Five steps towards a more sustainable supply chain
John Perry, Managing Director at SCALA, shares the processes businesses should undertake to become more sustainable.
Sustainability is becoming increasingly crucial to both consumers and key stakeholders alike, with research from Unilever finding that one in three consumers now choose brands based on their social and environmental credentials. This, combined with the UK having recently become the first major economy in the world to legally commit to net-zero emissions by 2050, means that businesses are now having to ensure that their supply chains are as sustainable as possible – the question is, how?
Developing a business case
The first step towards achieving a more sustainable supply chain is to build the business case for action. This will help to identify the highest priority supply chain issues for the company, evaluate opportunities and risks, and build the internal support needed to move forward.
The business case for a particular company depends on a variety of issues, including: industry sector, supply chain footprint, stakeholder expectations, business strategy and organisational culture. However, in most cases, supply chain sustainability offers a number of significant benefits.
This can include minimising business disruption from environmental, social and economic impacts; protecting a company’s reputation and brand value; reducing the costs of material inputs, energy and transportation; increasing labour productivity and fostering growth by meeting evolving customer and business partner requirements.
Establishing a vision
Once the business case has been successfully put forward, it’s important to then establish a clear vision for the company’s sustainable supply chain programme. Defining the objectives at the outset of the project will prove invaluable when it comes to devising the strategy. Having a vision in place also makes it easier to evaluate the success of the programme and identify areas for continued improvement.
In order to ensure full support from the business’s senior executives, which will be crucial for success, they should be actively involved throughout the creation of the vision. In addition to the c-suite, representatives from across the business including sales, marketing, finance, IT systems, manufacturing and procurement should be consulted, as each of these functions will have a role to play in the implementation of the sustainable supply chain programme.
A key element of supply chain sustainability is efficiency, which is best achieved through careful planning. Sophisticated digital modelling tools can provide end-to-end supply chain perspective, enabling businesses to pinpoint inefficiencies and design a more sustainable supply chain and logistics network going forward.
By assessing all potential options and analysing a range of future ‘what if’ scenarios, companies can ensure not only that their supply chain and logistics networks are resilient to future changes, but also that they can benefit both the environment and their bottom line by eliminating wastage and overspending.
For example, modelling software can help supply chain professionals to minimise physical space used by identifying redundant facilities or opportunities to rebalance storage, avoid empty miles by analysing their transportation network, and reduce emissions by directing inventory to serve demand.
While it’s impossible for businesses to fully control the practices of every third party they deal with in their supply chain, they should work to ensure that wherever possible they only partner with companies that share the same goals, sustainability values, and environmentally-conscious supply chain processes as themselves.
Customers will ultimately hold the businesses they interact with directly accountable for the products or services that are delivered. So, if it is discovered that products contain parts manufactured unsustainably that have come from an external supplier, it won’t be the supplier that faces the backlash and suffers the consequences.
Qualifying the right sourcing partners is a critical piece of the sustainability puzzle, and it requires businesses to enforce the same high sustainability standards to which they hold themselves. Establishing and communicating expectations through a supplier code of conduct is an effective way for businesses to involve suppliers in their sustainability efforts.
When looking to improve sustainability, logistics is one of the areas where the biggest difference can be made. With a large number of vehicles moving high volumes of goods to diverse and dispersed locations, there is a significant risk of inefficiency when it comes to transport operations.
In order to optimise their logistics network, businesses should look at whether their fleet’s size, type and geographic spread remains optimal; whether their distribution centres are in the right places; whether customer order profiles and delivery requirements have changed since the original transport operation was designed; and whether a dedicated transport operation is even still needed, or if it could be more economical and environmentally-friendly.
This will not only help to ensure that the supply chain can operate as smoothly as possible, but also reduce empty miles and carbon emissions, which has a significant positive effect on a business’s environmental impact.
In addition to helping the environment and satisfying public demand for ethical and environmentally sound business practices, sustainability can drive significant business value both now and long into the future.
For more information on business topics in the Middle East and Africa, please take a look at the latest edition of Business Chief MEA.
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