Driving Sustainability: Innovations in Supply Chain Management for a Greener Future

The push for greater sustainability is a hot topic around the globe. 72% of people are “very concerned” about personal harm due to climate change and a further 80% say they’d be willing to make “a lot” of changes to their lifestyle if it reduced the impact of global warming.

Climate-conscious businesses can lead the call for greater sustainability by reassessing their supply chain and sustainability goals. Even small changes, like choosing a new supplier for shipping boxes, can significantly reduce a firm’s carbon footprint.

Eventually, however, businesses will have to make big changes to embrace a greener future. These changes should be guided by environmental, social, and governance (ESG) policies while falling in line with international standards like ISO 1400 and the Fairtrade Foundation.

Setting Sustainability Goals

Companies that switch to a sustainable business model can boost their brand image, reduce their long-term operating costs, and protect the environment while turning over a healthy profit. However, setting sustainability goals that make a meaningful difference can be tricky.

Firms that are interested in cleaning up their act should start by assessing their supply chain using ISO 14001 standards. ISO 14001 is the global benchmark for sustainable-oriented firms and will assess every element of a business’s operations. As well as assessing carbon use, ISO 14001 identifies supply chain issues like:

• Pollution;
• Environment degradation;
• Raw material misuse;
• Waste mismanagement.

ISO 14001 standards can be the driving force for firms that want to improve the sustainability of their supply chains. However,  ISO 14001 standards may not always be applicable to small to medium-sized enterprises (SMEs). SMEs can set sustainable goals by:

• Avoiding Greenwashing: Greenwashing is an underhand technique that deceives consumers into believing a firm is eco-friendly when, in reality, it isn’t. Avoid greenwashing and stick to goals that make a meaningful difference to the environment.
• Consulting an Expert: Environmental experts can spot supply chain issues and help firms find suppliers that adhere to industry standards.
• Double Checking Suppliers: Some suppliers utilize greenwashing to generate more business. Check the certification of suppliers and look for government-backed sustainability standards.
• Aiming to Offset: Switching to a sustainable supply chain takes time. In the interim, offset unsustainable suppliers by investing in environmental protection and recycling programs elsewhere.

Creating a more sustainable supply chain takes planning and preparation. Working with an expert to set realistic goals can help firms sidestep greenwashing while building a resilient, eco-friendly supply chain.

Circular Economy and Reorders

The concept of a circular economy has gained traction amongst eco-friendly consumers. However, businesses can close their supply loop by clamping down on supply chain inefficiencies and improving their stock management systems.

Recent advancements in automated order fulfillment technology can improve the accuracy of reorder point (ROP) calculations and help minimize waste. Ideally, your ROP should strike a balance to keep your company from running out of supplies but also prevent over-ordering to reduce waste. ROP is typically calculated using the following formula:

(Lead Time + Safety Stock + Basic Stock) * Unit Sales Per Day  

However, communication errors and stock mismanagement can cause miscalculations and overordering. Supply chain technology like the Internet of Things and AI algorithms can mitigate the risk of miscalculation by improving the accuracy of the data that firms rely on when calculating ROP.

Businesses that overorder stock should find ways to reduce the environmental impact of excess inventory. Simple solutions like recycling or repurposing overstock can save money, too, which can be reinvested into sustainable tech. Alternatively, firms can work out a consignment deal with sellers who are willing to take on over-ordered goods like clothes or food. These solutions aren’t optimal but can spark a new, zero-waste era of supply chain management.

Building Better ESG Policy

Any firm that cares about its impact on the environment needs a robust ESG policy. An effective ESG policy turns empty promises into actionable commitments by putting productive pressure on decision-makers who influence the shape of the supply chain.

Effective ESG policies are data-driven and focus on three elements of business operations.

• Environmental: Many of the considerations associated with these operations have to do with climate change mitigation, natural resource conservation and pollution and waste management.
• Social: Factors to take into account for social impact include workplace safety, labor relations, diversity and inclusivity policies, and others.
• Governance: This area is concerned specifically with how the company is run, especially when related to who has decision making power and how the company is structured. These aspects can strongly influence how the environmental and social commitments of a company are enacted.

An effective ESG policy can empower supply chain managers who want to reduce waste and team up with reputable suppliers. A good ESG policy can help keep the firm on track to achieve its long-term sustainability goals, too, as ESG programs require regular audits and reviews.

Conclusion

Unsustainable supply chains undermine global efforts to fight global warming and can cause serious ecological harm. Up to 80% of a typical company’s greenhouse gas emissions are produced by the supply chain due to waste mismanagement and carbon-intensive practices. Sustainability-oriented businesses can empower their supply chain management team by setting achievable ESG goals, embracing automation, and offsetting carbon use during the transition to more eco-friendly suppliers.