10 Things Every Business Owner Must Know About Sustainable Supply Chain Management


he advancement of digital technology and the arrival of Covid-19 have shaken up the global marketplace. They’ve not only affected the economy, they’ve also changed how businesses around the world manage their supply chains. 

The pandemic has highlighted vulnerabilities in supply chains, and the climate emergency is fueling consumers’ preferences for sustainable and environmentally friendly products and services. 

These factors are prompting global supply chain managers to re-evaluate their protocols. Now is the time to place more emphasis on social, environmental, and ethical responsibility.

What is supply chain?

Brands that set actionable goals to reduce their emissions, reduce their use of resources and their production of hazardous waste, and prioritize good social and environmental causes have sustainable supply chains. 

In a sustainable chain, all of a company’s suppliers work with it towards mutual goals that align with the brand’s targets for its footprints in each field. 

What you need to know as an Entrepreneur?

1. Risk Management is Essential

Companies that respond proactively to economical, environmental, and social risks in their supply chains can protect their shares in the market and reduce their risk premiums. Being able to determine where risks are probably and apply mitigation approaches aligns well with the concept of sustainability.

Your goal should be to develop sustainable and flexible supply chain networks that can respond to rapid changes without losing profitability. Strong social, environmental, and economical risk management will help you address reputation risks that could impact your customers’ loyalty and reduce your market share. 

2. Sustainable Management Will Save You Money

There is a clear link between sustainable supply chain management and cost savings. Businesses who make their supply chains more sustainable have consistently enjoyed financial savings while reducing costs and adding value to their enterprises.

The sustainable management of inputs like energy, water, and raw materials has proven to reduce procurement costs and reduce businesses’ carbon footprints, along with their impact on their workers’ health.

Purchasing local materials through local suppliers may also help to reduce the costs of importing foods and components while supporting the local economy at the same time.

3. It Will Help You Reach New Target Markets

Customers are increasingly seeking out sustainable products and making purchase decisions based on their environmental and social impacts. Considering this, making your products and supply chain more sustainable can help you reach a rapidly growing market sector of ethical and conscious consumers. 

In most cases, it may seem more cost-effective to produce products with no regard for external consequences. However, when taking long-term financial risk analyzes into account, making your products more sustainable can actually ensure that your company remains competitive in the long run.

4. Sustainability Includes Fair Treatment of People

Creating a truly sustainable supply chain requires you to leverage the supply chain to ensure fair and equitable treatment of the people that support it. Your goal should be to foster a shared vision with your suppliers about key sustainability goals and to work closely with them to achieve these goals.

These close relationships can supply you with important information about upcoming trends, market changes, and other external influences that could impact your business.

5. Ethical Conduct Fights Fraud

Sustainable supply chain practices promote responsible and ethical management practices throughout the life cycles of products. 

These practices will assist in building a healthy and resilient economy by reducing the incidence of procurement fraud, bribery, and corrupt business dealings.

6. Circular Supply Chains are a Win-Win

Circular supply chains involve the disassembly of old products, the processing of those products into raw materials, and the creation of new products from the recycled materials. This model allows businesses to achieve an environmentally friendly operational strategy while minimizing costs. 

According to a 2020 survey from Gartner, this win-win approach is growing in popularity, with 70% of supply chain leaders eager to invest in the circular economy in the future.

7. Sustainable Management Builds Brand Loyalty

According to Forbes, consumers are up to 88% more likely to remain loyal to companies with strong social and environmental responsibility. The public’s demand for transparency in supply chains is at a record high. Businesses that adopt sustainable supply chain practices can expect to attract more loyal long-term customers as a result.

8. AI is Your Business’s Best Friend

Artificial intelligence allows for the analysis and curation of numerous data sets across your company’s supply chain. AI’s capacity to promote collaborative shipping and synchromodality can be particularly useful in creating sustainable supply chains too. 

It allows for the streamlined tracking of the statuses and locations of shipments to take advantage of opportunities to combine shipments and use more environmentally friendly logistical options.

9. 3D Printing is the Future of Production

Additive manufacturing, also known as 3D printing, enables businesses to maintain virtual inventories and to produce stock on demand. This ability to manufacture on-site eliminates the need to transport resources and components using fossil fuel-dependent methods. 

This method enables manufacturers to use recycled materials and further reduce their costs.

10. Blockchain Could Change the Game

Blockchain is especially useful in sustainable supply chains because it offers the ability to act as a single, immutable source of data. 

Businesses can use sensors to accurately track materials and products back to their sources and to accurately assess their quality, handling and locations at any point in the supply chain.

The Future of Sustainability in Supply Chains

Digital advancements and the growing capabilities of digital supply chain technologies are playing crucial roles in the development of supply chain sustainability and transparency. 

Tools like blockchain, RFID sensors, big data management, AI and advanced analytics have all brought new levels of visibility to modern supply chains across the globe. 

Today’s businesses are more capable than ever before to focus on social responsibility and to adopt green supply chain and logistics best practices. With so many consumers now preferring or demanding sustainable products and services, it will benefit businesses across sectors and industries to rethink their supply chain management practices.