Sustainability in Supply Chain

Sustainability has become a buzzword in recent years, with businesses and organizations around the world making commitments to reduce their environmental impact and operate in a more socially responsible manner without being clear on how.

But with a bit of foresight and strategy, your company has the opportunity to not only make the world greener through sustainable practices but also build a more resilient supply chain in the process.

What exactly is being sustainable and how can you leverage it for your business?

Overview of Sustainability in Supply Chain

Sustainability in the supply chain involves the integration of sustainable practices throughout the entire supply chain management process. This encompasses a wide range of activities, including the sourcing of sustainable materials, reducing waste, and improving energy efficiency in production and transportation. According to Sarkis, Zhu, and Lai (2011), incorporating green supply chain management practices is crucial for achieving sustainability in the supply chain.

To optimize the sustainability of the supply chain, it is important to identify the key points in the supply chain process, from supplier to logistics, and manufacturing. By doing so, companies can better understand where sustainable practices can be implemented to reduce environmental impact and increase efficiency.

How important is it to have sustainable practices in place? And why does it help business success?

There are several key reasons why sustainable practices are important in supply chain management. Firstly, sustainability in the supply chain helps to minimize the negative impact of business operations on the environment. As Pagell and Wu (2009) point out, sustainable supply chain management practices can reduce carbon emissions, minimize waste, and promote the use of renewable energy sources. By implementing sustainable practices, businesses can enhance their reputation as an environmentally friendly company as consumer sentiment is slowly but surely shifting towards environmentally conscious choices.

In addition to the environmental benefits, sustainable practices in the supply chain also have positive social impacts. Implement fair labor practices, support local communities and safeguard the livelihood of your employees. According to Luthra et al. (2017), companies that implement sustainable supply chain management practices are more likely to attract and retain customers who value social responsibility. Your community will be your largest advocates if you can demonstrate a commitment to social responsibility, you can improve your brand image and build long-term customer loyalty. David Ogilvy, the father of modern advertising, famously said: If you're trying to persuade people to do something, or buy something, it seems to me you should use their language, the language in which they think.

Finally, sustainable practices can also support business success. By reducing waste and increasing efficiency, companies can save money and improve their bottom line. According to Zhu, Sarkis, and Lai (2008), sustainable supply chain management practices can help to improve the overall performance of a business. For example, through waste reduction, logistics optimization, businesses can save on costs associated with materials, transportation, and storage. You can then channel these resources to invest in innovation, product R&D, and other areas that can drive growth and competitiveness.

Now you’re aware why being sustainable is beneficial for both your company and the environment, how do you move towards being more sustainable?

4-Step Approach

We’ll show you a 4-step approach to make your supply chain more sustainable and resilient to disruptions.

1. Conduct a sustainability assessment: Conducting a comprehensive sustainability assessment of your supply chain can help identify areas for improvement. This assessment should evaluate your company's environmental impact, social responsibility, and economic sustainability.

2. Develop a sustainability plan: Once you have a list of things to improve, develop a sustainability plan. Outline specific sustainability goals and strategies for achieving them. Include targets for sustainable raw materials, reducing waste, increasing energy efficiency, and promoting social responsibility.

3. Adopt sustainable sourcing practices: Prioritize suppliers that share your commitment to sustainability. This may involve selecting suppliers that use renewable energy, have strong labor practices, and minimize their environmental impact.

   • Reduce waste: You can reduce waste by adopting practices such as recycling, composting, and reducing packaging. A closed-loop supply chain, which involve recycling or reusing products at the end of their useful life

   • Increase energy efficiency: Increasing energy efficiency in the supply chain can reduce greenhouse gas emissions and lower costs. This can be achieved through practices such as optimizing transportation routes, reducing energy consumption in warehouses, and adopting energy-efficient technologies.

   • Increase transparency: Companies can set a goal of increasing transparency in their supply chain by providing information about their suppliers and the materials used in their products. This can help identify areas where improvements can be made and promote accountability.

   • Support ethical labor practices: Companies can set goals to support ethical labor practices in their supply chain, such as fair wages, safe working conditions, and no forced labor or child labor.

   • Promote sustainable sourcing: Companies can set a goal of promoting sustainable sourcing by using materials that are responsibly sourced, such as those certified by organizations like the Forest Stewardship Council or Rainforest Alliance.

4. Engage stakeholders: Engage stakeholders, suppliers, customers, and employees to identify areas for improvement and develop solutions that meet your company’s needs.

Key Considerations for Implementing Sustainable Practices in Supply Chain

The core of sustainability comes down to three main factors:

• Waste reduction: Seuring and Müller (2008) literature review found, one of the most important steps in promoting sustainability in the supply chain is to reduce waste. While some waste is inevitable, there are steps you can take to reduce the amount of waste created by your supply chain. Switching to sustainable packaging materials, choosing styrofoam alternatives, and improving production processes.

• Energy efficiency: Be more energy efficient. Invest in renewable energy sources like solar or wind power. According to Sarkis, Zhu, and Lai (2011), the implementation of energy-efficient practices in the supply chain can lead to significant cost savings.

• Sustainable sourcing: Using sustainable materials and promoting sustainable sourcing practices can also have a significant impact on sustainability. Encourage existing suppliers to integrate sustainability measures or guide them with effective R&D. This can encourage other suppliers to follow suit and build stronger relationships with your suppliers. Pagell and Wu (2009) found that companies with sustainable sourcing practices are more likely to build strong relationships with suppliers and reduce supply chain risks.

Overall, sustainability in the supply chain is an important consideration for businesses of all sizes and across all industries. By prioritizing sustainability and implementing sustainable practices in the supply chain, your company can reduce your carbon footprint, promote social responsibility, and improve your chance at success.

• Sustainable practices: How it minimize negative impacts and support business success

• 4-step approach: assess, plan, source sustainably, increase transparency

• Key considerations: waste reduction, energy efficiency, sustainable sourcing

• Attract and retain socially responsible customers, improve brand image.

Worried about volatility in the market? Learn how to protect your supply chain with our SPARKD method.

Prefer to read it all in one go as a PDF? Get the 7-Step Supply Chain Crash Course here.