustainable
- Invest in people – To become more sustainable, organisations must focus on people. This means providing employees with the tools and resources they need to succeed and creating a culture that helps employees feel empowered to make good decisions.
- Improve data quality – Poor data quality is a common issue in supply chain management. You first need to understand what can and needs to be measured. By improving the quality of data being collected throughout the supply chain, businesses can ensure that they have a more accurate picture of their supply chain. This will enable companies to make better decisions based on accurate data.
- Create a collaborative culture – Supply chain sustainability is based on collaboration. All departments within an organisation must work together to make the supply chain sustainable. This includes the marketing department, operations, R&D, finance, and sales.
- Take a more holistic view of your supply chain – To create a sustainable supply chain, companies must take a more holistic view of the supply chain. They must also collaborate more with their suppliers. When suppliers are more involved in the decision-making process, they’re more likely to be engaged and committed to the success of the organisation.
- Focus on sustainability from the start – In order to achieve sustainable supply chain management, organizations must focus on sustainability from the very beginning. Companies must make sustainability a priority from the initial conception of a product all the way through the end of its lifecycle.
Sustainability is a crucial issue for businesses to be mindful of. All aspects of the supply chain must be considered and must be sustainable. By focusing on sustainability throughout the entire supply chain, companies can create more effective supply chains that are good for the customers, the environment, and the employees. If you would like to learn more about this subject or speak to an expert in this area please reach out to Supply Chain Lead Gopal Iyer or Partner Allison Ford-Langstaff. We are always ready for a conversation on supply chains and sustainability!