Why Supply Chain Sustainability MattersBy: Jim Luneke | September 20th, 2023
To address environmental and social concerns, supply chain sustainability has emerged as a critical concept that not only benefits the planet but also contributes to a company’s long-term success. In this blog post, we’ll examine why supply chain sustainability is important and how having the right supply chain solution can help companies achieve it.
Supply chain sustainability is a concept that‘s been en vogue, but do you have a clear understanding of what it is?
It ultimately comes down to how raw materials are sourced, converted to products, and delivered to market. But it goes far beyond just sourcing and delivery–supply chain sustainability is a commitment to environmental, social, and corporate governance considerations throughout the product lifecycle. And it doesn’t stop when the product reaches the market, it continues through reuse, recycling, and retirement strategies, all of which contribute to a circular economy.
In our previous series, we took a look at supply chain digitization and why it’s so critical for your business. For this blog, we’ll focus on what supply chain sustainability is, why it matters, and how the right solution can help you take advantage.
Why supply chain sustainability is important
Supply chain decisions have wide-reaching effects, extending well beyond the business. Supply chain sustainability is now a central part of corporate strategy, propelled by its environmental, economic, and social benefits, as well as its role in meeting regulatory requirements. It’s not merely a trend; it’s an essential business imperative. Let’s dive deeper into why it’s so critical:
One of the most pressing reasons for prioritizing supply chain sustainability is its impact on the environment. Traditional supply chains often involve excessive transportation, excessive packaging, and wasteful practices. These activities contribute to greenhouse gas emissions, resource depletion, and pollution. By adopting sustainable supply chain practices, you can reduce your carbon footprint and minimize your organization’s negative impact on the planet.
According to a report by McKinsey, companies that prioritize supply chain sustainability initiatives can achieve cost savings of up to 16% and reduce greenhouse gas emissions by as much as 90%.
Supply chain disruptions, such as natural disasters or geopolitical conflicts, can have devastating effects on businesses. A sustainable supply chain is more resilient and adaptable, making it better equipped to handle unforeseen challenges. By diversifying suppliers, reducing waste, and improving efficiency, you can protect your bottom line and ensure long-term stability.
Social responsibility & customer satisfaction
Sustainable supply chains also address social issues such as labor rights, fair wages, and worker safety. Consumers increasingly demand ethically sourced products, and companies with transparent and ethical supply chains are more likely to gain customer trust and loyalty. By promoting fair labor practices and supporting local communities, your business can contribute positively to society.
A Nielsen survey found that 73% of consumers are willing to pay more for products that come from sustainable or environmentally friendly brands. This indicates that sustainability can positively influence consumer purchasing decisions by fostering trust, by helping to deliver high-quality products, ensuring safety, aligning with environmental values, and meeting customer expectations. As a result, customers are more likely to choose and remain loyal to companies with sustainable supply chain practices.
McKinsey states that supply chain sustainability initiatives can lead to greenhouse gas emissions reductions of up to 90%.
Governments around the world are imposing stricter regulations related to environmental and social responsibility. Non-compliance can lead to fines, legal issues, and damage to your company’s reputation. Implementing sustainable supply chain practices can help you stay ahead of these regulations, ensuring you remain compliant and avoid potential legal and financial penalties.
How the right supply chain solution can help
In the pursuit of a sustainable supply chain, knowledge is power. It revolves around four key elements, all reliant on strong visibility and transparency:
- Real-time insights
- Efficient inventory management
- Supplier collaboration
- Analytics & predictive modeling
Let’s explore how these elements drive supply chain sustainability.
A key component of supply chain sustainability is visibility and transparency. The right supply chain solution can provide real-time data and insights into every aspect of the supply chain, from sourcing raw materials to delivering the final product. This transparency enables you to identify areas of improvement and make informed decisions to reduce waste, emissions, and costs.
Efficient inventory management
Excess inventory can lead to waste and higher storage costs. An effective supply chain solution can optimize inventory management, ensuring that stock levels are aligned with demand. This not only reduces waste but also frees up capital for other sustainable initiatives.
Collaboration with suppliers is essential for building a sustainable supply chain. The right supply chain solution can facilitate communication and collaboration, making it easier to work with suppliers who share your commitment to sustainability. This collaboration can lead to better sourcing practices and more sustainable supplier relationships.
Analytics and predictive modeling
Supply chain solutions equipped with advanced analytics and predictive modeling capabilities can help businesses forecast demand, optimize routes, and reduce energy consumption. These tools enable proactive decision-making and the identification of opportunities to minimize environmental impact.
Supply chain sustainability is no longer an option, it’s a strategic imperative with significant benefits. By implementing the right solutions and practices, your business can achieve cost savings, reduce its environmental footprint, enhance resilience, fulfill social responsibilities, and stay ahead of regulatory requirements.
It’s time to embrace it to future-proof your supply chain and contribute to a better world.
Syncrofy and your supply chain sustainability journey
Your number one weapon in a constantly changing world is visibility. When it comes to achieving sustainability, staying agile, and improving supplier collaboration, Syncrofy can provide the visibility to help get you there. What is Syncrofy? It’s a multi-enterprise data platform that enables transparency, intelligence, and automation across your existing supply chain networks.
Syncrofy customers have quickly achieved a positive ROI in the following areas:
- 50% reduction in avoidable fines & fees
- 55% less time spent searching for documents
- 30% reduction in revenue leakage
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