How Companies are Improving Supply Chain Sustainability to Remain Competitive

How Companies are Improving Supply Chain Sustainability to Remain Competitive

The sustainability movement is much more than a passing phenomenon or the means to achieve a competitive advantage — it’s become a moral imperative. As the world comes together to rally its talent and resources in the name of fighting back against climate change, companies too must do their part. Banning plastic bags and straws isn’t enough — we need enterprises that are committed to greening their operations and supply chains from top to bottom. Here’s a look at some of the ways this is being done in the world today.

Local materials and more efficient transportation

There are two major advantages to sourcing local materials: cost savings and a reduced impact on the environment. The two are closely related.

When companies work with partners overseas, raw materials or finished goods spend much more time in transit and temporary storage, which in turn adds up to more emissions and higher logistics expenses. In comparison, sourcing products from closer to home reduces our collective dependency on fossil fuels, helps eliminate some sources of air pollution and promotes closer relationships between business partners.

Companies based in North America spend $1.6 billion on logistics alone every year — a number that can easily be chipped away, to the benefit of the environment, by being a little smarter about buying materials from local sources and reducing the distance materials and products must travel.

Aerial photo of cargo containers in Bukit Merah in Singapore. Credit: Unsplash

Products designed for repairability and longevity

It’s becoming absolutely essential for products in every category to be designed from the ground up with sustainability in mind. Apple’s wireless “Airpods” headphones are a recent example of an extremely clever product developed with very little concern for sustainability. As VICE colorfully pointed out, this product is assembled from elements, some of them rare, which existed in nature for billions of years, but were then rearranged into a format that will linger in landfills for centuries or millennia before returning to the earth.

Companies are, slowly, realizing they must source consumer products that do not have an outsized impact on the earth’s natural cycles. It’s true that sustainability in product design comes at a cost — but many shoppers seem willing to make that compromise. Moreover, “green” products don’t have to come at the expense of quality.

Another trend influencing product design is the “Right to Repair.” This issue most closely impacts farmers and consumers of technology products. Farmers want to be able to repair their own tractors instead of being hamstrung by proprietary tractor designs. And users of electronic gadgets, rather than upgrading every year or contributing to the glut of “e-waste” in landfills, are pressuring recalcitrant companies like Microsoft and Apple to ease their arbitrary restrictions on user and third-party repairs to their products.

Related Post: The Problem with E-Waste: How the Rich Industrialized Nations Deal with Electronic Junk

To achieve true sustainability in the supply chain, companies must work hard to build relationships with sustainability-minded partners that:

  • Design products to incorporate recycled and post-consumer materials as often as possible
  • Wherever possible, design products that can be repaired or refurbished by the owner and eventually passed to a new owner

Technology, predictably, can help here. The company Philips gathers data on how their products are used and repaired in the real world — and this information informs later product designs and contributes to what’s come to be known as the “circular economy.” Such an economy emphasizes high-value, refurbished products and a constant push for greener and more efficient product design in new ones.

Man operation machine for steel kegs. Credit: Pexels

Closer relationships with partners

A 2016 McKinsey report called “Starting at the Source” revealed that just 25% of companies reporting greenhouse gas emissions to the Carbon Disclosure Project work closely with their suppliers in the name of emissions reductions. That figure has almost certainly risen in the last couple of years, but it goes to show that even eco-conscious companies have been slow to turn words into action. One way to improve the situation is to realize the benefits of vendor consolidation.

Many companies subcontract parts of their supply chain to other companies or purchasing agents without a lot of direct contact with the other players. For a more concerted sustainability effort across industries, this model has to change — and it is, albeit slowly. Nike works with fewer, higher-quality contract factories in the name of business ethics, material sustainability and to maintain closer ties with their partners.

Ultimately, achieving more widespread sustainability is a grassroots movement — companies need to find partners that share their values, and in doing so can raise the bar for the rest of their industries through leading by example.

Blockchain and other emerging technologies

The Sustainability Consortium reported in 2016 that, of the 1,700 companies they surveyed, fewer than 20% of them claimed to have a “comprehensive” understanding of the sustainability of their supply chains. We’ve already explored the case for building closer relationships with fewer, like-minded partners. But how can this be done in practice — and while providing transparency for the public?

Blockchain provides one promising way forward. This is the technology powering cryptocurrency, which is less a fiat currency and more an immutable record of transactions and creditworthiness. The open and collaborative nature of blockchain makes it ideal for helping companies green their supply chains and communicate to consumers that their favorite products were sourced ethically, manufactured sustainably and transported conscientiously.

Related Post: Will Blockchain Really Make Fashion More Sustainable and Ethical?

Companies can use blockchain to assign a unique cryptographic ID code to every product at the beginning of its journey — wherever in the world that happens to be. This code, or token, receives time stamps and other embedded information as it completes its journey. This level of transparency forces companies to honor their word when they make claims about sustainably harvesting tea leaves or manufacturing using reclaimed materials. This record of product origins and chains of custody culminates in a far more educated and aware consumer base. Shoppers and restaurant patrons can even use their smartphones to query these records.

Other ways to green the supply chain

There is much more that companies and their partners can do to begin bringing green principles into the supply chain. These include:

  • Designing simpler product packages and shipping cartons from recycled, recyclable material
  • Adopting clean energy in assembly facilities and distribution centers
  • Regularly revisiting and optimizing delivery routes
  • Exploring dropshipping options and potentially relocating shipping hubs
  • Making it easy for customers to send back end-of-life products for reclamation or refurbishment

Companies that want to make a difference are spoiled for options. But, it means taking a mindful and holistic approach to managing supply chains, choosing partners and designing products.

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Feature image via Pexels.

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