Smart Warehousing Jul 15, 2022 9:24:00 AM 10 min read

Improving the Supply Chain Through Sustainable Development Goals

Two years ago, the United Nations called on all sectors of society to unite for a 10-year campaign called the “Decade of Action.” With Sustainable Development Goals as a blueprint, “The Decade of Action calls for accelerating sustainable solutions to all the world’s biggest challenges — ranging from poverty and gender to climate change, inequality and closing the finance gap.”

Businesses across sectors are now striving to adhere to higher social and environmental standards. Sustainability has become integral in policies, practices, and business goals, as consumers, investors, and government bodies all have greater-than-ever corporate responsibility expectations.

To further these initiatives, organizations must focus their efforts on building a more sustainable supply chain. Think about it: Historically, supply chains have been responsible for high waste production, labor-related issues, and significant resource consumption. And today — only a couple of years into the Decade of Action — we’re beginning to see the ramifications businesses face when they don’t adopt more sustainable practices.

As Harvard Business Review reminds us: “Consider the embarrassing scrutiny that Apple, Dell, and HP endured not long ago for sourcing electronics from overseas companies that required employees to work in hazardous conditions, and the fallout that Nike and Adidas suffered for using suppliers that were dumping toxins into rivers in China.”

Customers, investors, and employees certainly aren’t shy about rejecting companies that fail to establish or uphold their sustainable development goals. Instead, they’re choosing to align themselves with more eco-conscious competitors that use ethically sourced materials, embrace energy-efficient practices, minimize waste and carbon emissions, and so on.

“Climate change, circular economy, ESG and sustainability have become business priorities and our global supply chains sit right in the middle of these challenges — as a major contributor to the problems, and a great area of focus to take action,” shares Forbes.

Here are four key ways businesses can embrace sustainable practices across the supply chain to satisfy goals and create a healthier planet.

1. Tie Sustainable Development Goals Into Your Business Strategy

Whether you operate a B2B, B2C, or e-commerce business, weaving sustainability goals into your overarching business strategy is the most effective way to drive positive change. Business leaders and management teams must work together to evaluate all functions of their supply chain network. By doing so, you can identify internal and external weaknesses that you can improve upon (i.e., working with suppliers that don’t embrace sustainable practices).

For instance, waste and emissions are two high-priority areas that provide a significant opportunity for businesses to develop more socially responsible initiatives. And to be clear: you can’t just talk the talk (unless you want to endure the same backlash Volkswagen, to cite just one example, has faced). You also have to walk the walk.

That means developing sustainability metrics to hold yourself accountable and make informed decisions based on the data and outcomes. There are three primary aggregations of sustainability metrics: environmental, social, and governance.

Environmental

  • Hazardous Materials
  • Plastics
  • Biodiversity
  • CHG Emissions
  • Water and Wastewater
  • Deforestation
  • Sustainable Agriculture

Social

  • Diversity, Equity, and Inclusion (DE&I)
  • Labor and Human Rights
  • Fair Pay
  • Worker Health and Safety

 Governance

  • Risk Management
  • Supplier Code of Conduct
  • Transparency and Reporting
  • Bribery and Corruption
  • Business Structure and Oversight

Opt to reduce plastic usage by 50% by 2025? Aim to reduce energy consumption by 25% over the next 18 months? Set out to improve ergonomics to streamline material movement and improve worker safety? Regardless of the target, measurable goals will yield benefits across the board — from community health to environmental impacts to business profitability.

 

2. Start Embedding Sustainability Data into Processes

Once initial goals are set, it is time to incorporate sustainability practices into your supply chain operations — from the initial product design all the way through last-mile logistics and recycling processes.

For instance, utilizing a 3PL provider can provide sustainable transportation solutions, such as maximizing route efficiency via co-loading or housing inventory closer to the end consumer to minimize travel. For example, Smart Replenishment by Smart Warehousing ensures that products are always located at the closest warehouse to the end user.

And don’t forget: you’ll want to continually measure performance and leverage data to refine processes. By adopting a data-driven approach, your business can leverage innovative technology, like cloud-based software and smart sensors powered by the Internet of Things (IoT), to capture and digest valuable analytics.

Access to comprehensive data allows for greater supply chain visibility. These insights also give businesses the information needed to identify gaps and inefficiencies and improve sustainability efforts.

Let’s say energy consumption is one of your key sustainable development metrics. Finding a warehouse partner that utilizes environmentally-conscious practices can help drive you closer to achieving your goals. Because, let’s face it, warehousing operations require an enormous amount of energy. You want a warehouse partner that strives to optimize sustainability via eco-friendly energy sources and energy-efficient floor plans while maintaining high levels of productivity and performance.

One example is Smart Warehousing’s underground Kansas City caves, which offer an environmentally-friendly omnichannel fulfillment solution to accommodate the cold chain. From dairy to meat to pharmaceuticals, the caves are ideal for temperature-sensitive goods, as they naturally maintain a 50-degree environmental year-round. Not only do they conserve a vast amount of energy, but they’re 60% more cost-effective as well.

Packaging is also another area businesses are seeking to improve. From greener packing solutions to eco-friendly material disposal, utilizing more sustainable packaging methods can help minimize your environmental impact, while effectively reducing costs.

As your business adopts new sustainability practices and partners, the subsequent data can keep your entire network accountable and be shared among shareholders, regulators, suppliers, industry associations, and customers to highlight progress and strengthen brand equity.

 

3. Become Regenerative and Embrace Circularity

Technology is key in helping organizations reduce, reuse, and recycle materials to decrease waste and ultimately work towards a circular business model. Accenture projects a radical departure from traditional ‘take, make, and throw away’ practices by 2030. Production and consumption systems will instead move towards a circular economy approach, providing up to $4.5 trillion in new opportunities for economic growth and sustainable prosperity for businesses.

To achieve circularity, businesses need to implement systems that are regenerative by design. According to Forbes, “R&D leaders and product designers should ask themselves questions, such as ‘how will the product be refurbished, repurposed, reused or returned to the earth, and ensure that non-biodegradable packaging materials end up in oceans or a landfill. We can leverage sensors to track which products are causing damage to the atmosphere and feed that back into the design process for future products to help meet our corporate commitments.”

Colgate-Palmolive is an example of a brand that’s already embracing circularity. The household name has pledged to reduce its use of virgin plastic and transition 100% of consumer packaging to reusable, recyclable, or compostable materials by 2025. Accessing data through every step of the supply chain through cutting-edge technology has been central to driving Colgate-Palmolive’s sustainability efforts forward.

 

4. Reassess Your People Strategy

Prioritizing people and cultivating buy-in from your workforce is essential to driving success for your sustainable development goals. This calls for a renewed focus on diversity and inclusion and professional development initiatives, as well as an emphasis on equality, worker safety and wellbeing, and human rights.

And not just internally. Truly building a more sustainable supply chain requires companies to partner with logistics providers, suppliers, and manufacturers that share and uphold these same values.

 

A More Sustainable Future

Driving sustainability in the supply chain is a collaborative effort. We’ve reached an inflection point where business leaders must be proactive in building their sustainable development goals. Making changes to the supply chain may feel like a massive undertaking, but with the right partners, it’ll pay off in the long run – for society, the environment, and your bottom line.

At Smart Warehousing, we’re helping clients build a more sustainable supply chain by implementing strong, sustainable development goals internally and externally at a local, national, and global level. From the point of sale through product delivery and returns, we utilize innovation and technology to support greener solutions.

To learn more about how the Smart Warehousing team can help further your sustainability goals, while driving efficiency and profitability for your supply chain, contact us today.