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An overview of a sustainable supply chain

An overview of a sustainable supply chain
Insight & News 05 December 2022

An overview of a sustainable supply chain

The main purpose of this passage is to discuss Sustainability in supply chain by focusing on the definition of sustainable supply chain management first followed by investigating sustainable supply chain challenges. In the next section, we will raise some points about the ways to improve your supply chain sustainability such as digital procurement, sustainability strategy, and … then Through the essay, we will explain the importance of sustainability in transport and logistics industry.

Understanding the definition of supply chain Sustainability is the first big step.

Supply chain sustainability

The concept of sustainability in supply chain management is the management of supply chain processes without damaging the environment and natural resources for the future while improving the standard of human life.
Sustainable supply chain management concentrates on cost-effectiveness resource, and energy optimization, and profitability through the enhancement of supply chain performance. Achieving profitability with focusing on environmental aspects, are the key factors to design an integrated sustainable supply chain network.
Implementing sustainable management strategies and policies can be a big step toward helping sustainable development advancements, such as economic growth, social advancement, and environmental conservation.
Sustainable supply chain management as a modern business practice involves green production and packaging, sustainable distribution, logistics, and delivery services.

Sustainable supply chain management involves many aspects such as green production.

To attain a sustainable supply chain, companies must adjust their business plan according to sustainability practices. This plan's key element must be sustainable supply chain management. This goal can be accomplished in seven stages:
•    Drawing supply chain strategy;
•    Analyzing the sources of environmental, social, and economic impacts and risk identification;
•    Assessing gaps and defining best efforts in developing performance;
•    Adjusting organization structures;
•    Conducting sustainability rules for suppliers;
•    Evaluating supplier’s sustainability performance;
•    Reporting on sustainable supply chain performance effectiveness
By going through these seven steps, not only the environmental and social performance improve, but there are business advantages such as attracting eco-friendly customers, increasing profitability, and reducing risk.

By following the mentioned seven steps you van improve Sustainability in your supply chains.

Sustainable supply chain challenges

Supply chain management considering sustainability requirements is a complicated issue but due to the importance of sustainable development in today's society, this issue should not be neglected. In addition to achieving the social and environmental goals of sustainable development, economic sustainability causes great improvement in supply chain profitability.
In the way of designing a sustainable supply chain, companies are facing significant challenges. changing business strategy has always been costly, and costs issue is very important, there are some cost sources in the way companies achieve sustainability such as the cost of defining sustainability criteria, long-term structural change, the cost of adopting new policies and strategies, and …
Examining how the change in approach towards sustainable development affects existing policies and structures, lack of resources, knowledge, environmental control policies, and … are other matters.

In order to raise supply chain sustainability, companies face significant and costly challenges.

Importance of improving sustainability in supply chain 

Manufacturers and retailers are developing their business models to integrate sustainable practices and meet environmental requirements.
Today, this development has become a social duty, because both customers and companies have realized the importance of sustainable development in improving human living standards and reducing environmental pollution caused by industrial activities so companies adjust their organization strategies according to sustainable development practices.
The right choice of sustainable development practices has a direct impact on the efficiency of the organization's processes. Optimizing processes to reduce waste by using renewable materials, and implementing software solutions and automation technologies is economically beneficial in addition to helping reduce resource consumption.
The adaptability and agility of your organization to new conditions depend on the sustainability of your supply chain.
It is essential to ensure that your suppliers comply with sustainable development standards and meet your KPIs for sustainable practices. These days, data plays a key role in the digital economy. Through effective data management and analysis, companies have a greater chance of cooperating with sustainable suppliers that are able to meet sustainability requirements.
Recent surveys have shown that consumers are willing to pay more to support product recycling and reuse and buy more environmentally friendly products. This shows the support of eco-conscious consumers to change the approach to sustainable development.

Thankfully nowadays consumers are more willing to support sustainable supply chain products.

Ways to progress your supply chain sustainability 

There is no fixed model for supply chain sustainability, and achieving sustainability requires a comprehensive, long-term plan. But companies can set attainable sustainability goals and develop sustainable business plans to support them by focusing on the best actions.

1.    Digital procurement
Procurement exists in all business sectors and since the management of the main sectors, such as supply chain, supplier relationship, and costs, is the responsibility of the procurement team, the effective performance of this team must be ensured by data management and analysis, and automation.
With automation and data transparency and data analytics tools accessibility, the procurement team will be able to target and cooperate with suppliers who follow high sustainable standards according to the industry and regulatory standards for environmental awareness issues.
Analyzing cost data leads to balancing supply chain sustainability, improving flexibility and agility, and providing forecasts, data modeling, efficient supplier management, supplier integration systems, and suitable KPIs tracking.

Performing Digital procurements ends up balancing sustainability in supply chain.

2.    Sustainable supply chain strategy
Companies' approaches to ensuring that their suppliers have met their environmental and social responsibilities, have had many similarities. The sustainability strategy has different steps. Companies should set and document long-term sustainability goals established by their upstream suppliers for sustainability, which includes collaborating with downstream suppliers to develop sustainability strategies. Creating a team or a department to implement and execute sustainability practices at all levels of the supply chain is another important step.
This approach provides the right context for any company interested in achieving sustainability as the basis of its overall strategy.
Among other practical applications, the following can be mentioned:
•    Conduct audits to help suppliers meet carbon emission standards and use sustainable resources such as renewable materials and clean fuels.
•    Adopting the practical approach to eliminate or reduce risks at all levels of the supply chain
•    Industrial automation, artificial intelligence technologies, Predictive Analytics with data science, strategic sourcing, and developing channels.

 Using strategies such as AI technologies, Industrial automation, … is a great way to Develop your supply chain sustainability.

3.    Change management
Changing the company's overall policy towards sustainable development may require significant investment in training and change management so the company can shortly adapt to new changes.
Sharing the competitive advantage of adopting a sustainable development approach, profitability, cost savings, and commitment to social responsibility can motivate organizations to move toward sustainability. Training employees, suppliers, and other supply chain members at all levels emphasizing the importance of sustainable development and using sustainability approaches to attract customers can be strategic initiatives within the organization.
Data management and analysis tools can be very effective in analyzing ever-evolving environmental, new trends and understanding market orientation, and consumer behaviors can also be applied to assess the success of your sustainability practices for sustainable development to tackle the challenges.
By developing sustainability strategies, in the right way, using data tools and technologies to identify and cooperate with sustainable suppliers, you can build a supply chain that not only reduces greenhouse gas emissions but also increases the resiliency and agility of your supply chain.

 By progressing a sustainable functional supply chain, you would be able to reduces greenhouse gas emissions and increase agility and resiliency.

Sustainable transportation and logistics industry

Sustainable transportation concentrates on energy efficiency, carbon footprint, and affordability of transportation modes, to optimize the whole transportation and freight shipping system and balance current and future social needs.
As mentioned before sustainable development has three basic pillars protecting the environment, economic efficiency, and social well-being. all aspects of the transportation industry have a direct effect on the physical environment and the environmental dimension of sustainable development in transportation industry includes the study of the effects of human industrial activities on the natural environment. From an economic point of view, the goal is to improve transportation infrastructure, which will ultimately increase economic productivity. That is while being cost-effective, transportation systems must have the ability to respond to the ever-evolving demands of society. And finally, in the social dimension, sustainability in the transportation sector includes improving the level of services and living standards.
Environmental sustainability represents a growing area of responsibility for transport service providers, inciting them to acquire expertise in environmental management. The most important challenge is implementing environmentally sustainable transport within competitive market structures and coping with transport demand changes while upgrading the transport supply.

implementing an environmental sustainability in supply chain and transportation industry is very important.

What challenges does sustainability in supply chain & logistics create?

Logistics companies face many challenges in providing sustainable services. In addition to meeting customer needs, a sustainable logistics service should be cost-effective and have the least impact on the environment. This requires effective logistics and transport strategy as well as providing eco-friendly technologies. Establishing long-term cooperation with customers can lead to more sustainable conditions, and internal development in an organization, both from customers and from society in general, is also a key part of facing sustainability challenges.
car-sharing technologies advancements, the use of electronic or self-driving vehicles, and clean energy have made a huge contribution to environmental sustainability. This has led to the continuous improvement of transport technology, which ultimately causes the reduction of air pollution. However, all public transportation systems are still not sustainable and this issue requires considerable attention. Today, due to the significant growth of the shipping of raw materials and goods in the global economy, cargo transportation should also be considered in this process. freight transportation must rely much more than in the past on environmentally friendly methods such as rail and sea transportation.

In order to raise Supply chain sustainability, public transportation systems should be sustainable in future.

Since updating and changing transportation infrastructure and methods requires a comprehensive planning approach, promoting sustainability in the transportation industry has always faced many limitations and obstacles. Due to the different lifespans of fleets and transportation methods, currently, most of the investments made in infrastructure do not demonstrate a large percentage of changes. For instance, most of the car fleet can be replaced with more efficient vehicles within a decade, but road infrastructure takes about a quarter of a century to replace, and assets such as airplanes and container ships have decades of life.
Sustainability is growing prevalent, in the future of transportation & logistics. organizations are even more being held accountable for the environmental issues and social aspects of their supply chain activities.
Reducing transportation costs has always been one of the basic issues in the transportation and logistics industry. And today, sustainability as an effective solution plays an important role in increasing productivity and reducing operational costs and is also considered a great factor in higher profits.

Sustainable supply chain will reduce transportation costs and solve many basic issues.

The significance of logistics and supply chain sustainability

Today, the sustainability of the supply chain is exceeding environmental protection. Considering environmental requirements is necessary, but companies should concentrate on all aspects of sustainability at the same time. Sustainability in the supply chain is the best solution for continuous improvement, cost reduction, and promoting a beneficial work culture.
Advanced technologies now play a huge role in sustainable logistics and sustainable supply chain management. Improving the inefficient systems of the transportation sector can be one of the most effective solutions for sustainability. For instance, truckload optimization assists to decrease the number of unnecessary trips and suggesting better routes with fewer stops is effective in reducing fuel consumption and vehicle depreciation.
high-performance systems and Renewable energy as part of sustainable logistics help businesses win logistics tenders. Also, following government sustainable development guidelines and incorporating sustainability requirements into company strategies will increase brand awareness through customer support functions, which will ultimately lead to a higher profit margin.

Advanced technologies are very important to maintain Sustainability in logistic and supply chain management.

The results of extensive research on Singapore as a leading country in providing logistics services indicate that, based on Singapore's sustainable development plan,
The government should support and provide some motivations such as tax incentives to achieve a cleaner and more sustainable environment by reducing greenhouse gas emissions, in which the logistics industry plays a big part.
The lack of training and e-skills remains the major problem facing transport and logistics companies. The adoption of new technologies such as artificial intelligence, the Internet of Things, and machine learning is the best opportunity to facilitate automation development. In the long term, logistics providers must consider technological developments to create the best customer experience by building flexible and agile supply chains.

To increase Supply chain sustainability, logistics providers have to invest in technological developments.

In the proposed article, we talked about one of the fundamental issues of today’s world, which resulted in gaining a better understanding of sustainability in supply chains. Followed by, we reviewed the main challenges of logistics and supply chain sustainability. Generally, the importance of developing a sustainable supply chain and logistics was the main topic of this passage.

Melika Mousavi (Marketing Specialist)

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