Celebrating Earth Day with Perspectives on Sustainable Supply Chain

    Posted by John Arkontaky on Apr 20, 2020 8:46:26 AM

    HJP_Earth-DayIn spirit of Earth Day, let’s look at a few key considerations to keep in mind when building a sustainable supply chain.

    Earth Day is a great opportunity for supply chain management teams to consider how they can facilitate greater sustainability in their operations. Sustainability initiatives have become increasingly popular in recent years, and will continue to trend in this direction. An additional one billion people around the globe will enter the urban consuming class by 2025. This highlights a need for more sustainable resource consumption (water, electricity, fossil fuels, etc) so we do not deplete critical resources as our cities around the world continue to grow. [1]

    Recent research has found that for the packaged goods market, sustainability-focused products were responsible for 50.1 percent of market growth between 2013 and 2018, despite only making up around 17 percent of the category.[2] Further, that same study found that sustainability-marketed products outperformed their conventional equivalents in more than 90 percent of categories examined by researchers. This evidence shows that consumers consider environmental impact when making their purchases and highlights the importance of sustainability in supply chain management.

    So, in honor of Earth Day 2020, here are a few ways that companies can promote sustainable logistics and supply chain management initiatives.

    The Need for Sustainable Supply Chain Management

    The expansion of the consumer class will naturally lead to increased worldwide demand. China alone is expected to gain 100 million working consumers in the next 10 years, which is also expected to result in doubled consumer spending on personal products.[3] Meeting the demands of a larger number of consumers using the same or fewer resources is just one of the challenges and conflicts in sustainable supply chain management, and it underscores the need for proactive sustainability initiatives.

    Increased incorporation of digital technology is one way companies can improve their supply chain operations. Some large corporations like Walmart and Unilever use software to improve energy efficiency and promote sustainable agriculture practices for their suppliers, while other companies are turning to Internet of Things (IoT) devices and sensors to track supplier performance or monitor carbon emissions.[4] Reducing carbon emissions should be another focus of savvy sustainability initiatives. As far back as 2013, research found that lowering greenhouse gas emissions could save tens of billions of dollars for multiple market sectors.[5]

    Creating a More Sustainable Supply Chain

    One of the simplest ways that supply change management teams can use the advantages of modern technology to reduce their carbon footprint is by implementing an effective transportation management system. These logistics transportation tools optimize distribution routes, which helps to reduce fuel consumption, mitigate environmental impact, and lower overall transportation expenses.

    Technology allows supply chain management teams to choose the best route for each delivery by performing complex calculations that would be difficult and time-consuming to do manually. Using predetermined parameters, transportation management systems can consistently and reliably generate delivery routes that maximize truck orders while minimizing mileage and fuel consumption. Many companies turn to third-party logistics (3PL) providers who specialize in streamlining shipping and distribution routes to manage their product delivery.

    Sustainability initiatives often focus on logistics, transportation, and shipping solutions, which means that facilities and warehouse systems may get overlooked. The United Nations Environment Programme found that, compared with other major market sectors, the buildings sector presents the greatest opportunity for creating significant reduction in carbon emissions.[6] Incorporating more environmentally friendly practices into building design is an effective way to conserve energy and maximize efficiency. Examples of this include installing LED lighting systems, ensuring buildings are properly insulated, using materials with lower polluting properties, or using sensors to manage lighting and other resource needs. Strategically placing warehouses near primary distribution routes can also be a cost- and carbon-saving factor.

    The ability to reduce energy and material consumption — as well as easily recycle or reclaim products at the end of their life cycles — will become increasingly crucial in the coming years, and supply chain management teams would also do well to consider the role that reverse logistics play in their sustainability initiatives.

    Building the Supply Chain of the Future

    Nearly every aspect of our daily lives is supported in some way by supply chains. Consumers rely on them for their daily needs, and manufacturers rely on them for their revenue streams. As consumer demand increases worldwide in the next several decades, companies will need to work even more collaboratively with logistics transportation partners and vendors to ensure that products, goods, and services can continue to be delivered efficiently, reliably, and sustainably in the years to come.

    Topics: Transportation, supply chain