Green is in. Intentional business owners are continuing to implement innovative ways for their companies to leave less of a negative impact on the environment. While green trends have been building for decades, only now are we seeing an almost ubiquitous commitment to eco-friendly solutions and sustainable business practices. So while many organizations are lessening their own output of waste, emissions, and carbon footprint, they are now also expecting the same approach to sustainability throughout their supply chains.
Supply chain sustainability requires a comprehensive evaluation of suppliers’ sourcing, production, and distribution processes, and an understanding of how those dynamics reconcile with your company’s sustainability goals. Next, you have choices to make. Do you work with your current suppliers to align with your green goals or do you vet new ones who have already implemented the environmentally-conscious processes that your organization seeks in its supply chain? The answer depends on your relationship with your current vendors, as well as the availability of other viable options in your sector. Collaboration with vendors is key to successfully implementing green supply chain measures. And make no mistake, suppliers are acutely aware of the green market shift and are making substantial efforts for innovation in how they produce, package, and deliver their goods.
While green measures have historically come with a hefty price tag, sustainable supply chains increasingly offer long-term, cost-saving opportunities due to the optimized use of resources and a potentially dramatic reduction of waste. Financers are also progressively interested in sustainable supply chains and environmental criteria in their investment decisions.
Does Supply Chain Sustainability Really Matter?
Disregarding supply chain sustainability is simply bad business. We all saw brutal examples of this during the COVID pandemic. Non-sustainable supply chains contributed to massive disruptions, delivery delays, and even businesses going belly up. While it is hard to speculate whether a greener supply chain would have saved any of those business from heartache or collapse, we do know that localized sourcing and lean manufacturing would have certainly made for a more accessible and responsive supply chain during that challenging time.
Localization is a big differentiator in supply chain sustainability. For decades businesses relied on cheap goods manufactured in mostly faraway places. While this is still more the norm than the exception, organizations are starting to favor suppliers closer to home. The nearer your suppliers are to your business or warehouse, the less impact moving those goods will have on the environment – and the more likely you will have access to those goods even during downturns or other unexpected events.
Three Ways to Build a More Sustainable Supply Chain
1. Choose Renewable or Recycled Materials.
By opting for more sustainable products and materials with lower ecological footprints, you can dramatically decrease the environmental impact of your business – and at a savings to boot. One study recently cited in the Harvard Business Review estimated that companies experience an average internal rate of return of 27% to 80% on their low carbon investments.
Example: A company called EcoEnclose manufactures environmentally friendly packaging solutions. The supplier uses mostly recycled and biodegradable materials, allowing businesses to enhance the sustainability of their packaging choices.
2. Buy Local When Possible
Choosing local suppliers substantially decreases shipping waste and transportation emissions. But the benefits run even deeper than that. Localized supply chains also foster community development and support local economies, which is a big win all around.
Example: Restaurant giant Chipotle Mexican Grill is known for its commitment to sourcing locally. By prioritizing local suppliers, the company aims to create a positive impact on the environment, support local businesses, and offer fresher, more traceable food for its customers.
3. Utilize More Sustainable Storage
The environmental impact of warehouse space and other storage options can be substantial. Consider ecofriendly facilities with renewable energy sources like solar panels, energy-efficient lighting systems, and when possible, water recycling processes. Request that your suppliers do the same.
Example: Amazon has implemented numerous sustainability initiatives throughout their massive network of warehouses and distribution centers. The company is heavily invested in solar energy and renewable power, as well as other energy efficient technologies and packaging solutions. Amazon also recently announced that its delivery fleet currently includes 10,000 electric vehicles.
As a business owner, you need to make decisions related to your supply chain that align with your business objectives, your mission, and your vision. But remember, while you have green options to consider today, sustainability regulations are almost certainly going to increase moving forward.