With industry leaders focusing on more efficient, sustainable and resilient practices, supply chains will adopt new technologies that adhere to client demands. For example, as consumers become more aware of the importance of ethical and sustainable practices, they expect the corporations they purchase from to implement such practices.
A sustainable supply chain requires determination across the board. It is an all-hands-on-deck effort with everyone involved, from manufacturing to packaging, logistics and post-use. Every step in the supply chain requires an intentional approach to achieve resiliency. Imagine the impact the Walmart supply chain has across the globe — and how its focus on sustainability can drive others to do the same.
Supply chain professionals can explore modern practice implementation with advanced coursework in the online Master of Science (M.S.) in Supply Chain Management program from Florida Institute of Technology. This degree program prepares students to excel in leadership roles, driving change and innovation in supply chain management. Read on for a primer in sustainable, resilient practices in supply chain management.
What Is Sustainability in Supply Chain Management?
Sustainable supply chain management equips organizations and supply chain managers to guide supply chain planning and execution in an intentional, proactive way. By providing a framework to set goals, adhere to standards, measure progress and adjust goals, sustainable supply chain management creates a mechanism to help organizations better identify opportunities to improve. Goals focus on the individual business level, allowing organizations to craft tailored targets that make the most sense for their operations.
A sustainable supply chain emphasizes both economic and social impact, ensuring affordable, reliable, and ethical sourcing, production and delivery. Achieving this is an ongoing process, reviewing each supplier to ensure products and raw materials are handled, created and shipped effectively.
For example, in the food supply chain, management oversees everything from ensuring handling is compliant with all local laws to verifying that shipping is both efficient and safe for transporting perishables. This also includes reducing disposable packaging and landfill impact.
Why Supply Chain Management Sustainability and Resilience Is Important
Meeting customer demand is just one benefit for businesses striving for sustainability. Organizations that employ an intentional Environmental Management System (EMS), as outlined by the U.S. Environmental Protection Agency (EPA), can mitigate risk, bolster compliance, boost efficiency, improve health and safety goals, and cut costs that impact the bottom line. Pursuing sustainability can also improve employee morale and enhance a company’s reputation with the public, regulated industries, lenders and even investors.
At an industry level, seeking sustainability can also improve supply chain continuity, as businesses innovate and source new partnerships, ultimately diversifying the supply sources. Innovation can also extend to how to certify products or processes in pursuit of more sustainable, long-term resiliency.
Additionally, everyone stands to benefit when a business engages in the supply chain, as it can reinforce and multiply broader impacts on supply chain advancement. When small and large businesses champion sustainable practices and goals, they can help reshape industries and supply chains to benefit workers, businesses and consumers.
For example, with recent efforts to bring manufacturing back to the U.S., business investments in building and rehabilitating factories and warehouses will support new jobs and bolster local economies. This also serves to reduce the impacts of sourcing products from around the globe.
Finally, companies that do business on an international scale must adopt sustainable practices to remain competitive in foreign markets. From Europe to Australia, regulations mandate businesses measure and maintain transparency and performance metrics. If a business doesn’t want to lose market share, they must comply with regional law and regulations.
What Does It Mean to Have a Sustainable Supply Chain?
To stay competitive, businesses will have to adopt sustainable supply chain solutions. However, large-scale organizational change takes time and effort. Companies can begin with several key steps:
- Establish a business case: By outlining clearly how a sustainable supply chain can bolster risk management and efficiency, as well as influence the industry, strategy and stakeholders, businesses can achieve buy-in more rapidly.
- Benchmark industry standards: Understanding suppliers and practices across the industry can help establish more widespread codes of conduct, sustainability and supply chain resilience initiatives.
- Align stakeholder expectations: Ensuring stakeholder and business leader alignment is critical to ensure organizations establish agreed upon company standards and goals.
Building resiliency into a supply chain includes specific steps that help accomplish overarching goals. Businesses can compartmentalize and achieve these goals by breaking down their supply chain into five operational areas:
- Manufacturing, production and warehousing: These stages offer ample opportunity to improve efficiency and eliminate waste, from product manufacturing to facility-based services like data colocation. For instance, data centers that incorporate reclaimed water for cooling systems reduce their upfront cost for water use, especially in arid regions where water can be prohibitively expensive. Estimates suggest organizations that form relationships with local municipalities to incorporate reclaimed water can cut their water expenses in half, as compared to using potable water exclusively.
- Packaging: Businesses can reimagine packaging to accomplish various goals. By conducting a life cycle analysis (LCA), a business can calculate the impact and cost of packaging production, transportation and end-of-life phases. Reducing waste in the life cycle can drive efficiency and minimize cost in production and transportation, and reducing disposal expenses for the end-user minimizes cost to the consumer, thus adding value for the customer.
- Production circularity: Additionally, creating circularity in the life cycle can further reduce cost and foster customer retention. A good example of this is Soda Stream’s CO2 canister return and refill model, where customers return their spent canisters and receive a discount on refilled canisters. This saves the company and the customers a substantial amount of money, from costly materials sourcing and production to distribution and packaging.
- Logistics and transportation: Today, software advances allow businesses to maximize route efficiency, decreasing mileage and cutting fuel use and expense. Combining package delivery and reducing separate shipments can further minimize distribution expenses, as “last mile delivery” is the costliest component of the distribution process. Offering the consumer more choice in delivery options also improves customer relations and loyalty.
- Post-consumer: While packaging choices can guide some post-consumer impacts, a business can also help with disposal by offering take-back programs. Through implementing take-back and recycling programs, businesses can reduce disposal cost to the consumer and minimize production cost, as highlighted with Soda Stream’s return and refill program.
Examples of Sustainable Supply Chain Management and Resiliency
Many businesses are already pursuing a more sustainable supply chain, including retail giant Walmart. The company is an early adopter of sustainable supply chain design, such as improving efficiency through circular waste economy initiatives and investing in the regeneration of natural resources to reduce impact and maintain dependable materials sourcing. Both of these efforts add further resilience to Walmart’s supply chain, reducing risk of negative impacts from unexpected disruptions.
Walmart measures initiatives and results using granular metrics that demonstrate impact and efficiency gains, ensuring transparency for stakeholders and the public. Through the public dissemination of sustainability initiatives, Walmart provides a well thought-out and evidence-based model or blueprint that other companies can follow. Further, because Walmart’s supply chain is massive and international, the company’s supply chain design influences and impacts the global supply chain exponentially.
Discover How to Build Sustainable, Resilient Supply Chains With a Specialized Master’s Degree
When organizations commit to sustainability in the supply chain, they drive better business results, as well as improved outcomes for and relationships with customers. Regardless of an organization’s specific goals, implementing sustainable supply chain design and management can cut costs and boost efficiency, maximizing operational effectiveness, profits and supply chain resilience.
Supply chain professionals must understand this component of the field in order to compete for high-level positions and lead change in their organizations. Florida Tech’s degree program coursework provides students with expertise in driving efficiency, lowering costs and navigating global supply chain issues. These areas of study are critical to becoming a supply chain leader and keeping companies afloat amidst the evolving business world.
Learn more about the online M.S. in supply chain management program from Florida Institute of Technology.
