Supply chain sustainability refers to the management of environmental, social, and governance impacts throughout your goods and logistics lifecycle.
As Harvard Business Review puts it, “The aim is to create a cascade of sustainable practices that flows smoothly throughout the supply chain, or, as we prefer to call it, the supply network.”
Organizations all around the world are taking steps throughout all of their business processes to be more sustainable, whether that be through using more environmentally packaging, to ensuring employee welfare. It’s a natural extension as many of us are looking to make more sustainable choices in our day-to-day lives, from choosing goods that have a lower carbon footprint, to protecting our own, and others’, mental and physical wellbeing.
Today’s consumers are increasingly making more ethical choices with their purchases. Single-use products and cheap but poor-quality goods are rapidly decreasing in demand. More consumers are choosing goods that they know have come from a company that prioritizes employee welfare (i.e. no more sweatshops) and has an environmental responsibility. However, these goods still need to be delivered at speed and at a reasonable price point. So, it’s up to manufacturers and retailers to strike a balance in their supply chains.
Supply chain sustainability can be broken down into three categories: environmental, social, and governance (ESG). There are benefits to be seen in each of these areas:
Environmental – Reduced environmental impact: Not only do you get the feel-good factor of knowing that you’re helping the planet, reducing the environmental impact of your operations can lead to significant cost savings. You can make smart decisions, such as selecting recycled and recyclable packaging, or imposing speed limits on your vehicles. If you reduce waste, you can save costs. By properly servicing and maintaining equipment and machinery, you make them more efficient and you’re more likely to see returns as you’ll spend less on energy, fuel and even on replacing or repairing parts.
Social – Employee wellbeing: Quite simply, if your employees are happy, they will be more productive. By ensuing fair working conditions, good pay and emotional support, you can drive a positive company culture. That in turn will result in reduced absenteeism and reduced staff turnover with higher retention rates, which will cost your company less and make sure that you retain institutional knowledge built up by your employees which can deliver further benefits.
Governance – Compliance with regulation: Every business process should be established on the grounds of proper governance. Without it, you could risk breaking the law and incurring legal punishment and federal fines. Ensuring proper sourcing, manufacturing, and distribution of products across your supply chain will protect you from any breaches.
Overall brand reputation - If you can prove that your organization is meeting all these ESG benefits, you can protect and build your brand reputation. This offer up the potential for new partnerships as other organizations who are making efforts to ensure their ESG operations are up to scratch will want to work with business’s whose values align with their own. It can also help you win more new business. Potential clients will see that you are taking steps to protect and maintain both your business and the planet.
According to a recent report by McKinsey, “Sustainability has become a top priority on the CEO agenda, making the supply chain an integral part of managing an organisation’s carbon footprint.” Traditional business considerations include a higher cost of doing business and a lack of agreement from suppliers. But if you broaden your lens, you can have wider, and arguably more dangerous issues, including:
Environmental impact – McKinsey found that 90% of companies’ impact on the environment comes from supply chains. Energy consumption and carbon emissions can lead to issues including water pollution and hazardous air emissions, which organizations now have a responsibility to limit according to the United Nations.
Shortages of raw materials – Overmining and overharvesting can lead to issues in sourcing and procurement, which in turn leads to delays and increased prices. This has been exacerbated by the global pandemic, so organizations need to be careful with their resource planning and work with suppliers in a sustainable manner
Workforce health and safety – All organizations have a corporate social responsibility to protect the wellbeing of their employees. You need to minimize work-related injury or ill health by providing optimal working conditions. Without proper risk assessments and policy regulation, you could be risking your teams’ health.
Bribery and corruption – In line with proper governance, all business should be carried out fairly. Audits and established processes avoid employees from making gains during dealings with suppliers and customers, such as kickbacks. Bribery and corruption in the supply chain can lead to misallocation of resources, poorly made products and other detrimental effects.
Use process models to manage your supply chain – By creating a process model of every point in your supply chain, you can establish a framework of excellence and best practice for sustainable and ESG management. A modeled process also provides complete visibility so you can always assess and improve your operations to keep up with the latest trends.
Automate supply chain tasks – Automating tasks in your supply chain ensures that processes do not deviate away from the standards you have set. So, you can rest assured that your best practices are being followed to the T.
Set sustainability targets – Having a goal to work towards will help your business to make a real impact. Think about what you want to achieve and set goals that will have a wide impact. While they may seem unattainable, they will have a trickle-down effect and help to inform decision-making at all points in the organization, so everyone is working towards the same goal.
Work with suppliers – By collaborating with like-minded organizations, you can be sure that points in the supply chain outside of your control are still sustainable, and you in turn can pass these benefits on.
Bunzl Retail Supplies, an organization that provides and distributes goods not for resale, is using Bizagi Sites to enable sustainability and environmental awareness for its customers. Bunzl is helping retailers understand the composition and recyclability of the packaging and products they provide, so retailers can make informed decisions when purchasing goods.
To achieve this, Bunzl created a supplier portal using Bizagi Sites, which is being used by over 400 of their global suppliers to enter the breakdown of materials through forms which link to a Bizagi-hosted database.
To save time, suppliers can query the Bizagi database to retrieve information on products that have previously been entered. This data is then automatically passed to the Bunzl procurement team for approval.
The supplier portal is designed to look and act as an external-facing website and is used to host sustainability information and legislation along with FAQs and user guides of how to fill out the forms and make informed decisions about their environmental footprint.
If you would like to know more about how Bunzl Retail Suppllies are enabling their workforce using Bizagi, catch up with their recent webinar on-demand: Automation for Product Lifecycle Management with Bunzl. Hear from Dan Harrison, System Technical Lead at Bunzl as he shares:
• The challenges of supply chain management and the opportunities to solve them using digital process automation • How and why Bunzl automated their Product Lifecycle Management processes using Bizagi • The benefits to both employees and customers from automating the Stock Price Enquiry process
