Five actions for a sustainable supply chain

Sustainable Supply Chain

It’s only three years into the ‘Decade of Action’ and we’re beginning to see what happens when companies don’t pivot to more sustainable business practices.

Customers, employees and investors are increasingly rejecting those that are laggards in establishing sustainability goals. They’re turning instead to their more planet-friendly competition – those that design recyclable products, manufacture with ethically sourced or repurposed materials and deliver products with minimal carbon emissions or waste.

Climate change, circular economy, ESG and sustainability have become business priorities and our global supply chains sit right in the middle of these challenges – as a major contributor to the problems, and a great area of focus to take action. As many companies embark on their sustainability journey, below is a five-step action plan to consider.

Establish a Sustainable Business Strategy

It’s imperative that companies make sustainability central to their overall business strategy. To begin the process, business leaders must examine all functions of their network and identify sustainability weaknesses within and outside of their organization.

For example, supply chains are a major contributor to waste carbon emissions and are therefore a major area of opportunity for improvements. Creating measurable goals to improve a company’s supply chain (e.g., eliminating single-use plastics within the next 18 months, or becoming carbon neutral by 2030,) can restore the confidence of customers, investors, employees and other stakeholders that the organization is making active strides to become more sustainable.

Embed Sustainable Data into Business Processes and Networks

Once initial goals are set, business leaders must then measure their performance and use data captured across the supply chain to refine their operations. Sustainability must extend from the design to the end of life of a product: from the design of products, the sourcing of raw materials, manufacturing of goods, all the way to last-mile logistics and even to product usage, returns and recycling processes.

Having sustainability data from within an organization and across the network of partners will also help keep companies accountable, as it can be easily shared with suppliers, shareholders, industry associations, regulators and customers to ensure they are meeting the sustainability goals they’ve set forth.

Manage Carbon and Climate Exposure Throughout the Supply Chain

After an initial data capture, supply chain leaders should then make sure they are accounting for and managing climate-related emissions across all parts of their supply chain (Scope 1,2 and 3), which includes suppliers, contract manufacturers, logistics service providers and other trading partners.

This is no small feat – a lack of visibility across a company’s supply chain is typically the reason why business leaders struggle to manage the total carbon footprint of products. By employing technology to provide the visibility they need to see across their supply chain, business leaders can then take actions to reduce their company’s end-to-end carbon footprint.

Making changes to the supply chain may seem like a large undertaking, but it will undoubtedly pay off in the long run with a more loyal customer base.

Embrace Circularity and Become Regenerative

The use of technology can help companies reduce, reuse, recycle and use reclaimed materials to minimize waste and ultimately adopt a circular business model. Accenture projects that by 2030, circular economy strategies powered by digital technologies will present up to $4.5tn in new economic growth opportunities for companies.

An example of a company embracing circularity is Colgate-Palmolive. It pledged to use 100 percent recyclable, reusable or compostable materials for its consumer packaging by 2025 and reduce its use of virgin plastic. Technology enables Colgate-Palmolive to access data up and down its supply chain, which has been integral to the ongoing creation of new, sustainable products.

To achieve circularity and become regenerative, companies must design products with their end of life in mind. R&D leaders and product designers should ask themselves questions, such as ‘how will the product be refurbished, repurposed, reused or returned to the earth’ and ensure that no non-biodegradable packaging materials end up in oceans or a landfill. We can leverage sensors to track which products are causing damage to the atmosphere and feed that back into the design process for future products to help meet our corporate commitments.

Prioritize People Across the Supply Chain

When rolling out a sustainable business strategy, companies must have buy-in and support from the entire workforce. This starts with respecting the workforce, creating a diverse and safe space, placing an emphasis on human rights, equality, environmental health and safety and providing professional development opportunities for talent, such as training and reskilling programs. Additionally, business leaders have an obligation to establish partnerships with suppliers, contract manufacturers and logistics providers that share these values.

The prosperity of our environment can’t be restored and ultimately preserved by one organization alone – sustainability is a team effort. We are at an inflection point for business leaders just starting their sustainability journey, motivating them to take an active stance is essential. It will likely take society years to make substantial progress, but business leaders taking steps to prioritize their green line just as much as their bottom line will ultimately go a long way in addressing the world’s greatest environmental issues.

To learn more about how design and manufacturing contribute to more sustainable supply chains download the new Sustainable Supply Chain whitepaper here.

This is a sponsored article by SAP.