Supply chain sustainability is not a one-size-fits-all solution. Each company faces unique needs and challenges regarding sustainability and finding the best approach. Companies must develop a detailed strategy for how they want their supply chains to look in the future.
Moreover, companies need to rethink their profit and loss statements by putting a price on the environment. Companies must align their business activities with the goals of a sustainable supply chain.
Sustainable supply chains that use renewable energy, reduce waste, improve efficiency and promote biodiversity in their value chain will provide the most significant long-term business benefits. Therefore, here are steps on how supply chains can be sustainable:
1. Industry Collaboration
A common approach to supply chain sustainability is cross-sector collaboration, where the company has suppliers that share similar goals in terms of efficiency and conservation. In this scenario, all companies in the supply chain work together to be more eco-friendly and efficient while still maintaining healthy profits.
Cross-sector collaborations are especially effective when all partners agree on priorities, such as improving energy efficiency or increasing recycling efforts. Companies from different industries can work towards sustainability by collaborating. For instance, companies that use similar raw materials and intermediates need to develop a common approach.
Similar businesses in the same industry should join forces and create sustainability targets for their supply chain. Collaboration among companies in the same industry can help cut down costs as they share ideas, strategies, and experiences. Furthermore, the effectiveness of a sustainable supply chain is achieved when companies share information, making it easier to measure progress and create shared expectations.
2. Map Your Supply Chain
A comprehensive map of your supply chain is a crucial first step toward sustainable supply chain management. To gather the most accurate information, you should first create an internal map that focuses on how you currently manage your supply chain, including all suppliers and customers. This internal map should include details such as transportation routes and modes, energy sources, and production processes.
Next, focus on the environmental aspects of your business and determine which each part of your supply chain poses environmental risks. To do this, you will need to take a look at market assessments, environmental audits, and social and economic data.
These maps are critical for a sustainable supply chain since they help to determine which aspects of your supply chain are most important. Finally, you will need to apply a global environmental policy to your supply chain by creating a long-term sustainability plan that addresses the needs of all stakeholders throughout the chain.
3. Communicate Expectations
You can play a huge role in creating sustainable supply chains as a company. It’s important for you to clearly communicate your expectations to suppliers and end-users so that they know exactly what you expect from them.
Sustainability demands that companies are transparent with their employees and the community on how they produce, transport, and manage their products. Companies must be able to communicate their goals, the risks associated with them (such as social issues or environmental degradation), and how these risks can be minimized.
Companies can do this by creating a standard procedure for communicating sustainability expectations from the start of the supply chain. Companies should ensure that these expectations are communicated clearly to all suppliers to know what is expected of them and can plan accordingly.
4. Develop Training and Capacity Building Programs
Supply chain sustainability demands that companies be able to deal with uncertainty, learn from the past and continually innovate. However, it is difficult for companies to do this when they cannot retain leadership in their industry.
Companies must build a competent workforce by investing in training and capacity-building programs that empower employees to take on more responsibilities for managing their supply chains.
Companies can do this by establishing sustainability training programs for current employees and hiring dedicated sustainability managers who report directly to the CEO and other top executives. These managers can then manage the training and development of employees in charge of sustainability issues.
5. Baseline Supplier Performance
Before a company can assess and improve supplier performance, it must first develop a baseline. A baseline is created by measuring key areas essential to sustainability, such as greenhouse gas emissions and water conservation.
These measurements can be used to create standards that are aligned with the company’s sustainability policy. Before you measure the performance of your supply chain, you should specify which measures need to be improved and why they are important for your business.
Once you have identified these measures, you can develop baseline measurements for each supplier regarding greenhouse gas emissions, water consumption, energy efficiency, and waste management.
Achieving a sustainable supply chain means coming up with methods to improve your supply chain’s efficiency, sustainability, and profitability. By considering each of the five steps above, you will be able to create long-term business benefits while reducing your risk exposure.