Recent years have seen businesses under pressure to prioritise sustainability. Environmental awareness is on the rise, and consumers, investors and stakeholders have started to favour organisations with sustainability at the heart of their supply chain. People want to support businesses that protect the environment and treat workers well — they want to make ethical purchasing decisions.
By making sure your supply chain is sustainable and ethical, and by minimising the negative impact your business has on the environment and society, you’ll unlock a range of business benefits.
Prioritising sustainability can boost your branding efforts, protect against reputational damage and ultimately lead to more sales and increased revenue. Customers are more likely to value your brand if they share your passion for sustainability, and this can lead to increased customer loyalty and satisfaction.
So if you want your business to survive and thrive in a world that’s becoming ever-greener, you need to prioritise supply chain sustainability. But if you’re not sure how to go about transforming your current supply chain into a sustainable, ethical and responsible powerhouse, here are five simple steps to get you started.
1. Assess Your Supply Chain and Identify Sustainability Issues
To make your supply chain more sustainable, you need to understand its current situation — and what issues you’re facing.
Look at your supply chain in stages and consider the environmental, social, and economic impact of each of those stages. Think about how customers purchase your products, how you source materials and manufacture goods, how you manage inventory and forecast customer demand, and how goods or services are delivered.
Within each stage of the supply chain, there will be factors affecting sustainability. For example, your transportation stage might involve using fossil fuels to deliver goods. Your manufacturing process might require hazardous substance control measures to prevent substances or by-products from harming people or the environment. Health and safety risks in any part of the supply chain can turn into environmental and financial issues, affecting your supply chain’s sustainability.
2. Ensure Ethical Sourcing
How you source your materials, and the sustainability of your suppliers has a huge impact on the ethics of your overall supply chain. So it’s important to communicate your sustainability goals to any current or potential suppliers. If suppliers are aware of your desire to make operations more sustainable, you can work together to make your supply chain more ethical and responsible.
A good way to ensure your supply chain sources materials ethically is to choose suppliers who are accredited and have certification in Environmental Management. To achieve and maintain accreditation, suppliers need to meet strict standards. So by selecting an accredited supplier, you know they have been thoroughly assessed to government and industry standards.
For example, by choosing a supplier who has achieved certification under the Common Assessment Standard, you can rest easy knowing they’ve demonstrated their competence and compliance across a wide range of risk management areas, including environmental risk management. Similarly, suppliers who have achieved ISO 14001 certification have implemented effective environmental management systems.
3. Spend Some Time Optimising Supply Chain Routes
The transportation and distribution stages of your supply chain can have a significant impact on the environment. Moving goods or materials from one place to another can burn a lot of fuel. Every mile travelled uses up valuable fossil fuels and produces harmful greenhouse gas emissions.
But you can cut down on the environmental impact of transportation by optimising supply chain routes. Consider alternative routes that cut out any unnecessary mileage, and think of ways to make return journeys more efficient.
For example, rather than delivering goods and having vehicles return to base empty-handed, consider whether any other materials could be picked up on the return journey. You could also partner with other businesses, split the costs of transportation, and pick up/deliver materials for them on the return journey.
Another way to optimise supply chain routes is to select suppliers who are geographically closer to your business. This is something to consider during the procurement process.
4. Reduce Waste through Demand Planning
Overproduction is something all businesses want to avoid. Producing too many goods or materials can result in unnecessary waste and by-products of production, not to mention it can cost your business time and money.
By reducing the risks of overproduction, you can reduce the environmental impact of the production stage of your supply chain. This step is reliant on forecasting customer demand as accurately as possible.
Accurate demand planning involves statistical forecasting. Using intelligent software and existing data from your business — such as information about seasonal sales and your historical growth rate — you can create a quantitative baseline forecast.
5. Establish Transparency in Your Business
Be open and honest with your customers, investors, stakeholders and suppliers about your supply chain and visions for sustainability. Transparency can increase trust in your brand and help you make the most of the benefits of sustainability.
76% of millennials say that when a company claims to take a stance against environmental or social issues, they research to check the claim is authentic. So by offering complete transparency into your supply chain, you can demonstrate your sustainability and benefit from increased customer loyalty and satisfaction.
Offering customers insight into your supply chain can also encourage you to make your supply chain as sustainable as possible. With your business operations on show for customers, investors and competitors to see, you may be more likely to take all of the steps you can to reduce your supply chain’s negative impact on society and the environment.