Delivering Sustainability to the Supply Chain

What is sustainability and the Supply Chain?

Simply put, sustainability in business alludes to doing business without negatively impacting the environment, community, or society. This is broken down into two categories:

The effect businesses have on the planet and the effect businesses have on society.

The supply chain encompasses every individual and all the activity involved from the beginning of the product lifecycle to the end of the product lifecycle. Since there are many different stages in this process, I have broken it into four main parts:

The producers, distributors, retailers, and customers.

So how do you add the concept of minimizing any negative impact that businesses have on the planet and its people to all of the different levels of the supply chain? We first have to know what role and function each link of the chain has.

Producers and Sustainability

Producers are people or companies that make and supply products or services. These can be categorized as harvesters of raw materials and those who make finished products. Harvesters of raw materials are those who farm, those who fish, and even those that mine. Those who make finished products include companies like Apple with an iPhone. Service providers are producers of services that support the operation of supply chains by offering a blend of services to each area of the supply chain. 

Methods

• Materials used can play a large role in a more sustainable product. The obvious way to make yourself more eco-friendly is by reducing the number of materials, in any way. For producers, in addition to benefiting the environment, it usually has the bonus benefit of significant savings. Other than shrinking their material usage, businesses can also change the material used, to make the product or offer their service, to a more sustainable material. Changing materials may not always provide savings for all business types, but it can still deliver ROI in the form of customer loyalty. There are many ways to look at materials as a solution, but whichever you choose, know that it is necessary to communicate to suppliers the sustainability objectives and select products with responsibility certificates. 

• • Industries like salmon farming are extremely sustainable compared to other protein production and reduce the use of paper and printing. Fish and shellfish are among the most eco-friendly sources of animal protein because they do not emit anywhere near the number of greenhouse gases that others do. Most farmed fish convert feed into edible meat very efficiently as well.

• Artificial Intelligence (AI) for manufacturers, can be a game-changer. The benefits of AI include better efficiencies, lower overhead, stronger quality assurances, and higher outputs. People are not well equipped to process data and the complex patterns that appear within large datasets; however, an AI can expeditiously sort through the sensor data of a manufacturing machine and pick out outliers in the data. An AI can sort this data in a fraction of the time people spend analyzing the data. The further AI applications develop, we may see the rise of completely automated factories, and the new factory workers will be IT professionals.
  
  

• Market research automation is the use of systems with minimal human intervention to automate data collection rather than the usual human face-to-face or phone research. Data sampling has also become increasingly automated. Providers like Smartlook, Heap, and Mixpanel provide services that make it simpler and quicker to fulfill survey goals. Automating your research can improve the accuracy of the results as well as increase the speed of the data collection, saving you money. This process will reduce the risk of mistakes and increase the quality and consistency of the information gathered, leading to faster execution, lower operating costs, and reduced errors.

• Sustainable Packaging refers to the sourcing and use of packaging solutions that conceptualize the minimization of environmental impact. Reducing your footprint on the world could be as simple as reducing the number of packaging materials you use. Using smaller boxes, bags, and containers for your products is very effective. This not only helps you be more sustainable, but it can also lower your shipping costs. Be careful what packaging is used because it could adversely affect your product. Selling clothes, for example, you should ensure that the material on the outside can protect your product without affecting the materials on the inside. When shipping fragile items, look for plant-based fillers and wraps made out of cornstarch and mushrooms like IKEA has done to ship their products. They are durable and cost-effective.

Distribution Centers

Distribution centers are companies that take inventory in bulk from producers, then deliver a bundle of related product lines to other businesses and occasionally to the individual end user, but can be delivered on an individual basis. Both warehouses and distribution centers fall into this category. A warehouse stores the products made by a producer.  A distribution center typically stores inventory, fulfills orders, then sends them to the next or final destination. For the duration your inventory is stored in a warehouse, the 3PL( 3rd party logistics ) company handles the fulfillment process and ships the orders to customers. If they are good 3PL providers, they usually control returns as well ensuring you will not have to worry about it.

Methods

•  Enterprise Resource Planning or ERP is a software system designed to boost production efficiency, reduce cost and waste, improve supply-demand planning, and drive greater organizational effectiveness. An ERP system, will identify the source of waste, then optimize resource consumption and schedule deliveries while taking into account the best routes for efficiency. A cloud-based ERP system diminishes the need for on-site hardware. Moving the ERP to the cloud will also eliminate the need for utilities, employees, and other financial resources that are required to maintain it.  
• Delivery EVs (Electric Vehicles) may be an expensive upfront investment but could be a great return on investment in the long run. When it comes to distribution, the vehicles used in transport are one of the biggest areas to add to that sustainability concept. It was only a matter of time before Amazon had to embrace electric vehicles as a part of its delivery system. Amazon, in partnering with Rivian, an automotive company based completely around sustainability and send shockwaves through the retail goods industry because Amazon is such a well-known company. According to InsideEVs, the first 10,000 Amazon delivery EVs will be produced by the end of 2022. The other 90,000 EVs will be out delivering packages by 2030. Amazon’s deal with Rivian was crucial for the company. Imagine if all delivery vehicles, whether a car, truck, plane, or train were all run without the burning of fossil fuels. You might be able to see the stars at night.
• We spoke about AI above for manufacturers. AI, utilized in distribution centers, will similarly maximize the implementation of automated technologies.  These industries are key to achieving sustainable economies sooner than one can imagine.-

According to FORBES, “AI is advanced enough to work in harmony with humans, combining powers to fast-track large-scale efforts to make real change when it comes to environmental sustainability, resource preservation, and waste reduction. From more intentional identification of potential emission impacts across energy operations to making entire cities smarter and more efficient, AI is already taking names when it comes to substantial results."

• - When you think about all that AI can do, logic holds that AIs could pack your product, place it in the cabin of a truck, then give you the most efficient route to their destination in conjunction with your ERP. Numerous benefits for the business and the world would be better for it in tandem.

Retailers

Retailers are people or businesses that sell goods to the public in relatively small quantities for use or consumption rather than for resale. Retailers are the community's answer to a product’s or service’s need to meet the supply and demand of customers who purchase at a level of individual need. Most retail companies use more than their storefront to accomplish this. On April 1st, 1976 Apple was started and 25 years later, on May 19, 2001, the company opened its first storefront. Some companies encompass most parts of the supply chain themselves, as Amazon does. No Amazon is not a producer, but they are a service provider for every part of the supply chain. Other companies are solely producers with digital storefronts like Microsoft and piggyback off of different brick-and-mortar stores across the world like Walmart.

Methods

• CRM or Customer relationship management system is the combination of strategies and technologies that brands use to manage and analyze customer behaviors and data throughout the customer lifecycle. Putting a CRM system in action for retailers enables sales and marketing teams to work together as members of one organization. The CRM gives both marketing and sales teams access to complete records of leads and customers, which makes it easier for them to target prospects. Businesses have been shown to gain up to 30% in efficiency by changing from multiple folders in your system with different people contacting different departments to an all-in-one system for all customer data.No more information on paper in a filing cabinet somewhere in the building or a warehouse. CRMs are often overlooked when thinking about this particular definition of sustainability, but they should be considered since they save so much time, labor, and paper.
• Shopping bags can make a big difference. Apparel companies for years have used recycled cardboard bags to do their part for sustainable business practices. Some retailers like grocers have storefront locations where they will sell you an eco-friendly shopping bag to avoid incurring the eco-expense of supplying you with plastic bags. ALDI, in particular, does not carry plastic bags at all and they instead repurpose the boxes they receive from deliveries to give to customers for transporting groceries.  Europe even instituted a plastic tax in 2022 that will likely have companies rethinking how they are sending you home with purchases. Do you think you will still receive plastic bags for your purchases in 1 - 5 years?
• Circular fashion is defined as a restoration system in which apparel is circulated for as long as its maximum value is retained and then returned safely to the supply chain as base materials. As the world’s ecosystem changes, retailers are urged to reassess traditional approaches to business. Two Days Off, a sustainable line of  pieces by Gina Stovall, uses eco-conscious natural fabrics or deadstock fabric to produce in small batches and ships plastic-free and ethically. Another company, Reformation, has been recycling and reusing clothes since 2015. By sending in unwanted Reformation clothing to its RefRecycling program, you'll receive a credit to shop for something new on the site. Levi's Secondhand allows trade-ins of up to five items at any Levi's store or in the mail. Once evaluated, you'll receive Levi's gift card to spend on your next pair of denim. Timberland is another one embracing sustainability by integrating a circular fashion into their iconic footwear with Timberloop.

Customers

Customers or consumers are individuals or organizations that purchase and use a product or service. A customer may also be an organization like a producer or distributor that purchases a product to make another product. Customers depend on producers, distributors, and retailers to meet their needs for products and services

Methods

• Customer values play an important part in delivering sustainability to the supply chain. We can not disqualify the customer’s influence they carry. A customer's willingness to pay for an item that is sustainably sourced, packaged, or distributed is on its own, adding sustainability to the supply chain. This is mostly because, if there was no demand for the products to be handled in this manner there would be little interest in a continuous push for a more sustainable business.
• Ecommerce saved businesses during the Covid Pandemic. Everyone moved their shopping experiences online due to stores being closed. In doing so customers had already begun shrinking their carbon footprint. Nature.com stated that, after rising steadily for decades, global carbon dioxide emissions fell by 6.4%, or 2.3 billion tonnes, in 2020, as the COVID-19 pandemic suppressed economic and social activities worldwide. Because the producer is ensuring that their business is not negatively impacting the environment by using a location that doesn't have to be driven to by workers or shoppers, and because the customer is choosing to do the shopping online versus trying to locate the exact or a similar product in a brick and mortar location, they are together doing their part. Maybe one day, all shopping will be online.
• Upcycling is the process of altering materials that are destined for the dump, into new products of higher value and environmental purpose. It can be profitable as well as eco-friendly if you can do it yourself. Tv shows like Flea Market Flip are famous for these reasons. To take what was once a broken down dresser and turn it into designer furniture is a great way to turn the once broken dresser into a timeless piece of art.
• When you think about it, every part of the supply chain doubles as a customer at some point. Producers need materials, warehouses and distribution centers need trucks, tech, & real estate, retailers need products, and the entire supply chain needs a slew of services to keep it operational. Don’t just consider individuals, consider all the entities as well. Everyone is a customer.

Cost

Now that we know how we could be better for the planet.  How much will it cost?  Cost is a huge factor when considering the move towards a more sustainable supply chain.  Some consumers and businesses choose to pay upfront for a long-term-profitable decision.  It’s about the long game, getting beyond the initial change to create more sustainable businesses and understanding that it will not be the most immediately profitable practice.  The deal between Amazon and Rivian will not be immediately profitable; however, when there are no costs or delays for gas, fewer repairs, faster routes because of an ERP, and customers will be happier because of speedier deliveries. There will be a return on investment like no other.

“Businesses are realizing that sustainability could mean avoiding steep costs due to future environmental changes” UNIBusiness, n.d.  

Eco-friendly businesses consider environmental, economic, and social factors when making business decisions. These organizations build strategies to monitor the impact of their operations to ensure that short-term profits won't turn into long-term liabilities.

How Will You Deliver Sustainability?

The goal of a sustainable business strategy is to make a positive impact in at least one area.  When companies fail to assume responsibility, the opposite can happen, leading to issues like environmental degradation, inequality, and social injustice.

Sustainability is continuously growing in importance to customers. By adopting sustainable practices, you will not only be eco-friendly but increase your profits and competitive advantage as well.  Concerns about the packaging materials used for eCommerce deliveries have led to most online shoppers thinking, that packaging materials should be fully recyclable.  Businesses, on the other hand, are considering overhead, labor, and software costs to become more sustainable.  One common factor throughout the supply chain in making businesses more sustainable is the digital factor.  Digital transformation is the process of using digital technologies to create or upgrade business processes, culture, and customer experiences to meet changing business and market requirements.  Digital transformation can give you better insights and processes to complete daily tasks that you do daily manually, automatically, and more efficiently.  Digitalization will save you time and resources while making the business more efficient, and cohesive for a better experience for everyone involved.

Communicating the importance of integrating sustainable strategies into digital transformation means thinking beyond profit and putting social and environmental concerns on equal footing with financial goals. The top floor executives have to start to move from short-term thinking and instead consider the long-term effects. 

Digital technologies are transforming how environmental sustainability-related issues are measured and controlled. There is not enough understanding in the business world on how organizations can adopt these practices to make informed decisions on the topic. The tactics needed to ensure environmental sustainability, are infused into digital transformation. The accelerated rate of digital transformation has opened industries and societies to new opportunities for creating more value while creating better products for the future at the same time. Now, it’s time to use these opportunities to build sustainable economies for improved processes, improved consumer satisfaction, reduced waste, and reduced pressure on the natural environment. As you start to look for online solutions for business sustainability, these are a few important considerations.