Progressing Toward Supply Chain Sustainability: Insights and Strategies

Supply chain sustainability has emerged as a consistent priority for business leaders, with many embracing Environmental, Social, and Governance (ESG) principles as a focal point of their strategies. According to the 2022 State of Supply Chain Sustainability report, a significant 80% of firms pursued sustainability efforts even during the disruptions caused by the COVID-19 pandemic. This dedication underscores the centrality of supply chains to business survival and highlights the sustained interest in sustainable practices despite external challenges.

Geopolitical Tensions and Strategic Adaptations

Recent geopolitical tensions have compelled companies to rethink their supply chain strategies, leading to the adoption of reshoring and friendly shoring practices. These strategies aim to mitigate risks associated with international supply chains, though high costs and inventory concerns continue to persist. To address these challenges, many firms have implemented Sales Inventory Operations Planning (SIOP) to enhance supply chain performance.

As supply chain leaders increasingly focus on sustainability, investments in technology have become vital. Advanced systems now play a crucial role in tracking sustainability metrics, with future supply chains set to be driven by data. Trust in data is essential for informed decision-making, and improving supply chain visibility remains a primary focus.

Technological Advancements and Integration

Artificial intelligence (AI) is revolutionizing supply chain management by monitoring disruptions in real-time, improving forecasting accuracy, and automating mundane tasks. These technological advancements require a balanced integration of human talent and automation, as digital transformation is not merely a matter of technology but involves significant change management—estimated to be 20% technology and 80% change management.

Creating a culture of innovation empowers employees and streamlines communication among humans, products, and machines. This streamlined communication is crucial for implementing the five strategies discussed for a more sustainable supply chain by 2025, which focus on strengthening supply chain management across various domains, including logistics, technology, general supply chain management (SCM), warehousing, and industry-specific solutions.

Strategies for a Sustainable Supply Chain

The strategies aim to tackle issues such as global trade management, inventory planning and optimization, and sustainability & corporate social responsibility. They also address forecasting and demand planning, transportation management, and enhancing supply chain visibility. Companies are encouraged to adopt innovative strategies such as vetting warehouses for sustainability, optimizing transportation, implementing circular economy practices, and prioritizing data collection and transparency.

Proximity to major hubs and access to transportation infrastructure like highways, railways, and ports can significantly reduce carbon emissions from long-distance freight, supporting transportation efficiency. Logistics providers can assist companies by advocating for sustainable infrastructure in lease agreements, ensuring that warehouses meet environmental standards like LEED or BREEAM certifications.

Reducing Environmental Impact

Sustainable warehouses often incorporate energy-saving features such as solar panels, energy-efficient lighting, and temperature control, enhancing operational efficiency while reducing environmental impact. The transport and logistics industry is responsible for 11% of the world's CO2 emissions; thus, businesses prioritizing sustainable supply chain strategies can make significant strides in mitigating climate change in the years ahead.

Utilizing online tools to calculate carbon emissions and air pollution associated with supply chain activities provides transparency and helps develop solutions for emissions reductions. Companies must stay informed about state, federal, and global ESG requirements to remain ahead of regulatory trends. Data-driven reporting systems can mitigate litigation risks, meet stakeholder expectations, and enhance brand reputation.

Notably, JLL assisted a startup in securing a $15 million grant by identifying an optimal warehouse location that aligns with sustainability goals. In the apparel industry, robots are expediting fulfillment processes, while Tive's real-time tracking technology bolsters shipment security for electronics.

For supply chain professionals seeking further insights and resources, SCB offers a range of materials including webinars, podcasts, whitepapers, and videos.