The Future Of The Supply Chain Starts With Sustainability.
The Future Of The Supply Chain Starts With Sustainability.
Feature Article by Blume Global
To say the last two years have been difficult for the supply chain industry is a significant understatement. From driver shortages to the e-commerce boom and pandemic-related lockdowns fueling unprecedented congestion, getting goods to retailers and consumers in a timely manner has never been more challenging. While there has been some easing of capacity constraints, many of these issues are likely to continue well into the second half of the year. the coming year may look a little different regarding sustainability.
The Importance of Supply Chain Sustainability for 2022 and Beyond
Supply chains typically have a greater impact on the environment than any other operation. Between the Paris Agreement and shifting consumer values, sustainability isn’t optional. While it’s undeniably important to source products responsibly and produce recyclable or reusable products, companies also need to focus on making the transportation and distribution of products more sustainable.
In addition to reducing their overall carbon footprint, reducing their consumption of energy and resources, and preserving the planet for future generations, sustainability can improve a company’s financial results. Consumers and investors are statistically more willing to buy products from or invest in companies that follow green practices. Not only can going green improve customer loyalty and attract new investors, but it can also bring companies tax benefits.
From a shipper’s perspective, sustainability is equally necessary. Around 70% of industry stakeholders have clients pushing them towards sustainable practices. Adopting new, greener practices will help these stakeholders maintain current clients and attract new ones. This is a global issue, of course, but if we just take the U.S. as an example, we see that 7% of the U.S.’ greenhouse gas emissions can be attributed to the freight transportation sector. These emissions will likely double by 2050, so committing to sustainability now is essential.
In 2022, many companies will be looking to localize their supply chains. Not only will going local lower transportation costs and emissions, but it will also enable companies to get their products to domestic retailers and customers faster — even when faced with the shortage of truckers in today’s climate.
You can also expect ESG investments to rise, clean air to become a higher priority, and renewable energy to become cheaper. More states may require companies to report their emissions and energy consumption, and many companies may shift from a net-zero mindset to a climate-positive mindset. Instead of simply not contributing more carbon dioxide to the atmosphere, they may start removing carbon dioxide from the atmosphere.
Making Supply Chains More Sustainable
Customers, shareholders, shippers, and investors want to make the supply chain more sustainable, but it isn’t easy. Making the supply chain more sustainable will take a considerable amount of effort, but it will be worthwhile in the long run.
To make your supply chain more sustainable, you should:
Map It Out
Mapping out your supply chain should be one of the first steps you take in your journey towards a more sustainable supply chain. If you don’t understand your supply chain and all its moving parts, you won’t know where to direct your sustainability efforts or which changes are necessary.
By gaining increased visibility across your supply chain and taking the time to understand your entire supply chain, you can determine which parts are the riskiest and which parts produce the most waste. You will also gain a more thorough and accurate understanding of the challenges your global suppliers face, allowing you to make more informed choices when deciding which changes must be made.
Ensure Your Materials Are Ethically Sourced
To have a truly sustainable supply chain, you will need to closely examine how your suppliers are producing and extracting raw materials and how they’re communicating with you. Using paperless billing and communication methods may seem like a small gesture, but it will add up over time.
You can also keep track of your supplier’s transportation times. Long transportation times generally mean more carbon dioxide emissions, so switching to a local supplier can cut carbon emissions. You may even save money by choosing a local supplier.
Educate Your Staff and Suppliers
A lack of education is often responsible for the slow adoption of sustainable practices, so creating internal training programs is essential. Implementing these programs will ensure that your company’s workers are on the same page when it comes to sustainability and its importance. When your employees understand and respect why you’re implementing procedural changes and everyone is aligned with the same goal, you can more quickly progress towards sustainability together.
Work With Other Companies
Creating a sustainable supply chain is a difficult task that can’t be accomplished alone. No single person can solve the supply chain industry’s problems, and no single company can construct a new, more sustainable supply chain.
Instead, you must collaborate with other companies that occupy the same parts of the supply chain to develop new, sustainable, universally beneficial practices and standards. This will enable you to hold your suppliers accountable and shift the entire industry’s approach to sustainability.
Using Technology to Create a More Sustainable Future
As we move towards more sustainable supply chains, technology will play an essential role. To make your supply chain more sustainable, consider adopting:
Internet of Things Technology: Using Internet of Things (IoT) technology will let you collect, share and analyze accurate data from across your supply chain in real-time. Thanks to IoT technology, you can more easily identify and eliminate redundancies in your workflows and reduce energy consumption across your supply chain. Examples of this technology includes GPS sensors that give you the exact location of containers moving through the supply chain and devices attached to refrigerated cargo that monitor internal temperature.
Artificial Intelligence and Machine Learning: Artificial Intelligence (AI) and Machine Learning are paving the way for a more efficient and sustainable supply chain industry. AI can more accurately forecast future demand, analyze and optimize warehouses processes, power robotic vehicles, and more, so it’s not surprising that AI is expected to help reduce greenhouse gas emissions by 4% in 2030 and decrease operational costs. Plus, since 68% of product disruptions are due to poor demand signaling, using AI can also help you ensure your operations run smoothly.
Digitizing your supply chain and adopting new technologies will enable you to streamline operations, remain agile, gain end-to-end visibility, and have a significant impact when it comes to sustainability. You’ll have a clearer understanding of your supply chain and where there’s room for improvement, allowing you to make more meaningful changes to your supply chain and keep up with consumer demand for more sustainable practices. Additionally, a digital supply chain will help you quickly share accurate data with your partner organizations and receive information from them, so you can ensure they’re adhering to your sustainability guidelines.