How to crack eco-friendly supply chain management

In today’s business landscape, the integration of eco-friendly practices into supply chain management is more than a trend — it’s an imperative. As environmental awareness surges among consumers, investors, and regulatory bodies, businesses face an urgent call to reduce their ecological footprint. This shift toward sustainability is reshaping how companies manage the flow of goods and services, moving beyond mere efficiency to embrace responsibility and stewardship of our planet.

How is supply chain management currently not eco-friendly?

Supply chain management (SCM) is the coordinated management of the entire process involved in making and delivering products, from the initial sourcing of materials to delivering the final product to consumers. It includes managing production, ensuring products are efficiently made, and handling the logistics of getting them to where they need to go. The aim of SCM is to make these processes as efficient and cost-effective as possible while also meeting customer needs. Effective supply chain management is vital for businesses to stay competitive and responsive in today’s market.

In its current avatar, supply chain management can be unfriendly to the environment. Several practices prioritize efficiency and cost-reduction, the flip side of which is ecological concerns.

Traditionally, many supply chains involve excessive resource use. They consume large amounts of raw materials, energy, and water, depleting natural resources faster than they can be replenished.

Transportation and manufacturing processes, especially those relying on fossil fuels, contribute significantly to carbon emissions. The global logistics of moving goods across long distances, often using airplanes and trucks, exacerbates this impact.

Conventional supply chain practices can lead to substantial waste, from production excess to packaging materials that are not biodegradable or recyclable. There’s often a limited focus on designing products and processes that facilitate recycling and reuse, leading to a cycle of single-use products and materials.

Pollution is also an issue — Industrial activities within the supply chain can release pollutants into the air, water, and soil, harming ecosystems and public health.

Positive shifts in supply chain management

Over the past few decades, many companies have seen and acknowledged the dangers of letting SCM continue the way it has over time. There have been enough success stories in recent times to set examples for future endeavors.

Unilever, for example, has made significant strides in reducing its environmental impact across its vast portfolio of products. The company focuses on sustainable sourcing of raw materials, has committed to achieving net-zero emissions from its products by 2039, and aims to make all of its plastic packaging reusable, recyclable, or compostable by 2025.

The world’s most loved furniture brand, IKEA, has also publicized its aim to become a circular business by 2030. Their plan involves using only renewable or recycled materials and designing all products to be reused, refurbished, remanufactured, and eventually recycled. The company has invested heavily in renewable energy sources to power its stores and factories.

Apple has also taken significant steps to improve the environmental impact of its supply chain. The company has committed to using only recycled or renewable materials in its products. It has set a goal to become carbon neutralacross its entire business, including its manufacturing supply chain, by 2030.

Strategies to implement eco-friendly supply chain management

Developing an eco-friendly supply chain involves implementing strategies that reduce environmental impacts across the various stages of sourcing, production, distribution, and disposal. Here are some effective strategies to consider:

Practice sustainable sourcing

Prioritise materials that are renewable, recycled, or upcycled to reduce the demand for virgin resources. Partner with suppliers who have strong sustainability policies and practices in place. Certification and audits can ensure suppliers meet these standards.

Use resources efficiently

Optimised product design goes a long way toward ensuring sustainability. Design products with minimal material use and for easier recycling at the end of their lifecycle. Implement energy-saving technologies and practices in manufacturing and warehousing to reduce carbon footprints.

Implement circular economy principles

Reduce packaging materials, use recyclable packaging, or design for packaging reuse. Design business models that reuse materials, aiming for zero waste by recycling products at the end of their lifecycle.

Improve logistics

Use software to find the most efficient delivery routes, reducing fuel consumption and emissions. Given the advancements in transportation, it’s also a good idea to identify alternative environmentally friendly transportation modes such as rail instead of trucks or electric/hybrid vehicles.

Manage carbon emissions

Regularly measure the supply chain’s carbon footprint to identify areas for improvement. If there are unavoidable emissions, invest in carbon offset projects to compensate for that. Partnering with tree-planting organisations like EcoMatcher is also a great idea to green the planet and keep an eye on the future.

Optimize for transparency

Implement systems that track the sustainability of products throughout the supply chain to ensure compliance with environmental standards. Publicly report on sustainability efforts and progress to build trust and encourage accountability.

Leverage technology to optimize systems

Use advanced technologies to improve efficiency, reduce waste, and monitor environmental impact. Blockchain technology is also extremely helpful in creating a transparent and tamper-proof record of environmental impacts along the supply chain.

Helpful resources about eco-friendly supply chain management

For those looking to make their supply chain management (SCM) more eco-friendly, a variety of resources are available to help guide and inform their strategies.

Reading

Green to Gold by Daniel C. Esty and Andrew S. Winston offers insights into how companies can use environmental strategy to innovate and create value. For a comprehensive look at green supply chain management from a strategic and operational perspective, Joseph Sarkis’s The Green Supply Chain: Integrating Suppliers into Environmental Management Processes is a good choice. The Environmental Defence Fund (EDF) and the World Resources Institute (WRI) regularly publish insights and best practices on reducing carbon footprints and improving environmental sustainability in supply chains.

Software

Software like SimaPro and OpenLCA can help analyse the environmental impacts of all the stages of a product’s life, from cradle to grave. Tools such as SAP Integrated Business Planning for Supply Chain and Oracle SCM Cloud offer modules designed to optimise supply chain efficiency and sustainability.

Conferences

There are plenty of conferences and workshops that are both a source of information and a way to network with existing professionals in the community.

The Council of Supply Chain Management Professionals (CSCMP) Annual Global Conference, for example, brings together supply chain professionals from around the world and covers various topics, including sustainability, technology, and logistics. Gartner’s events are well-regarded for delivering deep insights into supply chain management trends and future technological innovations.

The final word

Integrating eco-friendly practices into supply chain management is crucial for the long-term sustainability of businesses. It’s about changing how companies operate to become more sustainable. Unilever, IKEA, and Apple have shown that this shift is not only good for the planet but also meets consumers’ growing expectations and the requirements of new regulations. It’s time for more people to join the movement!