The Benefits of Sustainable Supply Chains

Sustainable supply chains require collaborative efforts across the ecosystem. Because every jurisdiction that a supply chain touches has different laws and regulations, measuring progress toward sustainability goals is difficult. To measure the results of sustainability plans, companies must collect data on different metrics. Furthermore, data sources and regulations differ from one market to another. Companies must establish a clear strategy for ensuring success and demonstrate it to investors.

A recent survey of 350 businesses showed that one of the benefits of sustainable supply chains is the ability to be resilient in difficult economic circumstances. The COVID-19 pandemic put the fundamentals of economics in the spotlight, but instead of reverting to the basics of supply and demand, many businesses stepped up their efforts to make their supply chains more sustainable. Ultimately, these efforts contributed to their survival.

In addition to using sustainable inputs and suppliers, companies can optimize supply chains by reducing unplanned downtime, improving energy efficiency, and increasing recycling rates. Companies can also redesign their products to become more sustainable. For example, Procter & Gamble has taken water out of its previously heavily water-based products. This helps to reduce their weight, which makes them more efficient to transport. This also reduces carbon emissions.

A sustainable supply chain works by setting and maintaining consistent standards. Sustainability plans must include benchmarks, targets, and guidelines, which must be shared with all stakeholders. Using digital technology, companies can easily measure their compliance with sustainable standards. Growing amounts of data show the benefits of sustainability benchmarking. It makes businesses more resilient to supply shocks and promotes industry in developing nations.

In addition to helping companies minimize risk, sustainable procurement programs can improve transparency into suppliers’ practices and improve collaboration between buyers and suppliers. By enhancing transparency, companies can quickly assess and respond to crises. Since 2007, the Stanford Value Chain Innovation Initiative has been measuring the attitudes of companies toward sustainable procurement. It includes surveys of suppliers and buyers from around the world.

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