Sustainable Supply Chains: Balancing the Bottom Line and the Green Line

While sustainability is top of mind in most companies’ mission or purpose statement, few have the visibility and processes in place across the supply chain to achieve these goals today.

These are key takeaways I gleaned from a recent Oxford Economics study, “The Sustainable Supply Chain Paradox: Balancing the Bottom Line with the Green Line.”

Sustainability Will Be Front and Center Post-Pandemic

Sustainability was a major focus pre-pandemic, and it is clear from the study that this will be the same post-pandemic. In fact, the 2020s have been named the Decade of Action by the United Nations, which calls for “accelerating sustainable solutions to all the world’s biggest challenges – ranging from poverty and gender to climate change, inequality, and closing the finance gap” by 2030.

Climate change, the circular economy, and sustainability have all come to the forefront over the past few years and our global supply chains sit right in the middle of these challenges, both as a major contributor to the problems and as a great area of focus where we can take action.

The Need Is Clear, but the Path to Get There Is Not

If you look for a company’s values, purpose, or mission, sustainability is often at the top of the list. The survey confirms this, stating that 65% of companies have created a clear purpose statement around sustainability, with a further 23% saying they are in the process of doing so. That’s 88% in total.

However, there’s a long way to go in living up to that “purpose.” For example, only half of the surveyed companies have reduced overall shipping miles. And while over two-thirds say they would reduce the amount of business they do with a supplier shown to have unsustainable practices, only a small percentage have the visibility into the multi-tiered suppliers’ processes that would enable them to make that decision.

What Is Driving Sustainability?

Most respondents agree that having a clear purpose and mission is necessary to the long-term success of their businesses, a sustainable supply chain is a competitive differentiator, and good sustainability practices reduce risk.

The survey also highlighted the top three market factors influencing sustainability initiatives: product and service innovation, customer demand, and increasing industry and governmental regulations.

Sustainability: From Design to Decommission

Supply chain sustainability is the management of environmentalsocial, and economic impacts – and the encouragement of good governance practices throughout the lifecycles of goods and services. End-to-end supply chain transparency is critical, whether un-housed across your own facilities or outsourced to trading partners. Sustainability initiatives must extend from the design to the decommission of a product, from raw materials sourcing, to last-mile logistics, and even to product usage, returns, and recycling processes.

Sustainable Design for a Sustainable Product Lifecycle

Companies need to think “sustainable” from the start of a product’s life, by designing products and packaging that are biodegradable and environmentally sustainable. In the design process, you need to be able to:

  • Calculate the environmental costs for products throughout the lifecycle.
  • Simulate the manufacturing impact on the environment.
  • Link the voice of customer feedback to sustainable requirements.

Sustainable Plans for Sustainable Outcomes

The saying goes, “If you fail to plan, you plan to fail.” This is true of a sustainability initiative. Businesses need to:

  • Drive planning processes that strive to reduce emissions and satisfy demand with sustainable, ethically-sourced supply.
  • Increase forecasting accuracy to reduce obsolete inventory.
  • Predict end-of-life scenarios and support circular processes.
  • Simulate the CO2 footprint of the plan through procurement, production, and transport.
  • Report actual results to compare to the plan to identify successes and areas for improvement.

Sustainable Manufacturing to Minimize Waste and Environmental Impact 

Manufacturing facilities are a huge area of opportunity to drive carbon reductions and sustainability initiatives. But this involves:

  • Monitoring energy usage as a function of production volume
  • Measuring CO2emissions against compliance commitments
  • Capturing and utilizing co- and by-products to minimize waste
  • Enforcing safety management for a sustainable workforce

Sustainable Logistics that Reduce Mileage, Emissions, and Your Carbon Footprint

The logistics processes that move goods around the globe are also a huge area of focus when it comes to sustainability.

  • Track, measure, and optimize CO2 and energy consumption in warehousing and transportation functions.
  • Consider delivery resources that are energy efficient or CO2 neutral, especially for inner city or last-mile delivery tasks.
  • Optimize routing to run the shortest and least congested route to conserve energy and reduce mileage and your carbon footprint.
  • Leverage optimized 3D truck load planning to reduce empty miles traveled.

Operate Assets and Equipment in an Energy Efficient Manner

Sustainability through the full product or asset lifecycle is critical. Having visibility into performance at a customer’s site or home can enable you to:

  • Extend the asset’s life and reduce energy consumption.
  • Calculate and track the environmental impact of asset operations.
  • Ensure the safety of operators or users and environmental and safety compliance.

Embracing Your Network of Partners Is Key

At the end of the day, no business operates alone, instead leveraging a network of contract manufacturers, suppliers, third-party logistics companies, and other trading partners. To successfully do so, be sure to:

  • Establish visibility across all tiers of the network. If a supplier two tiers down your supply chain has unethical practices, it could be your brand that suffers.
  • Monitor and track compliance agreements to reduce risks.

The survey concludes by stating that “Executives must realize that sustainability can no longer be treated as an afterthought. It is an integral part of the day-to-day activities that keep a supply chain running, from design through to decommissioning.”

To learn more, download the “The Sustainable Supply Chain Paradox: Balancing the Bottom Line with the Green Line” research.