How to Create a More Sustainable Supply Chain Change happens lightning fast. You must keep up or close up.
By Lucas Miller Edited by Heather Wilkerson
Opinions expressed by Entrepreneur contributors are their own.
The world is changing faster than ever. Having a sustainable supply chain is pivotal for businesses trying to stay afloat amidst all of today's uncertainty. Sustainability has long been something that has been strived for on an individual level, but now society expects the same from businesses.
In a comprehensive case study by Harvard Business Review, researchers Temsie Whelan and Carly Fink asserted having a sustainable business model in place can affect up to 70 percent of earnings, and that "executives can no longer afford to approach sustainability as a "nice to have' or as solid function separated from the "real' business."
Minimizing environmental impact, reducing unnecessary costs and creating a brand story that authentically connects with an audience are all positive end goals that businesses desire.
However, the precise steps and paths to get there can be difficult to discern. Sometimes the solutions are rooted in areas often overlooked by companies just starting on their path towards a sustainable supply chain.
Related: Sustainability in Business: Why Change Is Needed Now
Realistically project customer demand
Being able to accurately forecast your customers' demands allows you to make decisions based on facts rather than gut feelings. When you have data backing up your inventory purchasing decisions, you avoid housing depreciating mountains of backstock.
Surplus backstock can hamper your business for years with potential cash flow crunches and it doesn't do the environment any favors with the carrying cost of monitoring products for quality control. The financial and environmental resources spent to maintain product quality are harmful, unnecessary and avoidable when you have a smart and sustainable supply chain in place.
With a better idea of how much product you will need to fulfill future customer demand, the same resources spent on the materials, space and general overhead could be better allocated elsewhere. This allows you more overall flexibility and the ability to respond to the most recent trends and data available.
The data concerning customer demand, which is necessary to optimize your supply chain, is vital to have on hand, but it requires a little help to properly gather and assess.
Related: Who and What Drives the Management of Your Supply Chain?
Always look ahead
There's no room for rest in the field of sustainability as new technological breakthroughs occur almost daily. Staying well-informed and aware of them can be the difference between your business being a flash in the pan or built to run for decades on end.
We have all heard the steady approach of automation for years, and a recent study by the Information Technology and Innovation Foundation confirms that as much as 40 percent of some industries could be replaced by AI within the next 10 years. This will forever change the workforce as we know it, but what does all this mean to supply chains right now?
The answer lies in implementation and preparation. Companies currently taking steps to fully understand new technologies and training employees on how to use them will have the inside edge against competitors who are slow or hesitant to shift their supply chain away from traditional strategies.
This kind of forward-thinking has gained traction with industry leaders such as Logmore's CEO, Janna Juhala, who in a recent email exchange wrote, "Digital shipping systems no longer merely track a package's physical location, but also monitor that key conditions stay steady throughout the process. This guarantees consistency in product quality, which in turn increases customer trust."
Continued Juhala, "If something does go wrong, pinpointing where and when the issue has occurred is a simple undertaking. Teaching our clients how to use these kinds of systems saves everyone's time and resources from being wasted in the future."
The ability to have people and technology work effectively together in tandem will ultimately come down to education and training. By staying ahead of the curve in this area, companies can start positioning their companies to have a supply chain that is sustainable for years to come.
Related: Overcoming the COVID-19 Supply Chain Strain
Shipment speed matters
When you have your supply chain running smoothly, it's time to dial in the details. The path your product travels from production to consumer can be a long, convoluted and often expensive journey.
If you have enough lead time, shared methods of transport can dramatically reduce costs and are far more sustainable than individually-rushed, emergency shipments. Emergencies are bound to happen at times, of course, but making them the exception rather than the norm should be the goal here.
Just by using better routing and more advanced technologies, Wal-Mart was able to save nearly $11 million from 2005 to 2015 by improving its fuel efficiency. At the same time, they avoided pumping 15,000 metric tons of C02 into the atmosphere. The savings here for both the business and environment speak for themselves, but also exemplify how seemingly small tweaks to a supply chain can reap substantial benefits.
Even more so, for international shipping, transport costs increase exponentially when time is an issue, and planning to use shared or slower forms of transport become essential for environmentally-conscious companies.
Send a message with meaning
Positioning your business to have a sustainable supply chain often yields positive results in the short- and long-term, but requires time and resources upfront to properly implement.
By doing so, however, you show your customers that you hold certain standards that supersede savings or profit if they come by harmful means. Brand narrative right now is arguably as important as product quality itself and making sustainability a core company tenant sends a powerful message to an audience.
In no uncertain terms, it says that your business listens, learns and will continually change to better serve both the customer and the world — which is in desperate need of a helping hand at the moment.
