Unsurprisingly, a company’s supply chain tends to account for 90% of their greenhouse gas emissions. Shipping and transportation alone have a major impact on climate change. The good news is that they don’t have to.
Practices like reshoring and nearshoring can help. By making efforts to reduce emissions, you can make your supply chain company a more valuable asset and a better steward of the planet.
If you’re not convinced of the importance of sustainability in the supply chain, you’re in the right place. We’re here to explain why it’s time to create a supply chain strategy that embraces the environment.
Read on to learn how supply chain sustainability ensures the long-term viability of your company.
Reducing Environmental Impact
Sustainability, in and of itself, is a worthy goal. Every step of the supply chain, from product manufacturing to the final delivery of a single product, has the potential to contribute to climate change. Though it’s not always easy to see the major impact, you can often see the results of pollution in your own community.
By making active changes to reduce the use of fossil fuels, your supply chain company can make a tangible difference. Options include:
- Nearshoring to reduce the distance your materials and goods have to travel
- Investing in electric fleets for short-distance deliveries
- Partnering with third parties that have a sustainability commitment
- Incorporating solar power into warehouses and office buildings
As a major employer in your community, making these adjustments over the course of several years can help to improve local air quality while reducing your contribution to global climate change.
Improving Efficiency
Why does the supply chain play such a large role in environmental degradation? Consumers have grown accustomed to fast manufacturing and delivery times. As a result, businesses place more emphasis on speed over sustainability.
The truth is that by embracing sustainability, you can improve efficiency in the long-term. For example, reshoring your manufacturing can reduce the time it takes to receive a shipment while also reducing gas consumption. This will keep the consumer happy while also reducing operational costs and emissions.
You can also improve efficiency by:
- Switching to energy-efficient technology
- Maintaining technology to reduce energy draw
- Consolidating shipments
These changes will have a ripple effect on energy usage and operational costs. Importantly, they will also allow you to keep up with consumer demands.
Protecting Your Supply
In the early years of the COVID-19 pandemic, we saw a major breakdown in the global supply chain. This was caused by a variety of factors, including:
- Transportation restrictions
- Labor shortages
- Increased demand
Because so many companies relied on offshore manufacturing, their flow of goods and materials was brought to a halt. This was especially true for companies relying on factories and warehouses in China, where lockdown measures remained in place for years. Without a steady stream of supply, the supply chain no longer served its purpose.
Environmental sustainability involves moving production and warehousing closer to home. Embracing new procedures now can also help your company prepare for any shifts caused by climate change, itself. The right supply chain solutions will drastically reduce the risk of severing important connection points.
Meeting Regulations
Many countries, including the US, are adopting new policies to protect the environment. Individual states and organizations are also changing requirements over time. As we mentioned earlier, the supply chain is a major contender in emissions production, and you can expect these regulations to impact your company.
Failing to meet changing regulations can have a major impact. You can face:
- Fees and fines
- Small-scale shutdowns
- Large-scale shutdowns
- Negative publicity
- Loss of clients, customers, and revenue
If you’re behind on the latest regulations, you become a liability. You may also have to make massive, costly changes in a short amount of time.
By taking steps toward sustainability now, you can remain with or ahead of the curve. This will allow you to budget for upgrades and come up with long-term strategies that don’t disrupt current operations.
Embracing Innovation
We often fear that a shift towards sustainability will destroy existing jobs. For example, as we move away from natural gas, industries like coal and oil will start to take a backseat. The reality, however, is that sustainability requires innovation and labor, creating new job opportunities in the process.
The same is true of supply chain operations. Your technicians and workers may be used to specific processes now that would shift under a new sustainable strategy. However, sustainable measures require innovation that will support new roles and encourage employees to come up with powerful ideas.
Supply chain companies that get ahead of this process may even stand to profit. For example, if your warehouse implements new procedures that increase efficiency while reducing environmental impact, other companies may pay to learn those procedures and adopt your technology.
Cost Reduction
We have mentioned cost savings already, and it’s important to talk about them at length. Sustainable practices reduce waste. Reducing waste reduces costs, which will make a major difference to your company’s bottom line.
A simple example is the adoption of energy-efficient equipment. If your current equipment is outdated or poorly maintained, it’s draining electricity and increasing operation costs. New, energy-efficient equipment will reduce your energy consumption and your expenses on electricity and gas.
Other cost-reduction strategies include:
- Using energy-efficient lightbulbs
- Embracing alternative energy sources
- Using recycled materials
- Optimizing shipping for fewer trips
Plus, meeting environmental regulations can reduce potential fines. Ultimately, your supply chain network stands to save by going sustainable.
Improving Brand Reputation
Today, brand reputation matters. In fact, without a good reputation, you stand to lose business deals. Your supply chain brand’s reputation comes from:
- Your value system
- Your commitment to improvement
- Your follow-through
- Your efficiency
- Your consistency
Consumers care more and more about a brand’s values, and that includes their commitment to stopping climate change. Sustainable practices show consumers that you recognize your impact. It also assures them that you care about more than profit, which will boost their loyalty to your brand.
The clients that rely on you also care about reputation. To reduce their own carbon footprint, they have to partner with third parties with a small carbon footprint. By making sustainable changes, you make yourself a more desirable partner for businesses all over the globe.
Creating New Partnerships
When was the last time you reviewed your third-party partners? This can include:
- Manufacturers
- Suppliers
- Outsourced transportation and fleets
- Outsourced warehouse providers
It’s possible that in 2023, it’s time for an upgrade. A sustainable shift will force you to reconsider who your third-party partners are and decide if they’re the best choice. Chances are, there are other companies out there that are already working to reduce their emissions, and a partnership with them will improve your carbon footprint.
Plus, the heat is on in the B2C industry as well. Many retail businesses are looking for ways to meet consumer expectations related to environmental impact. If your supply chain network is a major part of their role in environmental degradation, they’re likely to look elsewhere.
Remember, sustainability has ripple effects, including on costs. By partnering with other sustainable businesses, you’re likely to access lower prices.
Boosting Employee Morale
Employees care about more than their monthly pay. They also want to work for a company that they can feel proud of. They want to do work that makes a difference, and sustainable changes can make that a reality.
Supply chain success starts when you find supply chain talent. However, it’s up to you to keep morale high. Embracing sustainability can improve morale by:
- Giving employees a chance to innovate
- Making daily work more meaningful
- Increasing the longevity of your business
At the end of the day, all of these benefits will give your supply chain company the tools to survive the 21st century. It’s hard to feel secure and happy at work if the fear is that the company might shutter. When you’re on the cutting edge of change, your employees will feel confident that their jobs are both secure and valuable.
Embrace the Importance of Sustainability in the Supply Chain
If you’re a major player in the supply chain, it’s time to make a change. The importance of sustainability in the supply chain is undeniable. Sustainable practices can help you reach internal goals, keep your partners and customers happy, and benefit the world.
Looking for ways to reward your employees for working hard to become sustainable? Let us help you to create high value, private-label savings programs that will show your team you appreciate their loyalty and commitment.