SUSTAINABILITY IN SUPPLY CHAIN - WHY 2023 MUST BE THE YEAR TO TAKE ACTION?

We’ve talked about the latest technologies impacting the supply chain businesses, the changes brought forth by the Covid-19 pandemic, the best practices for efficient management of the supply chain systems, etc. One of the things common is the influence of consumer’s buying behavior which is a major driving factor for any business. Today the consumers are becoming increasingly cautious about their purchases, thereby forcing businesses to adapt to a certain level of ethical and sustainable standards. The supply chain today is all about customer satisfaction, increased margins and embracing sustainable methods. ?

In this article, we focus on why businesses today need to make their supply chain and logistics sustainable, by collaborating with all levels of the company, implementing sustainability programs that support company goals, and using technology to track and trace transportation. As companies look to adopt greater efficiencies and resilience, a variety of technologies and approaches are also coming into the picture for supply chain transformation. ?

A report conducted by Mckinsey and Company shows the direct effect that the supply chain process has on the environment as companies try to keep up with the growing population of customers. In December 2015, the Paris Agreements signed by 195 countries at the United Nations Climate-Change Summit set a target to cut global greenhouse gas emissions in order to prevent the warming of the planet by more than two degrees. It was revealed at this summit that in order to achieve this target, consumer packaged goods (CPG) companies would have to lower their carbon intensity, which is the volume of greenhouse gas emitted per unit of output, by more than 90 percent by the year 2050. Consumer Packaged Goods are those goods that are consumed and replaced rapidly, such as food, cosmetics, toiletries, etc, and thus, are a major part of the supply chain operations. ?

The United Nations Global Compact (UNGC), which is a non-binding UN pact as well as the World’s largest corporate sustainability initiative, encourages companies to align their operations as per the ten UN universal principles related to Human Rights, Labour, Environment and Anti-Corruption and also take steps to advance the implementation of UN’s Sustainable Development Goals (SDGs). The UNGC has also worked towards influencing an increase in the demand for sustainable or sustainably sourced products while encouraging businesses to be a part of the global corporate sustainability movement without sacrificing the organization's long-term development. ?

Making a sustainable supply chain is a process that requires long-term planning, determination, and collaboration. Major companies such as Unilever, Apollo tyres, Tetra Pak, etc., have already begun strategizing their supply chain processes towards achieving environmental, social and governance (ESG) goals and have prioritized investments towards incorporating smart technology into their business operations to work efficiently and in a sustainable manner.

As a consequence to the above discussed reasons and goals, companies are working towards attracting the right suppliers and logistics partners that can cope with their sustainability goals. It is also required that sustainability programs be introduced and a tactical supply chain policy is created for working towards long-term sustainable goals. ?

This can include developing sustainable practices, utilizing ethical supply chains, and the right technological solutions while also being willing to invest in technology that will enable the right solutions such as tracking shipments and managing inventory more efficiently. The whole supply chain needs to be taken into consideration when creating a company’s sustainability goals, from the sourcing of raw materials through production, delivery and transportation link, energy use in product life cycle, and recycling of products at end-of-life. Supply chain management systems help companies manage data from their suppliers and measure progress against sustainability goals. Companies should also prioritize renewable energy sources as well as encourage greater social responsibility among their suppliers. The main goal must be creating a long-term strategy to spread the message of sustainability across their organization, as well as to their competitors and suppliers. This will help build an understanding of the wider issue among those involved in the logistical services and processes.?