How Supply Chain Leaders Make Sustainability Their Core Mission
Much has been written about what it takes to run a successful supply chain in the era of “get it to me fast and get it to me cheap.” Supply chain professionals are looking for ways to store goods closer to customers by investing in micro fulfillment centers and to optimize their facilities so orders can be processed faster. But it’s important to remember that while customers want their purchases fast, sometimes even the next day, many care about the environmental impact of that delivery as well. A growing number of consumers are asking the brands they buy from to invest in sustainability throughout the supply chain, from the materials they use to make products, to the transportation options they use to deliver products. An IBM study found that 57% of consumers are willing to change their shopping habits to protect the environment.
In response to these rising complexities, late last year, Körber commissioned its first ever Supply Chain Benchmarking report. The results, based on a representative survey among more than 200 companies, shed unparalleled insight into key challenges in the industry, as well as best practices to improve supply chain performance and operation. Based on this, participating companies were grouped into the following maturity levels: leader, advanced, developing and initiating. We were pleasantly surprised to find supply chain professionals are taking sustainability seriously – 57% of respondents were classified as sustainability leaders based on the steps they’ve taken to prepare for a greener future.
So, what set sustainability leaders apart from the rest of the pack? It turns out they’re rethinking every part of their operations, from a single package to their distribution process. We found three key strategies that could serve as a blueprint for other supply chains:
Packaging has an incredibly big impact on supply chain sustainability. It is often used and then quickly discarded, often several times, while goods move from the manufacturer to the store shelf. Additionally, co-packers, shelf re-stockers and even customers themselves might throw away plastic packaging rather than recycle it. That waste – not to mention the resources used to replace it – adds up fast.
Leaders understand the costs of packaging waste and its impact on the environment: 77% said they’ve made the use of sustainable packaging materials a priority. For example, manufacturers may invest in re-useable product packaging and containers to move goods to co-packers or retailers, cutting plastic out of the equation. E-commerce companies may look for ways to pack multiple goods into one package before shipping, increasing efficiency while also reducing waste.
A company’s sustainability efforts don’t have to rest on its supply chain leaders alone – in fact, strategic partnerships play a key role in helping businesses meet their sustainability goals. Partnering with the right suppliers can help supply chains unlock new innovations and join in on partnerships to reduce emissions. These types of initiatives are universally leveraged by leaders: 98% ranked supplier sustainability as either “important” or “very important.” In fact, major retailers such as Wal-Mart have already made supplier sustainability a key part of their vetting process for new vendors.
The great news for supply chain professionals looking to make their supply chains more sustainable: there are multiple options throughout their warehouse and transportation operation. They can work with their construction companies to install solar panels on new and existing warehouses or invest more deeply in autonomous robots and battery-powered equipment such as forklifts. They can combine trucking shipments, reduce empty miles, and get goods to customers quicker by working directly with other businesses, or leveraging less than truckload (LTL) providers. They can even invest in simulation and modeling software that will help them plan green warehouses from the ground up and in the right location.
The “circular economy” might not be a mainstream approach yet, but sustainability leaders are pushing to make it a reality. Circular economy projects encompass the re-sale, re-use or upcycling of previously sold products. This can include the product itself, or the materials used to manufacture and deliver them, often by the manufacturers themselves. While this approach is at odds with the traditional one-way supply chain, it can cut costs for both consumers and manufacturers significantly and reduce emissions and waste dramatically, and circular economy processes can be supported by modern, adaptable WMS. It’s no surprise that 71% of sustainability leaders in our survey have either implemented or are in the process of implementing a circular economy project.
One example is Scandinavian furniture giant Ikea. The company has been working on a product design that enables repurposing, repairing, reusing, reselling and recycling, with a goal to have a 100% fully circular range by 2030. Ikea also buys back furniture to sell on to other customers.
Some phone manufacturers, among others Samsung and Apple, also offer customers to trade in their old phones. On the one hand, materials from used phones can be recycled and used in new devices, on the other hand, they can be refurbished and sold on to new customers – with the incentive of a lower price compared to new.
Keep sustainability at the core of your operations
With supply chains working around the clock to deliver goods quickly, many might be tempted to take a position of “Faster? Cheaper? Sustainable? Pick two.” They might say the focus can’t be on three areas at once. However, it’s critical that sustainability becomes a core focus, rather than a third wheel. Applying it throughout the supply chain can also help manufacturers deliver goods faster and cheaper. That could mean investing in more sustainable packaging, developing partnerships with green suppliers, or even re-engineering the delivery process.
Want to be a sustainability leader while also meeting demand? It’s time to rethink everything.
A 25-year veteran of the supply chain industry, Kelly Mello Woodsum serves as Körber Supply Chain Software’s Vice President, Global Portfolio and Marketing Strategy focused on portfolio and product marketing, market research, content marketing and buyer and sales enablement. Woodsum has worked in the supply chain software industry through a variety of software vendors including TRW, MARC Global and Red Prairie (now JDA). Most recently, she was the senior director of marketing and communications for DMLogic, a Pittsburgh-based pharmaceutical serialization and warehouse management software and services provider which was purchased by Körber in 2017. Woodsum holds a master’s degree in communications from Emerson College and was formerly an adjunct lecturer at Boston University’s School of Communications. She lives in the Boston area.
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