Let us first define supply chain sustainability. SCS, or Supply Chain Sustainability, is a complete approach to supply chain operations, logistics, and technology that affect the social, economic, legal, and environmental status of the components. Typical sustainability strategies include identifying raw material sources, ensuring staff safety, and reducing carbon impact.
According to the US Department of Energy's Annual Energy Review, the industrial and transportation sectors account for more than 60% of US carbon emissions after supply chain activities. This demonstrates that when energy consumption is closely investigated across the supply chain, there are huge opportunities for improvement. Volatile energy costs erode a company's resources greatly. Companies must limit their energy consumption or risk fines under new government legislation. Customers, shareholders, and advocacy groups continue to put pressure on firms to reduce their energy use and carbon emissions.
KEY TAKEAWAYS
- What’s green sustainability?
- What are the main challenges in sustainable supply chains?
- What drives sustainable supply chain operations?
- The missing link is not missing.
- Best practices for sustainable supply chains.
- The conclusion
A Green Sustainability
Organic, environmentally friendly, green, energy-saving, non-polluting, and fuel-efficient are terms that businesses regularly use. These marketing clichés may seem appealing, but sustainability entails more than just being considerate of the environment and the people who live there. Sustainability also provides a chance for multinational corporations to demonstrate their environmental and social responsibility in more important and open ways. It is required by governments, expected by customers, and rewarded by markets. As a result, operational expenditures fall and revenue growth accelerates. When carefully chosen and implemented, sustainability-related measures in supply chains help a firm to defend its future and maintain a positive brand reputation. Profits increase while expenses decrease. Customers, workers, and stakeholders all benefit from the changes. Businesses throughout the world have seen increased engagement, customer loyalty, and a drop in workplace accidents after implementing environmentally responsible supply chain sustainability.
Great things come with greater challenges
What are the supply chain sustainability challenges? The research and development team at AWL India, the leading supply chain management companies in India, analyzed three supply networks to better understand the situation and propose solutions. One in healthcare and pharmaceutical logistics, another in electronics, and still another in energy supply chain management. They examined a sample of suppliers from a variety of MNCs, including both top-tier and lower-tier suppliers with locations in countries such as the United States, Japan, and India. They discovered that many were not adhering to the MNCs' requirements. Rarely did the expected cascading effect occur. All three nations studied have various issues and challenges with their sustainable supply chains.
They discovered that practically all third party distribution enterprises did not have environmental management systems. Not only that, but they also failed to follow the standards for dealing with social concerns that might arise with an employee at work and should raise red lights, such as boss retaliation, sexual harassment, and hazardous working conditions. Logistics management company like AWL India discovered that in all three nations, only 50% of workers are permanent, with the other half being temporary or paid on a daily basis. It becomes difficult to implement effective environmental, health, and safety programmes in a business.
They found poor environmental practices, unsafe working conditions, and persistent overtime challenges due to insufficient staff at the enterprises they visited. They also observed lower-tier American suppliers and determined that many of them lacked systematic accident reporting and had high quantities of airborne chemicals. So, what are the Supply Chain threats?
What drives sustainable supply chain management?
A business strategy for supply chain environmental performance can result in demonstrable environmental benefits for the organization and its stakeholders. By 2024, many organizations will regard supply chain sustainability as a strategic concern. A sustainable sourcing strategy prepares the company for greater disclosure requirements, increased investor scrutiny, resource shortages, and environmentally sensitive customers. The impact of big supply chain solution firms and leading warehouse service providers like AWL India, as well as movements like socially responsible investment, has pushed supply chain sustainability to the forefront of the debate. As a result, investors are becoming increasingly worried about long-term procurement. Consumers expect responsibility and sustainability from businesses as part of the growing ethical consumerism movement since it directly impacts the cost of the product and its supply chain management.
Where is the missing link?
If a consumer company's supply chain wing and energy suppliers engaged in making and delivering items are in excellent working order, it can handle two separate sustainability-related risks. One type of risk is how delivering goods and services to consumers may influence sustainability. The typical consumer company's supply chain is responsible for more than 80% of greenhouse gas emissions and 90% of the impact on air, land, water, biodiversity, and geological resources, resulting in much higher social and environmental costs than the company's operations. Thus, by focusing on their supply chain warehousing operations, consumer businesses may dramatically reduce their costs.
3rd party logistics organizations or 3PL management organizations, such as AWL India, have simplified their approach toward green supply chain solutions, which benefit not only the environment but also businesses due to lower transportation and better warehousing solutions. Because sustainability implications can disrupt consumer firms' supply networks, a second type of risk emerges. Unilever believes that it loses over 300 million euros per year due to rising food costs caused by growing water scarcity and declining agricultural production. Despite the fact that supply chains face sustainability risks, only a tiny minority of firms throughout the world work with their suppliers to reduce these risks.
Best Practices for a greatly sustainable supply chain
1. Use supply chain management and measurement technology to track progress and detect bottlenecks. 3PL and 4PL logistics consultants such as AWL India have produced guidelines and Key Performance Indicators to help firms achieve their environmental goals.
2. Each stage of the manufacturing and operational processes adds to the environmental effect of the supply chain. Determine the most serious issues and areas for improvement within the supply chain. Furthermore, enterprises should be aware of the locations with the highest levels of emissions and hazards in order to improve.
3. Businesses may reduce waste, expenses, and environmental risks by selecting and collaborating with environmentally friendly supply chain management businesses such as AWL India. Eco-friendly packing, storage, and delivery, for example, can reduce emissions.
4. Businesses should base their operations on scientific advice from logistics consulting firms and governmental regulations to have the greatest influence on the global sustainability agenda and to progress toward carbon neutrality. Targets for supply chain sustainability should be consistent with overall sustainability goals.
5. Carbon offsets can also be purchased by businesses if they have limited control over their supply chain or wish to see an immediate impact. These are credits that help an organization reduce its carbon footprint by sponsoring green projects. The slogan for the future is to invest in carbon offsets.
6. Routine audits, the implementation of sustainability programmes and teams, customer-facing objectives, impact-tracking software tools, and progress reporting are all methods that may be implemented to guarantee responsibility. The goal is to maintain control throughout the operation.
Conclusion
Transparency is vital across the supply chain in the major warehousing companies in India like AWL; sustainability measures must include everything from raw material procurement to last-mile transportation to product returns and recycling procedures. Supply chain sustainability is changing, owing to digital transformation and the sophistication of digital supply chain technology. Because of advanced analytics, big data management, and security solutions like blockchain and artificial intelligence, modern supply chains today offer unparalleled visibility and responsibility. Companies now have more responsibility and have the potential to share best practices for environmentally friendly supply chains and sustainable logistics. The UN Global Compact has created ten criteria for measuring supply chain sustainability.
Compliance goals and sustainability criteria are becoming more standardized as businesses place a greater and more urgent emphasis on ethical supply chain operations. Corruption, labor standards, human rights, and environmental responsibility are among the requirements. These guiding principles are founded on the concept that socially conscious behaviors and purchases benefit not just persons and the environment, but also the ability of businesses to compete successfully and achieve long-term financial success. A sustainable supply chain is one that completely includes moral behavior and environmental considerations into a competitive and successful strategy.
Lovely Mehra
Corporate Communications Specialist