One thing is clear when it comes to the state of the planet’s climate: If we wish to meaningfully reverse the effects of climate change, the time for action is now. Many businesses are eager to do their part to limit the impact.
The question we must ask is: What challenges hinder sustainability optimization across supply chains, and what steps can be taken to start overcoming these hurdles?
Barriers to achieving sustainability in the supply chain
Global supply chains are uniquely positioned, as the logistics sector is a major contributor to greenhouse gas emissions, and so stands to make a significant, positive impact.
On paper, most corporations have subscribed to achieving various sustainability standards. 60 percent of surveyed businesses said sustainability is as important as economic performance.
Lack of supplier diversification also plays a role, as many organizations depend exclusively on suppliers in certain countries or regions, such as in Asia, Latin America, or the Pacific.
Many such countries have unenforced or nonexistent environmental, social, and governance (ESG) regulations, making it difficult for well-meaning corporations to accurately assess partners.
Many supply chains lack the mechanics to systemically balance cost, cash, service, and sustainability, limiting the inclusion of sustainability to large-scale decisions rather than operational planning decisions that occur every day.
Making sustainability a cornerstone of operational execution
Executives are working to achieve supply chain sustainability, and cloud technology is playing a role in scaling organizations’ sustainability efforts.
Organizations can further embed sustainability as a quantitative metric through carrier scores and factor GHG emissions into carrier selections during the operational planning stage.
The transportation sector contributes significantly to GHG emissions on a worldwide level; in the U.S., it’s the leading contributor at 27%. With most fuel for transportation coming from petroleum and being used to fuel cars, ships, planes, and other modes of transportation, the potential for businesses to reduce environmental impact within logistics is substantial.
On the reverse logistics side, smart returns management provides similar functionalities to smart order and transport planning, providing carriers and customers with the most sustainable and green way of handling returns.
Aligning goals and vision with sustainability objectives is necessary
Incorporating sustainability into operational decisions is only one piece of the puzzle, as alignment and shared vision and goals will be required on all levels.
Greater supply chain visibility, efficiency, and smart returns management are not only better for the environment; they improve operations and offer a unique opportunity for increased value and differentiation to customers.
To truly make lasting, meaningful, and deeper changes toward sustainable supply chain management, sustainability must be embedded as a priority metric in organizational frameworks and management thinking, alongside cost and service.
Also read: How To Achieve Supply Chain Resilience