Sustainability has become a widely used term in the supply chain, but its meaning varies from person to person. Despite the different interpretations, assessing sustainability in a supply chain remains crucial.
Let’s talk about supply chains and sustainability
Supply chains are undergoing a transition from traditional transactional functions focused on cost-cutting to becoming strategic value networks. With increased global integration, supply chains have become highly interconnected and dependent on each other, playing a significant role in delivering customer value. Recent events such as Brexit, the COVID-19 response, climate change, modern slavery, and the Black Lives Matter movement have emphasised the importance of promoting transparency in global supply chains. Both resilience and transparency are two sides of the same coin called sustainability.
What is supply chain sustainability?
Defining supply chain sustainability can be complex, but it involves evaluating a chain’s performance across social equity, economic factors, and environmental considerations. It encompasses industrial, natural, human, and technological systems working together to create a better world. This definition prevents businesses from prioritizing one aspect of sustainability over others and encourages a holistic approach.
When it comes to sustainability, there are endless debates on various aspects, such as glass bottles versus plastic bottles or electric cars versus petrol cars. The answers vary based on the scope of the measured supply chain, but the holistic impact of end-to-end supply chains must be carefully assessed. For example, while plastic bottles contribute to environmental pollution, the production, transport, and recycling of glass bottles also have significant environmental consequences. A comprehensive lifecycle assessment is necessary to make informed decisions.
Supply chain visibility
Another challenge lies in companies’ limited visibility of their entire supply chain. In 2017, a survey conducted by GEODIS found that only 6% of businesses had confidence in their supply chain visibility, making it difficult to assess sustainability comprehensively. In addition, 70% of the survey’s respondents said that their Supply Chain was either ‘very’ or ‘extremely’ complex. Finding an easy answer to the sustainability question is a challenging task.
Not just a cost-cutting measure
In the past, sustainability divided business leaders, often seen solely as a cost-cutting measure or greenwashing. However, the business ecosystem has evolved, and sustainability now plays a pivotal role in brand preservation and commercial value. Customers increasingly base their purchasing decisions on hidden factors like working conditions and supplier practices. Leading retail chains focus on offering sustainably grown, processed, and packaged products. Sustainability-marketed products have contributed significantly to the growth of consumer packaged goods. Despite this progress, there is still a need to engage customers in the overall sustainability journey.
Lifecycle Sustainability Assessment
While financial and operational models for economic sustainability have long existed, integrating social equity and environmental considerations cohesively has been a challenge. Fortunately, organizations now have access to tools that enable them to plan strategically. Lifecycle Sustainability Assessment (LCSA) offers a supply chain perspective to evaluate the environmental, social, and economic impacts throughout a product or service’s lifecycle. Sustainable development goals, consisting of 17 objectives, provide a blueprint for responsible consumption and production, sustainable communities, climate action, and more.
Six steps to kick-start your journey to supply chain sustainability
To kick-start your sustainability journey, take inspiration from the following six steps:
- Map your supply chain comprehensively, from product information to cash flow, considering the entire lifecycle.
- Segment your supply chain based on product/service, customers, and delivery mechanisms. Each segment will have unique processes, performance levels, and expectations.
- Continuously measure your sustainability footprint using available tools for different segments, collaborating with suppliers and customers.
- Set targets and thoroughly document your sustainability plans, integrating them into your annual targets.
- Invest in educating employees, suppliers, and customers to empower them in delivering the desired sustainability change.
- Celebrate and revisit the impact of your sustainability plan on the supply chain, acknowledging achievements and addressing areas for improvement.
Business sustainability matters
In the age of information, customers have the power to vote with their wallets, avoiding brands associated with the mistreatment of workers, lack of transparency, or unsustainable practices. Sustainability reviews play a crucial role in building and preserving brand image and customer loyalty.
It has never been more important for businesses to prioritise sustainability and incorporate it into their supply chain strategies to avoid falling behind. By making genuine efforts toward sustainability, companies can contribute to a better world while securing long-term success.