Sustainability is at the forefront of business conversations today as customers and investors are increasingly pressuring companies to up their environmental responsibility game. Consequently, many businesses are seeking innovative methods of boosting eco-friendliness.
“Eco-friendly no longer applies to hippies and niche businesses manufacturing hemp straws. Whether you’re a manufacturer, CPG, 3PL or otherwise, there’s a good chance that your big-brand customers will want to see emissions reporting as well as other environmental barometers such as water risks or lumber consumption.” - HighJump
2019 saw many big brands joining the move towards greener business practices. To name a few examples, McDonalds cut down its energy wastage by 25% with energy-efficient appliances; Dell promoted a recycling program for safe disposal of their products; Google built the world’s most energy efficient data centres on top of heavily campaigning (and funding) green energy projects. Furthermore, the number of high street fashion retailers committed to sustainability has also soared in response to the widely reported rise of re-sale (or second hand) fashion.
Companies seeking greener practices are realizing that some of their greatest challenges and opportunities often lie outside their own stores, distribution centres and manufacturing plants. As Environment + Energy Leader reported, “supply chains are responsible for up to four times the greenhouse gas emissions of a company’s direct operations”. Thus, to make a significant environmental impact, businesses must revisit their entire supply chain.
“By managing and improving environmental, social and economic performance throughout supply chains, companies can conserve resources, optimize processes, uncover product innovations, save costs, increase productivity and promote corporate values. Research shows the business case for supply chain sustainability is growing.” – Green Biz
Environmentally responsible practices are not only good for our people and our planet, they are also key to building a positive brand perception and improving long-term profitability.
Companies can adopt many different approaches in their pursuit of a greener operation. This article enlists the five best practices to kick start your corporate environmental supply chain strategy.
1. Supply Chain mapping
The very first step you need to take when planning to enhance the environmental footprint of your supply chain is… well, to know your chain. As simple and obvious as it may sound, many companies don’t have a holistic view of their entire supply chain from raw materials, through manufacturing to end consumers. For example, you may have a close relationship with your Tier 1 suppliers, but how well do you know your suppliers at Tiers 2 and 3?
In order to grasp the sustainability impacts of your supply chain, you need to have a detailed analysis of each step of the product journey. Supply Chain Digital suggested a ‘cascading invitations’ approach to supply chain mapping, starting with inviting Tier 1 suppliers to join the process. Tier 1 suppliers pass the invite on to Tier 2s, and so on right down through all the tiers. The key to success is ensuring that each person can link what they sell to whom; and that details of what they buy link to the next person in the chain.
Once the map is complete, you must focus on identifying the main waste drivers and assessing environmental risks associated with each tier.
“Climate-related regulations, the cost and availability of materials and human resources are all supply chain risks. Working with suppliers to improve sustainability can help mitigate these, as well as reputational risks.” – Environment + Energy Leader
2. Educate
Corporate sustainability does not only entail procedural changes but, more importantly, cultural ones. Therefore, your policies must be developed in alignment with your company’s overall strategy and vision.
Earning buy-in from your staff and suppliers is as important as it can be challenging. You need to share your environmental responsibility initiatives in such way that all stakeholders understand their importance to the world and to the organization. That means towing a fine line between bragging about doing good and dismissing the PR value of going green.
Armed with the analysis you obtained from your mapping exercise, build momentum within your organisation by meaningfully communicating your supply chain’s issues, risks, and their impact to all stakeholders.
3. Gain upstream support
“Companies that look to become more sustainable start with their own operations, but pretty soon they realise that many of their impacts are in their supply chains rather than in-house, so they start pressuring their suppliers to make changes.” - Forbes
Use your suppliers as force multipliers. Form strong and positive partnerships. Collaborate with them to develop programs and policies that will drive sustainable improvements to the chain.
Establishing and communicating expectations through a supplier code of conduct is a critical step in involving suppliers in your sustainability efforts. – Green Biz
4. Embrace the Circular Economy
The traditional linear model preaches the concept of 'make, break, and discard'. The circular economy is aimed at eliminating waste. Products are designed and manufactured with production and reproduction cycles in mind.
The Sustainable Business Network explained that with circularity materials that can be safely composted or otherwise returned to the environment flow in one set of systems. Materials like plastics, metals and petrochemical based products circulate in another set of systems. Product design is done so these can be easily separated at the end of the product’s life. This allows the materials to be used for more products or to enhance the natural world. And in New Zealand this can be entirely powered by renewable energy.
“Circular systems employ reuse, sharing, repair, refurbishment, remanufacturing and recycling to create a close-loop system, minimising the use of resource inputs and the creation of waste, pollution and carbon emissions.
The circular economy aims to keep products, equipment and infrastructure in use for longer, thus improving the productivity of these resources.
All 'waste' should become 'food' for another process: either a by-product or recovered resource for another industrial process, or as regenerative resources for nature, e.g. compost. - Wikipedia
5. Leverage technology
Supply Chain technology, such as a Warehouse Management System (WMS), can help with identifying risks and opportunities for innovation. It will pinpoint where a company should focus resources to avoid potential disruptions. It will also assist with tracking your new initiatives, compare with historical data and produce meaningful progress reports.
Cartonization is a WMS feature that can promote a huge impact on sustainability. It’s a process whereby the WMS assesses every and each item from an individual order to define the number and size of each carton needed to ship that order. The software uses height, length, weight and width as parameters for its algorithm to determine the best way to pack individual cartons. The goal is to pack the order in the smallest cube size.This automates and improves traditional manual shipping methods by saving costs and reducing waste.
A yard management system (YMS) can also provide significant benefits to your operation by managing shipments from the yard gate to the dock. A YMS provides real-time visibility into trailer locations and contents to increase productivity thus avoiding downtime, delays and spoilage.
Finally, a transportation management systems (TMS) can also be leveraged for achieving a greener footprint. The software contributes to critical business drivers such as productivity, scale, customer experience and cost savings.
6. Establish KPIs
You can’t improve what you can’t measure, so establish sustainability objectives and track their progress. Use scientific recommendations and government regulations as Key Performance Indicators.
A great way to encourage internal engagement is to create incentive programs that reward sustainability ideas and efforts.
Conclusion
Although incorporating sustainability into the supply chain is not a simple task, failing to act is a much bigger risk.
Switching to a sustainable path can entail a significant capital investment and no company sets out to lose money by going green. Businesses want to believe that their sustainability efforts will pay off, but there’s plenty of evidence that reducing waste can have a substantial positive impact to the bottom line.
Although oftentimes it’s hard to make a business case for some environmental supply chain initiatives. But companies are increasingly driven to do it.
“The world is turning, and greener businesses appeal to people in a way that opens new opportunities. So, whether it’s for closing new business deals, attracting new talent, improving profitability, or simply saving the world, consider what adopting sustainable supply chain practices would mean for your business.” - HighJump