Making sustainability part of your supply chain strategy

By January 5, 2021 No Comments

Sustainability is one of the most overused terms in supply chain in recent history and can mean different things to different people. However, this does not take away its importance when it comes to assessing a supply chain, according to Material Handling and Logistics magazine.

Supply chains are transitioning away from traditional transactional functions, from focusing on a “lowest cost wins” principle to becoming more complex and strategic value networks. With the ever-increasing global integration through human migration and emerging technology, never have supply chains been so interconnected, cross-dependent and the haloed drivers of customer value.

The recent episodes of Brexit readiness and COVID-19 response have heightened the need for more resilience, while other events like climate change, modern slavery and Black Lives Matter have further underscored the need to promote transparency in global supply chains. One can argue that both resilience and transparency are just two sides of the same coin—better known as sustainability.

In basic terms, supply chain sustainability is a measure of a chain’s performance across social equity, economic and environmental factors, overlaid by the idea of industrial, natural, human and technological systems, working together to create a better world. This definition stops businesses from promoting one sustainability area at the cost of others, and helps build a more holistic approach to sustainability, which may be easier said than done otherwise.

It wasn’t that long ago when sustainability was dividing business leaders, with multiple debates on its real commercial value. Many such discussions began in the marketing department, but were assessed mostly for costs alone. Moreover, many sustainability initiatives were either seen as a cost-cutting measure or merely a greenwash.

The business ecosystem in 2020 is quite different, with sustainability not just being a greenwash anymore. There are more examples today where customers have either reduced or even stopped buying products due to otherwise hidden issues like poor working conditions or even delayed supplier payments. There is an increasing focus on offering sustainably grown, processed and packaged products across all leading retail chains. NYU’s research suggests that that 50% of CPG growth from 2013 to 2018 came from sustainability-marketed products, clearly adding a growth lens to the discussion.

Companies can adopt a basic six step process to kick start their sustainability journey:

  1. Map your supply chain.Map your product information and cash flow from end to end—even cradle to grave.
  2. Segment your supply chain.Segment your supply chain based on three dimensions: product/service, customers, and delivery mechanism. Each of these segments will vary in terms of process, performance and expectations.
  3. Measure.Adopt one of the available sustainability tools to measure your sustainability footprint continuously and quantitatively for the various segments. This will involve working with your suppliers and customers.
  4. Plan.Set targets and document them thoroughly—communicate your plans as part of your annual targets.
  5. Educate.The success of your sustainability strategy will depend upon how well your employees, suppliers and customers are empowered to deliver the change, which will need a fair bit of investment in training.
  6. Celebrate.Do not forget to revisit and celebrate the impact your plan has had on your supply chain.

Whether it’s avoiding a brand due to mistreatment of workers or insufficient transparency on use of unsustainable palm oil, or even a remote linkage to dubious funding or business processes, this new information age has made it very easy for customers to vote with their shopping carts and to switch brands. Sustainability reviews have an increasingly important role in building and preserving brand image and customer lifetime value.

EPA declines to adopt stricter regulations on soot

The EPA has declined to adopt stricter regulations on particulate matter pollution, going against the recommendation of its own scientists to implement tougher standards, according to The Washington Post and The New York Times.

Administrator Andrew Wheeler, who was appointed by President Donald Trump, signed the standards, the Post said, citing conversations with two individuals familiar with the matter.

In doing so, the agency kept in place for five more years Obama-era regulations that set the annual particulate matter standard to 12 micrograms per cubic meter of air, according to the Post, which said EPA scientists “had recommended lowering the annual particulate matter standard to between 8 and 10 micrograms per cubic meter in a draft report last year, citing estimates that reducing the limit to 9 could save between 9,050 and 34,600 lives a year.”

The particles, which come from a litany of sources, including industrial operations, vehicle exhaust, power plants and smokestacks, according to the Post, “can enter the lungs and bloodstream, causing inflammation that can lead to asthma, heart attacks and other illnesses.”

Wheeler’s decision was criticized by the Natural Resources Defense Council which urged Biden to reverse it once he takes office.

“This administration could have strengthened the limits on soot to protect our lungs and give people at the highest risk of dying from Covid-19 a better chance at fighting off this virus. But it chose not to — leaving the health of tens of millions of Americans at risk,” John Walke, the group’s clean air director, said in a statement.

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