We are living in a time like never before. We are capable of communicating and working with others in an instantaneous way. Technological innovation is rapidly expanding and providing incredible opportunities for everyone. While it is exciting to see new technologies and advancements, there’s an important question we need to ask ourselves, is what we are doing sustainable? Sustainability is a development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

Sustainability was a significant pre-pandemic focus and will be front and center post-pandemic. If you look at most corporate websites for a company’s value, purpose or mission, sustainability is often top of the list. Whether you talk about corporate social responsibility, a commitment to be carbon neutral or negative, or striving to be a player in the circular economy, sustainability is always top of mind. But, what makes sustainable supply chain management important?

According to the latest study of Coyote Logistics, 81% of companies are focused on sustainability in the supply chain. 98% of global shippers now have at least one team member working on green initiatives. 77% of companies with a turnover between $1 Million- $199 Million increased their focus on sustainability within the last three years.

What is a Sustainable Supply Chain?

A sustainable supply chain refers to making supply chain decisions and implementing processes with strong consideration for their environmental impact.

Companies that value a sustainable supply chain can commit to reducing waste and carbon emissions, limiting water, fuel, and general energy consumption, and eating the suppliers they work with, do the same.

What is Sustainable Supply Chain Management?

Sustainable supply chain management involves valuing those elements of sustainability in a supply chain strategy alongside the traditional supply chain management factors of :

• Speed
• Reliability
• Transparency 
• Cost-Savings

Ideally, these values can all live alongside one another rather than in conflict as often taking sustainable steps saves money, though sometimes there are either decisions.

What Are Some Sustainable Supply Chain Practices?

There are a number of steps companies can take to make their supply chains more sustainable, including:

• You are choosing the most environmentally friendly freight mode.

• It is consolidating shipments to fully use container or trailer capacity and only shipping what’s needed when it’s needed.

• Investing in green technologies and equipment to be used in the manufacturing packaging and shipping process.

• Ensuring suppliers are ethically sourcing raw materials with minimal environmental impact and making changes to suppliers if they don’t.

• Implementing circular supply chain practices to reuse discarded materials and remake them for resale rather than throwing them away.

What Makes Sustainable Supply Chain Management Important?

1. Customer Retention

It’s clear that customers care about sustainability and, after all, making customers happy and retaining them are the bottom line in business.

81% of respondents to a UK-based survey by Smartest Energy said they’d be more likely to choose a brand with a positive approach to environmental sustainability.

In another study by Mckinsey, specifically on fashion, ⅔ of the surveyed and 75% of millennials said they consider sustainability and making a purchase.

The National Institute of Standards and Technology says green and sustainable practices can make your company more marketable.

So companies implementing sustainable supply chain practices should not just do it but proudly show their work as it makes a difference to customers.

2. Competitive Advantage

According to the latest research, 62% of businesses now think sustainability is as important or more important than financial success. The pandemic has accelerated the trend, as 72% of companies say sustainability has become more important than before covid.

There are many benefits of putting sustainability at the heart of your strategic thinking:

• Increase in efficiency and lower costs. 42% of businesses cite this as a reason for embracing sustainability.

• It gives access to capital as investors and lenders are more and more likely to use ESG criteria when deciding how to allocate funding and finance.

• 37% of businesses say that access to capital is a reason they are prioritizing sustainability.

• It provides access to talent. In a highly competitive jobs market, a commitment to sustainability can help you attract and retain employees.

• Increasing demands from large multinational companies for suppliers with sustainability credentials gives supply chain opportunities.

3. Enhance Environmental Sustainability

Undeniably, the basis of sustainable supply chain management is to enhance environmental sustainability. But companies use this concept to “kill two birds with one stone.”

 This is because a sustainable supply chain can’t only help reduce production costs and pollution, but it can also spur economic growth and provide better opportunities to sell products or services in a pro-environment atmosphere.

It also provides a competitive advantage with regard to a positive image, increased reputation, and greater customer satisfaction. It gives a win-win situation for both the companies implementing it and the environment.

4. Minimize Pollution

Adopting sustainable supply chain management helps companies minimize the detrimental impact their supply chain has on the environment.

This can be achieved by designing products in such a way that it minimizes pollution and energy. Minimizing pollution is also achieved by the adoption of lean policies, which leads to the elimination of costly losses that affect the financial health of the company.

5. Lower Cost of Operation

Maximizing profits companies adopt supply chain management inadvertently end up reducing the cost of operations and thus improving the financial health of the company.

For example, when a company tries to reduce greenhouse emissions by curtailing the number of trips in transportation, they end up saving a lot of money and thus increase profits.

6. Enhanced Reputation

The adoption of sustainable supply chain management policies in a company’s supply chain helps enhance the company’s reputation with its customer base.

By advertising the adoption of such practices, it can place itself better among its competitors and thus have increased profits from the improved sales of its products or services.

7. Social Benefits

Sustainable supply chain management could improve workers’ rights, whether close to home or in a much farther field—for instance, the cleaners and how they are using chemicals.

Local employment is a social issue as much as an economic issue, and this could help in that as well. Sustainable supply chain management also produces pretty and ethically produced goods.

Look at fair trade or alliance or other ethical goods that are coming through to make sure those workers had the right production methods to keep them healthy and their families employed.

5 Steps to Improve Resource Efficiency in your Sustainable Supply Chain

1. Check Sources Regularly

New materials and processes are being developed all the time. Opportunities to replace virgin materials with recycled or recyclable alternatives are constantly emerging.

Don’t rely on your current suppliers to provide information about potential alternatives, do your research. Ask your industry association or even look at other similar industries to learn about new products and emerging technologies.

Consider the origins of materials and components in your products, including your packaging. Find out where they are coming from and how they are transported. Don’t assume there are no competitive local suppliers.

2. Set Performance Criteria

Set performance criteria for your suppliers and evaluate them regularly. Typical measures might include quality performance, packaging, how much they use and how recyclable it is, origin and transport methods, and recycled content. Price and minimum order quantity.

We still need to check to proc and minimum order quantity to ensure our products and services are competitive in the market. Standards should be set to give you and your suppliers a benchmark to objectively assess their performance against their competitors.

3. Provide Feedback

As a customer, you need to use your influence to incentivize change in the supply chain. Communicate regularly with your suppliers, and let them know how they perform against your criteria.

Seek opportunities to collaborate to solve problems and develop new product ideas. Continue to review performance periodically and consider new suppliers if your current ones aren’t responding to feedback.

No matter how small your business is, remember that you are the customer, and your feedback is valuable to your suppliers.

4. Apply life cycle thinking to product/service design

Life Cycle thinking can help us understand where your efforts are best placed to close the loop and retain resources within our product/service systems.

This can be mapped directly to our supply chain by considering the inputs and outputs at each step in the supply chain. We highlight opportunities to design waste out of the system and discover ways to close the loop and retain resources in the system.

5. Rethink your Business

Extending the supply chain to include after-sales activity, such as repairs, replacement, or take-back programs, provides a pathway toward closing the loop.

It gives us an opportunity to reclaim resources and return them to the system for reuse or remanufacture into second-life products. This extended supply chain opens our minds to emerging new business models that support the circular economy.

Disadvantages of Not Using Sustainable Supply Chain Management

• Instead of being part of the solutions, you would contribute to the problem. You could be putting the best contracts together but miss out on the element of sustainability, which can make them even better and achieve more through that spending power.

• You could be conflicting with the organization’s policy and air quality by specifying different styles of vehicles that don’t meet what you’re trying to do.

• You could be encouraging or endorsing bad practices such as paying low wages, which you don’t intend to do, but it happens to the contract. You might be using harmful chemicals, and an example of this is a cleaning contract. Are there enough people specified or put through on the tender to carry out the work, or is the bidder underestimating how many people they need, in which case the existing ones are working more hours and being paid lower wages?

• The chemicals you are using are harmful to the people themselves or just harmful to the environment, and have those cleaners actually had training in how to use them and use the correct dosages?

• Procuring goods that water resources, including environmental resources, could also waste money on human and financial resources. It takes so much more time if you don’t think of sustainability issues upfront than just trying and include them later.

• In a time where a lot of cost-saving pushes, procuring sustainability can be the cheaper option.

4 Things You Could Lose if You are Not Doing Sustainable Supply Chain Management

1. Making Cost Savings

A life cycle costing is crucial in sustainable procurement, and it’s well worth considering that right at the start of the process.

2. Reputation 

For some organizations, reputation is a crucial thing. They might have these fantastic statements about their social responsibility, but if they are not following up on their own purchasing and supply chain practices, they could easily lose their reputation.

3. Procuring Better

You are losing the opportunity to improve your supply chain processes, and each contract can be better than the last one that was led. If you are not looking at sustainable management, how can you identify different needs that come up each time?

4. Chance for Innovation

If you are not looking at new technology coming through, it could link back to cost savings. You could be paying more for all technology, but the chance of innovation could move you and your organization forward.