Sustainability in Supply Chain Management
Businesses must understand the importance of sustainability in supply chain management to keep pace with their forward-thinking competitors.
Stakeholders have increased pressure on businesses to show better social and environmental responsibility as sustainable operations become a critical objective in today’s society. And for most companies, supply chain processes garner attention because they overconsume significant resources and typically lead to unnecessary waste.
As a result, more businesses now acknowledge and stress the importance of sustainability in supply chain management from the beginning to the end of their life cycles, measuring the effects of their products and services on society and the environment.
This article briefly discusses the supply chain sustainability concept and seven of its benefits.
What is Supply Chain Sustainability?
Supply chain sustainability refers to the effects on people and the environment as products move from raw materials to completed goods and into consumers’ hands. This concept covers every aspect of the supply chain process, including:
- Sourcing of raw materials
- Production
- Distribution
- Storage
- Transit
The goal of tracking sustainability throughout this process is gauging the environmental damage caused by its necessary resource consumption and resulting byproducts, including:
- Energy use
- Water use
- Transportation
- Waste generation
- Carbon footprint
The Importance of Sustainability in Supply Chain Management: 7 Benefits
1. New Paths to Innovation
Businesses can spark innovation by working closely with suppliers to enhance sustainability. More specifically, communicating the company’s mission and vision to suppliers can help clarify objectives and foster better decisions on procedures and services.
2. A Healthier Environment
Better decisions lead to supply chain sustainability programs that safeguard the environment. Initiatives within these programs aid in the following:
- Reducing pollution and greenhouse gas emissions
- Conserving resources
- Minimizing waste
- Properly disposing of waste
- Supporting renewable energy sources
- Enhancing air quality
3. A Boost in Reputation
Sustainability in supply chain management improves a company’s interactions with customers and other stakeholders. Customers in today’s green-friendly society are increasingly conscious of how their purchases impact the environment. They can often link their product and service purchases to specific steps in the supply chain process.
Sustainable supply chain management thus instills confidence in the consumer market. They are aware that the businesses they patronize are actively working to preserve natural resources.
4. Increased Profits
Sustainability can also help boost profit margins by decreasing production costs and increasing productivity through the following:
- Increasing product accessibility
- Increasing process efficiency
- Using fewer resources and energy
- Finding alternate resources
Also, by studying how their supply chain process and production decisions impact society, companies can make better business decisions that will promote sustained profits in the long run.
5. Reduced Cost to Consumers
However, increasing profits does not necessarily equate to stagnant consumer costs. A sustainable supply chain can help businesses save the money necessary to reduce consumer prices, attracting more customers while maintaining a healthy bottom line by lowering production costs.
6. The Potential for New Partnerships
Today, true sustainability in supply chains often requires the efforts and cooperation of more than one organization. Companies are turning to cross-sector collaboration to develop more effective solutions as they recognize the need for systemic change.
As such, managing a sustainable supply chain leads to new business prospects and partnerships with forward-thinking, environmentally-conscious companies.
The benefits of these partnerships include the following:
- Transparency and traceability of the supply chain
- New strategies for sustainable supply chains
- Ethical sourcing and purchasing
- Verification and assurance of sustainability
- Fair wages for quality work
7. Higher Productivity
Businesses that have implemented sustainable supply chain management have seen an improvement in employee morale because the staff is more aware of the value of their work and how it affects societal welfare.
Knowing that they are contributing to the company’s success can also make employees feel more enthused about their work and committed to their company. As a result, workers are generally more productive when they feel they are contributing to a shared cause, which ultimately results in higher production output.
Supply Chain Sustainability Will be Vital for Future Success
In an eco-friendly world where the importance of sustainability in supply chain management is front and center, responsibly giving consumers what they want can ultimately enhance your business’s income, profitability, and reputation. And even though many companies still struggle to navigate the path to sustainability, Veriforce can help you strive for improved processes.
