Digital supply chain technologies – such as blockchain, big data, AI, advanced analytics, and security tools – are playing a significant role in achieving supply chain transparency and sustainability. And these technologies have become increasingly sophisticated.
By Leon Steyn, CEO of Dante Deo
With this in mind, businesses currently find themselves in a position where they now have a much greater obligation to demonstrate corporate social responsibility and share best practices for green supply chains and sustainable logistics. In fact, as business owners, we have an obligation to do this.
We have finally reached a point where ethical supply chain practices are becoming a priority for businesses, and there are standardised compliance goals and sustainability benchmarks to guide us along the way. To this end, The United Nations Global Compact has come up with 10 criteria for measuring supply chain sustainability, covering everything from environmental responsibility and labour practices to human rights and corruption.
Supply chains are one of the key areas where the interdependency between business, society, and the environment becomes hard to ignore. The shift towards responsible business practice is not only in reaction to increased societal expectations, but also key to sustaining and growing a business over the medium to long term.
Components of sustainable supply chains
A sustainable supply chain is characterised by integrating ethical and environmentally responsible practices into a holistic and effective model. From a business’s perspective, it becomes imperative to ensure that all supply chain-related practices are 100% transparent and should reflect all steps, from raw materials sourcing to product returns and recycling processes.
Green supply chain management (green SCM) refers to the concept of integrating sustainable environmental processes into the traditional supply chain and includes product design, materials sourcing, manufacturing, logistics, and end-of-life product management. Green SCM recognises the disproportionate environmental impact of supply chain processes in an organisation and leverages the role of the environment in value creation.
Not so long ago, the word sustainability was synonymous with eco-friendliness. Today, though, it is a much more holistic term that refers to green, transparent, and circular supply chains, which are all components of a modern sustainable value chain.
Green supply chains benefit everyone
As the focus shifts to environmentally conscious supply chain practices, members of the public have become more and more aware of environmental issues. Consumers are asking questions about the products they are purchasing and where they have been sourced from. As business owners, we need to expect potentially uncomfortable questions about how green our manufacturing processes, where we sourced our raw materials and products from, how big the carbon footprint is through the supply chain, and how we approach recycling.
As a result, making responsible and conscious environmental practices part of supply chain management is not just considered the moral thing to do, it also makes good business sense. Apart from managing the risks related to unsustainable supply chains, businesses that opt for green SCM are likely to be thought of as more attractive by institutional investors and capital provider, given the growing awareness that responsible businesses are less risky and have the potential to provide sustained returns.
Several commercial firms have enjoyed early success using green SCM principles. But PepsiCo has presented some astonishing figures over the years and serves as an impressive example. This corporation saved about $44 million simply by switching from corrugated to reusable plastic shipping containers for one litre and 20-ounce bottles, conserving an estimated 196 million pounds of corrugated material.
Given the overwhelming amount of shopping options available to consumers, especially in a post-pandemic eCommerce context, it has become more challenging than ever for businesses to compete. Businesses are now required to find auditable resilient solutions to ‘greening’ their supply chains while also managing to reflect a profit.
This is precisely where supply chain technologies, such as blockchain, big data and machine learning, can benefit businesses. These solutions can help identify and manage risks and opportunities in an organisation’s supply chain and, ultimately, minimise the impact on the environment.
Designing and implementing a greener supply chain is truly a win-win-win scenario for your business, your shareholders, and our planet. Making green supply chain changes – like switching to plastic pallet pooling, improving warehouse lighting, and adopting better recycling practices – helps improve supply chains from beginning to end. When a supply chain becomes greener, waste becomes a thing of the past. And, when waste is eliminated from your supply chain – or any process, for that matter – the cost of that process is reduced.
We cannot afford to wait any longer to integrate sustainable business practices into our supply chains and minimise unnecessary waste chains. No matter the size of your business, you can make a difference.