The importance of a sustainable supply chain

The supply chain has a huge impact on the environment. It is common for the supply chain to have significant shortcomings, such as delays, diversions, manufacturing interruptions and low levels of delivery output. Nevertheless, the most damaging aspects are those related to waste, pollutant emissions and excessive energy consumption.

The supply chain: key for all sectors

An optimal supply chain has a positive impact on many different groups, including:

  • the executive committee
  • stakeholders
  • investors
  • consumers

It is essential that all of these groups consider sustainability as a priority when making decisions for their business. In fact, more and more multinational corporations are prioritising suppliers that comply with social and environmental standards. These, in turn, ask their suppliers to do the same, generating a multiplier effect of sustainable practices. Despite these good intentions, in practice, there remains a long way to go. For example, reducing Scope 3 emissions is still a big challenge for many businesses.

Sustainable companies are the future

The upcoming years will present big opportunities for businesses. According the consulting firm McKinsey, it is expected that:

  • Around 1.8 billion people will join the global consumer class by 2025
  • The global numbers of consumers will increase by about 75% compared to 2010
  • China, for example, could gain 100 million working-age consumers by 2030, according to forecasts. Thus, it is estimated that their spending on consumer products could increase to double their current rate.

It is therefore evident that shortcomings in the sustainability of a company can slow down growth, not to mention any harmful consequences for the planet. In order to manufacture and sell goods, supplies are required and it is essential to consider the impact of their procurement and distribution. Fortunately, both consumers and government legislation are moving towards a green economy and a reduction of emissions.

The supply chain: the last piece of the puzzle

Nowadays, the supply chain is the last piece of the sustainability puzzle. It is not to be overlooked: 90% of corporate emissions come from the supply chain. The parties involved, from energy suppliers, manufacturers, warehouses, to transport and distributors, are highly polluting. The data speaks for itself: 

  • These parties generate more than 80% of greenhouse gas emissions
  • They produce more than 90% of the impact on air, land, water, biodiversity and geological resources.

Therefore, companies must significantly reduce this impact by designing strategies for the different sections of the chain. How can this be achieved? Firstly, the respective impacts must be measured. Specific software is now available for this purpose:

  • The software is used to analyse social, environmental and governance data.
  • It effectively manages information that is, by nature, very difficult to collect, since it is not a type of indicator (such as a financial indicator).
  • It handles issues such as understanding your carbon footprint, whilst it also organises, collects, consolidates and reports the information.

Practical implementation of effective measures

Despite the negative environmental impacts of supply chains, relatively few companies work with their suppliers to manage them.

Thus, to understand the impact of manufacturing consumer goods, companies must determine how natural and human resources are used. This requires measurement at every step of the production process.

Companies must also consider a wide range of environmental, social and economic issues. The large variety of consumer products means that these issues can differ significantly from one to another.

Several organisations offer measurement frameworks and tools to help identify sustainability issues in supply:

  • some have created a set of performance indicators to detect critical points
  • these organisations offer software to effectively manage and report all activity in relation to sustainability and corporate responsibility

In this way, once you have identified the problem areas in the supply chain, it is possible to act in order to reduce its negative impact.

How to achieve a sustainable supply chain: innovation

In recent years, businesses of all sectors have adopted innovative methods to change the practices of their suppliers. These include the following:

  • Codes of conduct
  • Environmental audits
  • Questionnaires to design and implement sustainability programmes
  • Use of software to improve processes

More and more technologies are being developed to optimise these processes and reduce contamination levels.

In short, achieving a sustainable supply chain requires action. Indeed, a growing number of companies are setting this as a goal, integrating environmental policies across the board and marking respect for the environment as a crucial aspect to the business.

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