What is Sustainability?

What does Sustainability mean for Supply Chains? Being at the heart of the intricate networks that connect producers to consumers, it's hardly surprising that supply chains are one of the key focus areas for businesses in all sectors. Sustainability in supply chains can be achieved through conscious decision-making, innovation, and responsible practices.

Before getting into the practical tools, it's important to first understand the significance of sustainability for all types of businesses in order to align your business operations with ethical and eco-friendly practices.

Firstly, with climate change and resource scarcity, businesses face increasing risk of survivability. Depleting natural resources is one concern, but before running out of raw materials, businesses are sure to face increasing prices as competition for scarce resources increases. The natural consequence of integrating sustainability is reducing your company's carbon footprint, but another significant driver is the potential cost savings that can result from improved operations. Afterall, sustainable supply chains revolve around the fundamentals of optimizing resource usage, reducing wastage, and improving efficiency.

Additionally, consumers are increasingly drawn to environmentally-friendly and socially responsible brands. Companies that integrate sustainability into their supply chains can gain a competitive advantage that adds value to their brand reputation in the long run.

And finally, as society as a whole progresses, regulations around sustainability evolves as well. Governments and international bodies are taking a firm stand towards sustainable practices and enacting stricter environmental and social regulations. Sustainable supply chain practices enable businesses to comply with these evolving requirements.

So how can you get started?

Sustainability can be embedded into every step of the supply chain, beginning with Sourcing & Procurement. At this stage, sustainable practices refers to prioritizing fair wages, safe working conditions and adherence to human rights standards. Companies with appropriate certifications may be easily identified during the sourcing process, but due diligence must be taken to ensure the reality reflects the certificate. Additionally, in the post-COVID context, businesses have begun to look towards sourcing locally, which not only provides the benefits of supporting local businesses and contributing to the economic development of nearby communities, it also reduces risks associated with global logistics. Reducing transportation distances for raw materials can lower a businesses' carbon footprint and cost.

Beyond sourcing, manufacturing and operational stages stand to gain plenty by adopting sustainable practices. Most intuitively, implementation of energy-efficient technologies and processes will directly reduce greenhouse gas emissions and minimize energy consumption. The same applies for water consumption, or consumption of any raw material in that aspect. Companies can also appeal to consumers by opting for and promoting the use of sustainable packing options that use recycled or biodegradable materials, or by reducing excess packaging. Taken a step further, companies may even introduce recycling programs to facilitate a circular economy like The Body Shop has done.

Finally, the fuel consumption and emissions from transportation and logistics are areas for improvement as well. Every company's focus should be on optimizing transportation routes and modes to reduce fuel consumption and emissions. Particularly for last-mile deliveries, which tend to be the most resource-intensive aspect of logistics, a good area to invest is in eco-friendly delivery modes such as electric vehicles or even bike couriers. Businesses with sufficient resources should also consider utilizing technology to enhance supply chain visibility, allowing for real-time monitoring and better decision-making to minimize transportation inefficiencies.

Investing in sustainable supply chains is not just a moral imperative but a smart business decision. The benefits of sustainability can positively impact the bottom line by way of reducing cost through improved operational efficiency, and reduced wastage as a result of streamlined operations. There is also potential to grow the top line by increasing a company's competitive advantage by appealing to environmentally conscious consumers.

At the end of the day, a sustainable company's ability to deliver value for investors is inextricably linked to the stakeholders it works with and serves, the society it operates in, and the natural resources it draws upon. Sustainability has transformed from a buzzword to a guiding principle for businesses worldwide, and as companies acknowledge the interconnectedness between environmental, social, and economic aspects of their operations, integrating sustainability into supply chains becomes an imperative.

As companies embark on their sustainability journey, it's important for them to keep abreast of the necessary reporting guidelines to communicate their sustainability initiatives to stakeholders, including customers, investors, and employees. To learn more about how sustainability can be applied to your business, read more of our articles here.

This article was produced by the team at SPARKD Partners as part of its August Articles - a series of Supply Chain articles published every Tuesday and Thursday for the month of August. Click the button below to read more of our articles.