Need for Sustainability in Supply Chain and Challenges in achieving it

The world of business is constantly changing. To stay ahead of the competition, companies must find new and innovative ways to get their products to market. This led to the rise of the modern-day supply chain, which is now being threatened by sustainability issues. Companies must now consider the environmental, social, and economic effects of their supply chain operations.

Let us first understand the meaning of sustainability in supply chain.

What is Sustainability in Supply Chain?

Sustainability in the supply chain is the ability to meet the needs of today without compromising the ability of future generations to meet their own needs. This means that companies must consider all aspects of their operations, including environmental, social, and economic impacts.

For example, sourcing materials from sustainable suppliers or implementing measures to reduce emissions and waste. Carbon emissions are one of the primary contributors to global climate change, so reducing carbon footprint is essential for a sustainable supply chain.

Why Sustainability in Supply Chain is important now?

Sustainability in the supply chain is more important than ever. As global demand for goods continues to increase, so do the environmental and social impacts of production and distribution processes. Companies must now consider their “carbon footprint” when making decisions about how they will get their products to market. Without sustainable practices, companies risk not only their reputation but also the future of our planet.

“Companies are recognizing that consumers are increasingly focused on brands’ sustainability efforts—and that there are real risks associated with ignoring these concerns.” - Mckinsey, 2022

Here are a few aspects why sustainability is important in supply chain:

1. Consumer and investor demands: Consumers and investors are increasingly demanding businesses to be more socially responsible. They want companies that take sustainability into account when making decisions about their operations, such as reducing emissions, waste, and energy consumption.
2. Government regulations: Governments around the world are introducing legislation to reduce carbon emissions and encourage sustainable practices in the supply chain. Companies need to stay up to date with these regulations, or risk facing hefty fines.
3. Climate change and global disruption: Unsustainable practices can have a huge impact on global climate change, which is already leading to extreme weather events and disruption in supply chains. Companies must find ways to reduce their environmental impacts or risk falling behind the competition.
4. Building supply chain resilience: Companies that take sustainability into account in their supply chain operations are also building resilience. With sustainable practices, companies can be prepared for any disruptions and remain competitive in the global market.

Challenges in achieving sustainability in the supply chain

There are several challenges to creating a sustainable supply chain, such as rising energy costs, limited resources, and increased regulations. Companies must consider these factors when making decisions about their supply chain operations. Additionally, they must also consider the impact of their decisions on both the environment and local communities. Here's a brief description of these challenges:

Five key Challenges to Building a Sustainable Supply Chain are:

1. Increasing Energy Costs
2. Reducing Emissions and Sourcing Sustainable Materials
3. Addressing Social and Environmental Risks
4. Lack of a Sustainability Framework Across Supply Chains
   • Understand their environmental and social impacts
   • Make more informed decisions about their supply chain operations
   • Identify opportunities for improvement
   • Collaborate with other companies to create a sustainable supply chain
5. Paradigm Shifts: Mindsets & Cultures