A Comprehensive Guide on Sustainable Supply Chain Management
From maintaining operational efficiency to minimizing ecological footprints, sustainability is now taking center stage among major business objectives. As a matter of fact, the U.S. Environmental Protection Agency revealed that supply chains account for more than 90% of an organization’s greenhouse gas emissions (GHG). And, therefore, the concept of supply chain sustainability has gained immense traction in recent years, representing a fundamental shift in the way businesses operate and interact with the world around them.
For better understanding, let’s discuss in detail sustainable supply chain management and the best practices to follow.
What is supply chain sustainability?
Achieving a sustainable supply chain refers to the process of b2b supply chain management in an environmentally and socially responsible manner while also remaining profitable. It aims to balance the impact of business activities on the environment and society with financial goals. From procuring raw materials to manufacturing and distribution, when businesses adopt sustainable practices, they can minimize waste and pollution, cut costs, strengthen customer loyalty, and build a greener brand image.
Why Supply Chain Sustainability Matters?
Businesses understand that prioritizing sustainability has benefits that go beyond just a business initiative. It has been revealed in a recent EY survey that “80% of companies are emphasizing environmental, social and governance (ESG) and sustainability initiatives to increase their end-to-end supply chain visibility and resilience”.
Not just from the organization’s perspective, but consumers’ points of view also contribute to pushing businesses to make deliberate efforts on MRO supply chain optimization for sustainability. According to the survey, almost 40% of consumers will make all purchasing decisions to support a more sustainable future.
Let’s look at a few of the major reasons why building a sustainable supply chain is becoming a priority for enterprises:
Reduced Costs
When businesses prioritize sustainability initiatives in their operations, like less packaging, improving energy efficiency, and cutting waste they lower their operating costs. Things like reusing and recycling materials, optimizing transportation routes, and sourcing locally can add up to major savings.
Future-Proofing the Business
Environmental regulations are increasing around the world. Building a sustainable supply chain now will ensure you stay ahead of the curve and avoid penalties down the road. It also mitigates risks like resource scarcity that could disrupt your supply chain.
Better Supplier Relationships
By working closely with suppliers on sustainability, you build trust and loyalty. They’ll value your partnership and be more willing to go the extra mile to support your business objectives. Not to mention, building an eco-friendly, socially responsible supply chain is a win-win for both the planet and your company’s bottom line.
Best Practices for Developing a Sustainable Supply Chain
Businesses that strive to deliver excellence while meeting their environmental, social, and governance (ESG) objectives ensure long-term success and become more resilient. Here are some best practices for businesses to follow:
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Supplier Engagement and Collaboration: Organizations should work closely with suppliers to assess their sustainability practices and encourage improvements. They can further consider supplier sustainability performance when selecting and retaining partners.
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Transparency and Traceability: The need for supply chain transparency becomes more important than ever. Establish transparency in your supply chain by tracking and analyzing relevant sustainability data. With the help of supply chain systems, leaders can monitor the journey of products and materials from source to end-user.
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Resource Efficiency: To minimize waste at every stage of the supply chain, enterprises should focus on better and more efficient resource usage. To fulfill this objective many businesses implement circular economy principles by promoting product reuse, recycling, and remanufacturing.
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Transportation and Logistics: Optimize transportation routes to minimize emissions and fuel consumption. Use eco-friendly packaging materials and consider alternative transportation modes like rail or sea when feasible.
Besides the aforementioned initiatives, the use of evolving technological procurement solutions also helps businesses make supply chains sustainable. These modern-day solutions are equipped with the latest technological advancements like AI and real-time tracking features to streamline procurement while adhering to sustainable business practices.
For instance, Moglix Business offers supply chain solutions that enable enterprises to adopt sustainable operations from sourcing to delivering products. With the efficient use of technology, their supply chain solutions drive enhanced value throughout the value chain, which enables minimizing waste.
Read here how their solution helped a leading manufacturer of bio-diesel achieve 4% savings through digital procurement transformation while keeping sustainability in mind.
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