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
With the rise in global demand for goods, companies must find ways to reduce energy costs while still meeting customer needs. This can be challenging, especially when faced with rising electricity costs and limited resources.
As mentioned earlier, one of the biggest challenges to creating a sustainable supply chain is rising energy costs. This can be a major obstacle for companies looking to reduce their environmental impact. To meet customer demand, companies often must rely on energy-intensive processes, such as manufacturing and transportation. Additionally, the use of fossil fuels in production and transportation creates greenhouse gas emissions that contribute to climate change.
2. Reducing Emissions and Sourcing Sustainable Materials
To become sustainable, companies need to reduce their emissions and waste. This can be accomplished in several ways, such as by using renewable energy sources, recycling materials, and reducing energy consumption.
To create a truly sustainable supply chain, companies must source their materials from sustainable suppliers. This means looking for suppliers who use renewable resources and have low environmental impacts. It can be difficult for companies to find this type of supplier sustainability, but it is becoming increasingly important as consumers become more environmentally conscious.
3. Addressing Social and Environmental Risks
When making decisions about their supply chain operations, companies must be aware of the potential social and environmental risks. For example, a company might decide to source its materials from a supplier with a poor environmental record of accomplishment. This could lead to negative publicity and damage the company’s reputation.
Additionally, companies need to be prepared for any social or environmental risks that might arise. For example, if a natural disaster disrupts the supply of goods, the company needs to have a backup in place to ensure that its customers are still able to get the products they need.
4. Lack of a Sustainability Framework Across Supply Chains
One of the biggest challenges to creating a sustainable supply chain is the lack of a sustainability framework across supply chains. A sustainability framework provides companies with a set of guidelines for making sustainable decisions. Without a framework, companies are often left to make decisions on their own, which can lead to inconsistent results.
A sustainability framework can help companies:
- 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
There is no doubt that creating a sustainable supply chain is a daunting task. Companies face many challenges, such as lack of a sustainability framework, emissions and waste, and social and environmental risks. However, the biggest challenge might be changing the way they think about sustainability.
Most companies have a traditional mindset when it comes to sustainability. They view sustainability as an added cost that can impact their bottom line. As a result, they are often reluctant to adopt sustainable practices.
How 3SC can help with Sustainability in the Supply Chain
Companies today are faced with an increasing number of challenges when it comes to supply chain sustainability. With CarbonX from 3SC, companies can address these challenges head-on and make sure they remain competitive in an ever-evolving market.
CarbonX is a SaaS offering designed to help companies understand, analyze, and identify the risks and effects of Sustainability in their supply chains. With CarbonX, companies can make informed decisions about their sustainable operations while at the same time reducing risks along every step of their supply chain journey. This will not only help them achieve their sustainability goals but also boost their competitive advantage in a rapidly changing world.
CarbonX by 3SC is the perfect tool for any company that takes sustainability seriously and wants to stay ahead of the competition. So don't hesitate and start leveraging the power of CarbonX today. Connect with us today to get a demo.