Supply chain sustainability (SCS) is a holistic view ofsupply chainprocesses, logistics and technologies that affect the environmental, social, economicand legal aspects of a supply chain's components. Typically, sustainability initiatives include identifying the source of raw materials, ensuring good conditions for workers and reducing the carbon footprint.
Historically, supply chain was simply aboutlogisticsand knowing when and where goods were moving, but the rise of thedigital supply chainand accompanying visibility and analytics tools has provided companies with the ability to gather data about how well each component in the supply chain demonstratescorporate social responsibility. This transparency has promoted the concept of responsible sourcing and encouraged supply chain partners to develop and share best practices forgreen operationsand logistics. It has also allowed prospective partners to demonstrate compliance with industry best standards for worker safety, environmental protection and business ethics.
Factors that affect SCS include amount of waste, carbon footprint and emissions, air pollution, labor violations, deforestation and the health and safety of workers. SCS is based on the principle that socially responsible products and practices are not only good for the planet and the people who live here, they are also good for building positive brand awareness, minimizing environmental impact and improving long-term profitability.
In large companies, the task of demonstrating supply chain sustainability may be given to a supply chain analyst or sustainability officer. In addition to developing and implementing programs and processes in support of sustainability, the job may also involve qualifying new suppliers, ensuring delivery and quality performance targets are achievedand supporting supplier diversity policies.
How to improve supply chain sustainability
Companies should take the following measures in order to achieve a more sustainable supply chain:
- Identify critical issues and areas of improvement within the entire supply chain. The environmental impact of a supply chain is a culmination of each step in the production and operation process. Therefore, companies should understand where the most emissions and risks are located in order to improve.
- Use supply chain management and measurement tools to help track progress and find weaknesses. Organizations such as The Sustainability Consortium, World Wildlife Fund and The Sustainability Accounting Standards Board have created guidelines and key performance indicators (KPIs) that can help consumer businesses move towards their environmental goals.
- Set supply chain sustainability goals that reflect global sustainability goals. Companies should model efforts around scientific recommendations and government regulations to contribute the greatest impact to the global sustainability agenda and move towards being carbon neutral.
- Choose and collaborate with other sustainable suppliers. The practice of collaboration and combination of resources between manufacturers can help organizations reduce waste, cost and environmental risks. For example, sharing modes of delivery can reduce pollution by ensuring multiple half-empty vehicles are not sent out in the same direction.
- Maintain accountability throughout the process. Processes that can be put in place to ensure liability are routine audits, implementation of sustainability programs and teams, software tools that track impact and customer-facing goals and progress reports.
- Purchase carbon offsets. Organizations that have less control over supply chain or want to begin making an immediate impact can also look into buying carbon offsets. These are credits that help negate an organization's carbon emissions by investing in environmentally-friendly initiatives.
This was last updated in January 2019
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