Climate change could become a weak link in your supply chain, unless more action is taken. As climate change makes extreme weather more frequent and severe, it could increase the likelihood of supply chain disruptions. It is therefore important and also in their own interest that businesses contribute to the fight against climate change and incorporate sustainability into their supply chains.
“We have almost burned down the planet.” said Bettina Hobson, Sustainable & Circular Supply Chain at SP Scientific Products during Alcott Global’s Makers & Movers: Global Sustainable Supply Chain Summit.
On 8th-9th June I had the opportunity to attend the two-day summit and gain some insight into the future of sustainable supply chains. Due to technical difficulties, the event was extended to a third day for those who were unable to watch webinars from the first day.
How can companies become more sustainable?
Of course, it is always difficult to pick out the most interesting topics when there are so many to choose from, but I think for me the topics that stood out most were collaboration, agility and risk aversion, and the designing of products.
Build better, longer-term collaboration with suppliers
A company is only as good and as protected as its suppliers, and companies who are forward-looking are already engaging suppliers in global environmental issues. To build better, longer-term relationships with suppliers, it is vital to consider their ethics, values, positing and reputation.
In a case study webinar on how supply chain leaders can make a difference, Inge De Winne, Group Chief Supply and Sustainability Officer at Boortmalt said that it is important to work with suppliers and customers “to make sure they follow our code of conduct and ethics,” and to ensure these are respected. In most cases, B2C companies may not be able to choose who not to sell to, but B2B companies can, although most see no responsibility on this side of the supply chain. B2B companies can leverage engagement through sustainable marketing with resource-saving products and services, environmentally friendly supply chains, or donate to climate-neutral projects. Euginia Ceballos Hunziker, Head Responsible Sourcing and Impact Valuation at Lafargeholcim added in a panel on ‘Trade-off to Priority – Sustainability in Supply Chain’ that businesses need to engage their “suppliers and everyone [else] to not run out of natural resources.” Maintaining a balance between supply and demand in supply chains is dependent on natural resources, and the location, quantity and quality of these resources can significantly impact a supply chain’s capabilities and logistics costs. “Resource security is important,” added Catherine Weetman, Director at Rethink Global during a panel discussing the challenges in redesigning supply chains for a circular economy.In another panel which discussed how to create a more ethical and sustainable supply chain through procurement, Arindam Sengupta, VP and Head of Procurement Asia Pacific at Dole International, noted that “not everyone will be thinking about sustainability in your company. Everybody needs to be aligned and you need to motivate everyone,” which can be difficult the bigger your company and the more complex the structure is.
Become more agile to avoid future risks
During the interview ‘Advancing Sustainability in the Supply Chain of the Future’, Pawan Joshi, Executive Vice President, Product Management & Strategy at E2open said that “agility is important, you can’t ignore it anymore,” and to think of sustainability as more than just an afterthought in your business. This could be achieved by jointly planning and collaborating with suppliers, logistics service providers and customers about potential supply chain disruptions, as well as building flexibility into processes and increasing visibility, which can help to adapt to changes with a minimum impact.
The benefits of supply chain agility is that it allows organizations to accelerate time to market, eliminates waste and reduces errors, and reduces operational and product costs.
But being more sustainable can be expensive for businesses and higher prizes are a big risk if these are not capable of competing on the market. The one thing that is often asked, is “how can I be sustainable and simultaneously reduce costs?”. The answer was given by Boortmalt’s De Winne: it is done by “optimizing your network.” But before optimizing your supply chain or inventory, it is important to understand the benefits your company seeks to achieve and map your KPIs and initiatives to your business goals. Selecting just a few extra initiatives other than minimizing costs can make a huge difference in the overall supply chain’s efficiency, which can increase your company’s profitability and service levels, as well as leading to a greener supply chain. It can be difficult to convince more businesses and stakeholders that being sustainable is a benefit for companies too, but by being sustainable, it brings many benefits to companies – such as increasing productivity, reducing costs and it can even increase employee retention and recruitment.
A lot of companies have the investors and thus the necessary money to move in the direction towards sustainability and a circular economy. Rethink Global’s Weetman said “Apple have said they are going for a fully circular economy.” Apple have already got a series of robots that disassemble iPhones to get precious metals out that are put in new phones. Designing phones “in a way that you can repair it yourself”, said Zsofia Agnes Nagy, Co-founder & Supply Chain Adviser at BZLW GmbH, could be a step in the right direction. The European Union are implementing a Right to Repair rule, which will make it easier for consumers to repair their own devices such as smartphones, tablets and laptops. The rules are part of a wider effect to tackle e-waste and to achieve climate-neutrality in Europe by 2050. It is however a “long way to go before it makes a big difference.” says Weetman.
The event gave an insight into what supply chain professionals are looking for from companies, or what they have done to improve their own. We have a long way to go before we see a big difference, but getting more companies and stakeholders involved in sustainable practices now will be better for the future – both for businesses and the environment. “Sustainability is complex,” said Dole International’s Sengupta, but “we want to leave behind a better world” for future generations. “Sustainability is necessary for growth. It is not a pure competitive edge, it is something we have to do,” concluded Ann Tracy, Chief Sustainability Officer at Colgate-Palmolive.