Understanding Sustainable Supply Chains and All You Need To Know To Build One

There’s no doubt that sustainability is a key factor for businesses of all sizes in staying relevant and competitive. A sustainable supply chain concerns more than the physical planet, however. There are social and economic factors that come into play, too. Sustainable practices can help organizations of all stripes lower their carbon footprint, advance their reputation, and invest in their long-term future.

What is a sustainable supply chain?

A sustainable supply chain is more than a buzzword. It has real-world implications. This infrastructure refers to a group of organizations and processes that lower environmental impact, advance ethical labor practices, and positively help shape it and the country’s economic future. Stakeholders use it to source raw materials, produce goods, and distribute them using the fewest resources.

Why is sustainable supply chain management important?

Sustainable supply chain management matters on several fronts in the context of operations. Here are a few of the areas where it can make the greatest impact:

Reduced Environmental Impact

Taking control of the supply chain can help control waste, save energy, and lower carbon emissions.

Enhanced Brand Reputation

Showing that you’re committed to following practices that help the planet can lure in customers with those same values who wish to align their spending.

Risk Mitigation

Taking such an approach can help stakeholders get ahead of supply chain disruptions and oversights.

Cost Savings

Taking a sustainability-forward approach can lead to cost reduction by way of more efficient practices that limit waste.

Regulatory Compliance

Sustainability can help company leaders limit their legal exposure and related environmental fines.

The 3 Pillars of Sustainable Supply Chain

A sustainable supply chain is shaped by three key areas:

Environmental Sustainability

This means companies do their part to minimize the release of harmful gasses into the ozone. They also are good stewards of water, energy and raw materials. They take water reduction seriously and have programs in place to monitor and adjust consumption as needed.

Social Sustainability

Under a sustainable supply chain, company leaders have invested in fair labor practices and conditions as well as diversity and inclusion efforts. They’re active and engaged in their communities and give back.

Economic Sustainability

Company leaders invested in sustainable supply chains do their best to build supply chains that can weather the dynamic nature of the market. Fairtrade and support for small businesses are other priorities. The same goes for continuous improvement and investment in technological advancements that can help companies grow in their area. 

Benefits of a Sustainable Supply Chain

Company leaders, suppliers, and consumers stand to gain a lot from building and maintaining a sustainable supply chain. Here are some of the highlights:

Risk and Vulnerability Reduction

While there’s no certain way to forecast events like environmental and natural disasters or wars, sustainable practices can help to soften the blow of supply chain disruptions. It’s also worth mentioning that following practices related to labor practices and sourcing can help companies better manage their reputations and limit legal damages.

Build and Sustain Brand Loyalty and Reputation

Sustainable practices can position a company in a positive light and win over customers who wish to vote with their dollars. Consumers today expect more out of companies. Those who rise to the occasion stand to win on the fronts of loyalty and sustainability.

Cost Efficiency

Introducing waste reduction activities can help companies save on energy costs while keeping transportation costs lower and staying on schedule. Committing to sustainability can help companies gain a footing in the market and work alongside other industry leaders to build a stronger and more resilient supply chain.

Sustainable practices can position a company in a positive light and win over customers who wish to vote with their dollars.

How To Build a Sustainable Supply Chain: 10 Tactics

A sustainable supply chain is the result of intentional efforts. The best way to create one is by doing the following:

1. Identify Sustainability Issues Within the Supply Chain

Stakeholders will need to be intentional about how environmental, social, and economic conditions can contribute to certain outcomes. Evaluate your supply chain through the lens of material sourcing, reduced waste, manufacturing processes, transportation, and other delivery channels. This exercise will bring areas to life that require your attention.

2. Adopt a Circular Supply Chain

A circular economy helps you get the greatest lifespan out of your products. This can take the form of a few strategies, such as product design, take-back programs, and closed-loop supply chains.

3. Limit Fuel Consumption or Adopt Sustainable Sources of Energy

Committing to this can take the form of a few strategies, such as:

• Optimizing Transportation Routes: Rely on route optimization software to shorten transportation distances and fuel usage.
• Mode Shifting: Transition to rail or water transport when feasible.
• Using Energy-Efficient Facilities: Introduce energy-efficient technologies into operations to lower energy bills.
• Investing in Renewable Energy: Invest in solar and wind power sources to move away from fossil fuels.

4. Eliminate Dead Mileage

When vehicles travel empty between loads, this is wasteful. It is also somewhat preventable. To address this phenomenon, consider the following strategies:

• Load Consolidation: Merge smaller loads into larger ones to help you conserve costs and energy.
• Backhaul Optimization: Transport goods in both directions to cut down on waste.
• Real-Time Load Tracking: Monitor real-time statistics to optimize routes and reduce unnecessary travel.

5. Increase the Use of Recycled and Renewable Materials

Recycled and renewable materials, like packaging, can help with your sustainability goals. You should do your best to source products from suppliers that have the same philosophy.

6. Improve Supplier Relationship Management

It takes a village to build a sustainable supply chain. With that in mind, you’ll want to place a focus and emphasis on priorities like collaborative partnerships, supplier audits, and supplier education.

7. Promote Sustainability Education

Help employees understand what it means to think and act in terms of environmental stewardship. Courses related to topics like waste reduction, energy conservation, and ethical sourcing can be helpful in achieving this goal.

8. Establish Sustainability Goals

Define success, track progress, and hold your team accountable to your goals.

9. Adopt Ethical Labor Practices

Lead by example. Your supply chain should be a model for others. Work with suppliers to ensure safeguards that protect fair wages, safe working conditions, and labor rights.

10. Reduce Waste

Waste reduction will look different at each stage of the supply chain. Strive for efforts to reduce packaging materials, match inventory levels with supply and demand, and recycle waste.

Companies that invest in sustainable supply chains do their part in creating a more sustainable future.

Top Supply Chain Management (SCM) Software Tools of 2024

Supply chain management (SCM) software can help leaders find ways to save time and money. A few of the most popular ones on the market include:

Logiwa WMS

This warehouse management system (WMS) can help you take control of inventory management, order fulfillment, and shipping operations. Users can benefit from real-time inventory tracking, barcode scanning, and automated workflows. It works well with many of the mainstream e-commerce platforms and shipping carriers, making it helpful for businesses of all sizes.

NetSuite

NetSuite can help you take your inventory management, order management, and supply chain planning to the next level. It supports functions like finance and accounting, making it convenient for business leaders wanting simplicity.

Netstock

Netstock makes it easy to handle all of the details related to stock levels, demand forecasting, and purchase order management. You can use it for greater visibility on inventory levels, to lower stockout situations, and to take more control of supply chain intricacies.

Precoro

Precoro is your one-size-fits-all solution to refining the procurement process, from purchase requests to invoice processing. Users find it helps them bring clarity to procurement operations, reduce costs, and improve compliance. Precoro easily integrates with other software, which is another reason some professionals like to use it.

Magaya Supply Chain

Magaya Supply Chain supports freight management, customs brokerage, and trade compliance activities. Business people can use it to better understand the nuances of supply chain operations and navigate laws related to customs.

SAP SCM

SAP SCM’’s appeal is that its scope is far-reaching, from demand planning to transportation management. It may be better suited for large enterprises.

FreightPOP

Business leaders can look to FreightPOP to keep shipping costs more manageable and improve efficiency. Among its highlights include carrier-rate negotiation, shipment tracking, and customs clearance.

Shippo

Shippo is ideal for e-commerce businesses because it allows for label printing, shipping rate comparison, and seamless shipping.

Oracle

Oracle’s extensive offerings are great for supply chain planning, execution, and analytics.

Blue Yonder

Blue Yonder is a go-to for demand planning, inventory optimization, and transportation management.

Manhattan Associates SCM

Manhattan Associates SCM can be your secret weapon in warehouse management, transportation management, and taking omnichannel commerce to new heights.

Kinaxis RapidResponse

Kinaxis RapidResponse’s cloud-based solutions help businesses resolve supply chain disruptions so they can stay competitive. Users find value in its uses for demand planning, supply chain network design, and inventory optimization.

Plan Tomorrow’s Sustainable Supply Chain With Podium

Speaking of tools you can use for a sustainable supply chain, Podium is great for tracking and managing key performance indicators (KPIs) that keep you informed. Crunching these numbers can help leaders in this space boost supply chain operations and reduce their environmental footprint. Watch a demo and see why company leaders trust Podium’s suite of tools to help them achieve their operational goals.