How can you ensure your supply chain remains sustainable during resource scarcity?

-Avoid stockpiling: during times of scarcity and price volatility, smaller companies that lack the adequate hedging expertise run the risk of ordering large quantities at unfavorable prices, only to incur losses at later stages. -Prioritize utility-driven sales over product pushing: whilst resource scarcity is progressively a more potent risk, utility-based services for product sales can help companies capitalize on their expertise, drive in additional revenue without added costs, and dematerialize, contributing to sustainability diversification and tapping into new customer-bases. -Innovate with upskilling: Invest in upskilling employees to identify local market opportunities for sourcing secondary materials and get ahead of the curve.

Identify vulnerable resources: Analyze your supply chain to identify resources most susceptible to scarcity and their potential impact on your operations. Consider critical raw materials, water, energy, and other resources specific to your industry. Assess dependencies: Map your supply chain network, understanding your reliance on different suppliers and regions. Evaluate potential vulnerabilities due to geopolitical instability, climate change, or resource depletion in specific areas. Prioritize risks: Based on your analysis, prioritize the most critical risks with the highest potential impact on your business and sustainability goals.

Safeguarding supply chain sustainability amid resource scarcity starts with a comprehensive risk assessment. Utilize tools like the Environmental, Social, and Governance (ESG) Risk Atlas, Water Risk Filter, or Materiality Map to evaluate exposure to various resource scarcity risks—physical, regulatory, reputational, or financial. This understanding enables prioritization of actions and allocation of resources based on identified vulnerabilities, ensuring a strategic and targeted approach to managing and mitigating risks in your supply chain.

Supply chain are complex, multi-tiered and geographically scattered. They also have varying degree of maturity on sustainable business practices and the exposure level of their teams might be very limited. Ensuring supply chain sustainability during resource scarcity is a challenging task and a need of the hour. Diversifying suppliers base across geography, talent and resources availability, regular capability building on resource-efficient practices, innovative technology for alternative materials use, and agile contingency plans are some measures that can help. Adopting circular economy principles can also enhance resilience, reduce environmental footprint and balance costs.

The next crucial step in securing supply chain sustainability during resource scarcity is to embrace circular practices that prioritize minimizing waste and maximizing value. This involves designing products for durability, repairability, and recyclability, utilizing renewable or recycled materials, prolonging product lifespans, and adopting practices like material recovery and reuse. Exploring innovative business models such as product-as-a-service or sharing models is also integral. These circular practices not only reduce dependency on scarce resources but also lead to cost savings and the creation of new revenue streams, contributing to a resilient and sustainable supply chain.

The third critical step in maintaining supply chain sustainability during resource scarcity is fostering collaboration with stakeholders across the value chain. Engage with suppliers, customers, employees, investors, regulators, communities, and NGOs. This collaboration facilitates the sharing of information, best practices, and solutions, enabling the leveraging of synergies and economies of scale. Increased transparency and trust are byproducts of such collaboration, allowing for joint efforts to address common challenges and seize opportunities. By working collaboratively with stakeholders, you not only fortify your supply chain against resource scarcity but also contribute to a more resilient and sustainable business ecosystem.

You can also start with a focus on four areas: Procurement: Most companies start sustainability programs by looking at energy and water procurement, and by procuring sustainable materials to use in their products. Operations: Look for operational processes or steps across the supply chain that could be more efficient and reduce resource usage. Retirement: Avoid excess waste and obsolete items by designing products for upcycling and reuse. Data and communication: Measure the effectiveness of initiatives in the first three areas, and strengthen any related efforts, by communicating them to customers, supply chain partners and other stakeholders

Ensuring a sustainable supply chain amid resource scarcity requires a proactive perspective. Diversify suppliers, optimize processes through technology, foster transparent collaboration, conduct proactive risk assessments, and prioritize circular economy principles. Innovate collaboratively, diversify sourcing geographically, invest in supplier capacity building, implement real-time monitoring, and develop adaptability strategies. This approach emphasizes resilience, efficiency, and collaborative solutions to navigate challenges posed by resource scarcity.