Customers today are more informed and aware about their purchases, no matter if they are high-end appliances or daily-use products. Customers have specific requirements and there are certain standards that must be met. This includes scrutinizing the supply chain. According to Mckinsey’s latest report, a growing consumer base has an immediate impact on supply chain operations. This also has a proportional effect on the environment.
It is clear that supply chains are responsible for more than 90% of pollution caused by CPG and 80% of global warming. While demand is increasing across all sectors, only 20% to 20% of supply chain managers have the visibility necessary to include sustainability practices into their supply chains, which is alarming.
A responsibly sourced supply network is crucial to ensure regulatory compliance, decreased wastage, and business branding. Technology is key to creating and enabling responsible sourcing supply chains by tracking and tracing shipment movements in real-time. Supply chains today are facing a critical moment in which there is a greater emphasis on sustainability and being accountable.
How to Create a Responsibly-Sourced Supply Chain?
One of the most important functions of a supply network is responsible sourcing. Let’s take a look at some ways companies can ensure a responsibly sourced supply chain.
1. Optimize your supply chain and reduce wastage
You can improve your supply chain by making minor and major changes. However, these improvements should be made incrementally. Any improvement that decreases wastage will improve the supply chain’s speed by implementing sub-processes like delivery, quality enhancement, and sustainability. All processes within the supply chain can continually be improved and optimized by combining machine learning, analytics, and reporting.
2. Transparency and ethical sourcing are key
Visibility into the extraction and sourcing process of raw materials is key to ensuring suppliers follow sustainable standards. Companies can monitor, verify and report on supplier practices and working conditions using technologies like IoT and blockchain.
The openness and sustainability of the supply chain are enhanced by the increased use of interconnected technology. Technology platforms allow for the tracking of data and give everyone access at any time. Transparency is key to ensuring visibility and tracking of real-time progress.
3. Effective demand-supply planning can reduce overproduction
Supply and demand have always been in a relationship. This must be in perfect balance to avoid overproduction or underproduction. This includes efficient utilization of raw materials, manufacturing goods, and distribution of products. AI and other technologies can be used to predict the future and reduce wastage.
4. Reducing fossil fuel consumption through real-time optimization of routes
Reduced fossil fuel consumption is the key to a sustainable supply chain. This directly impacts the environment. Alternative modes of transport such as electric cars or renewable energy options can help achieve this.
AI can play a role in optimizing domestic, international, and national shipping routes even at this point. Advanced analytics can provide real-time updates of various routes, allowing for the avoidance of congested routes and reducing the time it takes to complete an operation.
5. Make optimum use of containers and transportation by merging shipments
Numerous cases have been reported of containers being empty or partially filled during container transportation. This is a significant waste of resources. Companies can use predictive analytics and analytics to forecast when and where goods will arrive at a common point. This allows the consolidation of multiple shipments from different suppliers. This optimizes container space and makes it easier to organize. This helps to reduce costs and energy consumption, as well as reducing greenhouse gas emissions.
6. Continuously monitor environmental risks and their effect
Environmental risks and climate change can have a huge impact on supply chains. These include flooding, wildfires, and rising sea levels.
Supply chain managers can plan and react by actively monitoring these risks using supply chain technology. This reduces the impact of these risks to a significant extent. These measures can help save costs and ensure a seamless supply chain.
7. Ensure equal growth of suppliers
Responsible supply chain management requires that buyers, suppliers, and business actors all play a critical role. Businesses can work in harmony with buyers and suppliers to improve their strategies and identify best practices. Building a smoother business leads to continuous improvement and easy identification of procurement options.
Suppliers might take some time to implement these strategies. These changes will be gradual and have a positive impact on the business. The buyer-seller relationship is improved by standard operating procedures, standard strategies, and continuous supplier performance monitoring.
A sustainable and responsible supply network model will result in a reduction of unwelcome spending and greater social and environmental commitments from suppliers. This creates a stronger partnership and lowers risk, which in turn leads to positive social impact without additional capital. Every organization should promote responsible business practices and guidelines throughout its supply base.
8. Work toward achieving a healthy ROI
Every organization operates differently so it is important to understand how to create a healthy ROI. The value drivers for an organization will vary depending on its size, industry, sector, or geography. When identifying the lever for change, there are many factors to consider — supplier feedback, supplier selection protocols, and sustainability criteria.
9. Analyze the effectiveness of implemented strategies
Supply chain success can be ensured by well-planned and implemented strategies. Analyzing the strengths of a strategy’s execution is best done by understanding its outcomes and mapping their effects. Positive effects will prevail.
These include improved productivity, product quality, cost reduction, and market expansion. These strategies add tremendous value to the business and should be continued for business development. Strategies that have less of an impact on business improvement may be dropped.
10. Work closely with suppliers for better results
Without the support of suppliers, a responsible supply-chain program can only be successful. Your suppliers should be able to understand the importance of responsible sourcing and how it can benefit your business. Explain the program and explain the strategies, guidelines, and expectations.
It’s important to have a team that supports suppliers in communicating plans, conducting surveys to collect information, working on continuous program improvement, and responding to suppliers’ requests.
Every day, consumers from all regions are more interested in the origins, production, and distribution of goods. As a result, it will become increasingly important to reduce the environmental impact of supply chains.
The right technology solutions and a forward-looking strategy will help ensure that your supply chain is responsibly sourced. It will be beneficial to consumers, suppliers, companies, and the entire world.