For most businesses, the supply chain is a vital artery of their operations. Supply Chain Sustainability (SCS) goes beyond just ensuring that all products are accounted for and delivered to the end customer within a certain timeframe. Impact investing with Supply Chain Sustainability in mind also aims to minimize negative social and environmental impacts, as well as strive towards continual improvements in product quality and production efficiency.
What is Supply Chain Sustainability?
Supply Chain Sustainability is defined as a management approach resulting in economically viable, efficient, and socially beneficial operations while considering environmental impacts. Moreover, it is the process of making sustainable business decisions that positively impact society and the environment. SCS also strives for a high return on investment (ROI) by strengthening supply chain relationships with key stakeholders.
Supply Chain Sustainability aims to:
- lower costs
- improve efficiency and morale
- reduce waste
- increase revenue
- enhance your reputation
By implementing sustainable practices into your company’s supply chain, you can limit the negative impact it has on the environment and improve efficiency in your business.
While the term supply chain sustainability is still new, the benefits of SCS have been well known to logisticians and suppliers for years. The current interest is mainly due to the rapid and widespread adoption of more sophisticated digital technology. This trend will continue to increase as we move closer towards an automated future.
Why is Supply Chain Sustainability important?
Supply Chain Sustainability is responsible for managing the impacts of activities on the environment and society during all supply chain stages. It effectively integrates environmental, social, and economic factors into day-to-day operations. For example, it can lead to more sustainable sourcing of raw materials, better product delivery to customers, and a stronger reputation for your business.
In addition to reducing costs and waste, SCS aims to achieve a positive social impact by respecting human rights, alleviating poverty, and preventing disease. The ultimate goal of SCS is to create a long-lasting, mutually beneficial relationship between producers and consumers.
What are the benefits of Supply Chain Sustainability?
The concept of Supply Chain Sustainability is relatively new, but many companies have already discovered the benefits it can bring. Some of the key benefits include:
1. Improved supply chain efficiency
Supply Chain Sustainability improves your company’s efficiency by reducing waste in production and logistics. This is achieved by ensuring that any waste produced during the manufacturing process is a result of the production process rather than poor or irrelevant product design or packaging.
2. Reduced environmental impact
Supply Chain Sustainability makes companies more environmentally conscious by mandating the use of sustainable raw materials in all products. As well as improving sustainability practices, it also ensures that your business is using as many recycled materials as possible.
3. Protecting against reputational damage
By incorporating sustainable practices into your supply chain, you can significantly reduce the risk of your business becoming a cause for concern among customers, employees, and stakeholders.
4. Improved revenue stream
Supply Chain Sustainability encompasses many different supply chain activities and functions. This results in greater visibility across the entire supply chain, giving all participants a clearer insight into how specific activities affect business performance and contribute to overall revenue growth.
5. Potential for new partnerships
By creating a positive relationship with your suppliers and their suppliers, your business can access more efficient logistics and production options that allow for higher profits. In addition, it provides you with a key partner to help improve your supply chain efficiency.
How to improve supply chain sustainability
In order to develop your Supply Chain Sustainability, begin by defining the SCS strategy and framework that suits your business. It is important to note that every business will have its own unique way of implementing SCS, as it aims to integrate multiple factors into operations.
1. Establish your SCS framework
The first step in developing an effective Supply Chain Sustainability strategy is to establish the frameworks that suit your business. A great way to do this is by mapping all of your internal and external relationships and identifying key areas for improvement.
Another option is to develop a sustainability scorecard, which enables you to track progress against key performance indicators (KPIs). By comparing the sustainability scorecard to previous years, you will be able to monitor your business’ performance across all stages of the supply chain.
2. Conduct sustainability assessments
Once you have established your framework, it is important to conduct thorough environmental impact assessments (EIAs) on specific products and services. A detailed EIA allows you to identify areas where you can improve the sustainability of specific products or services by reducing waste and increasing efficiency in production.
3. Improve supplier relationships
One of the most important aspects of Supply Chain Sustainability is actually building and maintaining strong relationships with suppliers. This means conducting regular communication and giving long-term, honest feedback on their products and services. It also means ensuring that you have a clear vision for future products and services that you can leverage to create mutually beneficial partnerships.
Although the concept of Supply Chain Sustainability is relatively new, many companies have already discovered the benefits it can bring. This is due to the wide range of opportunities it affords your business to improve its performance and become a more valuable resource in the community. In addition to these benefits, SCS helps firms achieve a stronger reputation as environmentally-conscious businesses and helps them protect against reputational damage.