How to develop a sustainable supply chain?
We are all familiar with the stereotype of large corporations ruthlessly seeking to increase their profits. Although this problem has not ceased to exist, there is no longer any room for short-termism in modern business. The largest players on the market are consistently building their powerhouses to the rhythm of sustainability, i.e. in such a way as to minimise their negative impact on the natural, social and economic environment in the long term.
Sustainability is a must
Not so long ago, sustainability in various sectors of business and industry was a novelty, a trend that was worth following for our company to be perceived as modern, responsible and conscious. Today, development in line with these standards is no longer a choice but a necessity.
The widespread knowledge about the impact of large corporations on the degradation of the environment makes the largest corporations in the world very carefully select their partners and suppliers, and the criterion for selection is precisely the observance of appropriate procedures.
Particular elements of the supply chain are not perceived individually, but each supplier becomes, in a way, the responsibility of the buyer, and on subsequent rungs of the business ladder, everyone follows the same schema, cooperating with companies that respect sustainable supply chain development standards.
As a result, a network of conscious practices is created, and if we want to develop among the most important players on the market, there is nothing left to do but to implement modern solutions in our structures. But how to do it?
Sustainable Supply Chain
Luckily, catching up with standards of sustainability is becoming much easier, thanks to the advancements in digital technologies.
Software helps supply chain companies deal with a number of issues. Take empty (or half-empty) runs as an example. Digital technologies, such as real-time visibility, allow transport companies to significantly reduce the amount of empty runs, which directly leads to the reduction of CO2 emissions.
Green supply chain also means green logistics and warehouse management. But how can we actually make it green? Automation and digital analytics lead to shorter time spent by transport units at the docks, ports and distribution centers, which significantly contributes to the lower energy consumption. Again, software is essential to hit those sustainability targets and create sustainable supply chain tools.
There are countless examples of digital technologies allowing supply chain companies to become greener. At times we might think that a certain kind of innovation is not revolutionary enough and the resulting change is too small. But sometimes even the tiniest improvements can lead to massive savings, when you consider the scale of a company’s operations and its fleet size.
A good example? Smart steaming! Smart steaming is a strategy by which the vessel speed is dynamically optimised based on the real-time state of the sea, weather and the situation at the destination port – all of it to reduce fuel consumption. And even though the amount of saved fuel by an individual vessel might not be spectacular, when this innovation is applied to a fleet of hundreds of thousands of vessels, it really makes an enormous difference.
When we already have knowledge and awareness of what a green supply chain can do and we want to implement these standards in our company, technology comes to our aid.
Thanks to it, we can develop in the field of zero waste, constantly monitoring the indicators of raw materials used, control the emission of pollutants, reduce the amount of paper used, simplify administration, collect and analyse data on the entire supply chain and educate our suppliers and partners on responsible procedures.
Digital solutions have a huge impact on optimising almost every stage in the supply chain, so it makes sense to use them as often as possible.
Knowledge is power
Yes, yes, this phrase sounds like a truism, but let’s think about it – how can we streamline processes, make changes or improve the functioning of our company without relevant data about the current state of affairs? How can we look for solutions when we don’t know the source of the problem?
Thousands of elements interact in the supply chain. Every stage of transport and logistics involves a huge number of operations, each of which generates profits, but also losses, for example in the form of emissions or unnecessary tasks that reduce the efficiency and well-being of employees.
It’s frightening how many companies don’t know the details of their supply chains, especially as today’s organisations’ operations are more extensive and global than ever before. Knowledge of the processes in a company is the basis and starting point for making improvements and with the help of digital solutions, we can obtain it in several ways.
Audits, or how our company is doing
An audit is a basic tool of verification and control of processes in our organisation, giving us an overall view of its functioning. In an extended supply chain, each of the entities conducts or at least should conduct them. This allows us to accumulate tons of valuable knowledge, but the problem is its flow.
Anyone who has watched films or series about serial killers in America in the 1960s or 1970s may have noticed a certain absurdity in the investigations carried out at that time. Namely, the police in different states did not exchange knowledge among themselves. As a result, a criminal only needed to cross a state border for the current investigation to practically cease, because law enforcement in another state had no access to the information gathered and developed by officers at the crime scene.
Of course, in the case of more serious crimes, the case could be taken over by federal officers, but FBI agents did not always evoke positive feelings from local police, who were reluctant to share their knowledge with them. The stifling flow of information between the various units resulted in the case not being solved and further damage caused by the elusive criminal.
In the case of audits, the potential consequences may not be as dramatic, but the principle is similar – the subsequent companies in the chain do not share it with each other or with the buyer, and the faulty practices still exist and cause damage.
Modern supply chain software allows you to greatly simplify the entire audit process and systematise the information, which can then be shared with partners.
Is a company generating too much raw material waste? Are working conditions unsuitable for employees somewhere? Does a particular supplier emit too many greenhouse gases or make inefficient transports? Thanks to technology, we will know this as soon as possible so that we can react to potential risks.
Supply chain mapping
Supply chain mapping is not a new idea. Back in the 19th century, when the management of raw material transportation grew to unprecedented proportions due to colonisation, rulers, entrepreneurs and companies created such maps.
They made it possible to determine the course of trade routes, the most important suppliers, the places of receipt and sale, and which raw materials were involved. The disadvantage of such maps was their comprehensive and static nature – the document showed the status of our chain only at the time of its creation; every change of route, a new partner or threat of pirate attack or armed conflict made the map outdated.
Constantly correcting it was complicated because the flow of information was slow, and it was unfeasible to provide everyone involved with the latest version of the map at the same time. Ah, if only 19th-century entrepreneurs had the technology we have now.
After all, we don’t live in the 19th century…
Today, the scale and complexity of the supply chain are incomparably greater. The vast amount of information we have to analyse and take into account would not be possible to process without appropriate digital solutions such as cloud based supply chain management software.
We can create accurate maps, showing every supplier, every receiving and selling point, every process, every transport, in real-time, because we can update them in a highly automated way. What’s more, everyone involved in our supply chain has access to the map and can follow the process they are interested in at any time, so they can see if there is a problem at any stage.
At the same time, information about suppliers can also include whether they operate to sustainability standards, so we can support them in implementing appropriate practices. IoT (Internet of Things) technology is very often used to collect this data, i.e. devices that constantly monitor fuel consumption or emissions and transfer them to a database in real-time.
Modern supply chain maps are important for optimising transport and logistics, increasing visibility and developing sustainable supply chain business.
Risk under control
Risk assessment in multi-component industries such as transport and logistics is an absolute must. Analysing factors such as the possibility of natural disasters, financial crises, social and political issues is essential to minimise damage and select the best solutions from a business, environmental and safety perspective.
Processing the information coming from each partner at different stages of transport in supply chains as complex as today’s would be impossible without the support of appropriate technology. Modern systems work with huge amounts of data and automation makes procedures simpler, clearer and, above all, effective.
Supply chain information management programs can accurately predict which elements of an operation are most sensitive, allowing weaknesses to be identified and potential risks to be addressed at the earliest possible stage.
Carbon footprint, the main market antagonist
Reducing the carbon footprint, or the sum of greenhouse gases generated is one of the most important tasks facing companies aiming to aiming to create sustainable supply chain. Counting and reducing this indicator is key to stopping environmental degradation.
Moreover, in today’s business environment, the carbon footprint is one of the most important criteria for companies to join collaborations or tenders, as major companies strictly adhere to standards and restrictions in this area.
Here again, technology comes to the rescue, as dedicated software can not only count the carbon footprint of the entire supply chain and each company but can also predict how much greenhouse gas will be generated in the future. Such solutions allow us to monitor the state of carbon emissions in real-time and react where necessary and develop preventative solutions.
Support and cooperation
Owners or investors of large, modern companies today have all the knowledge and tools they need to grow their businesses in the most sustainable way. Technology companies are racing to develop the solutions needed to do this because in a time of climate change and social inequality it is not just about profit, but about creating a market.
It is up to large organisations to ensure that their partners and suppliers operate to modern standards, but many of them are located in developing economies where these procedures are not yet as strongly implemented.
Sharing knowledge and best practice, through educational platforms, training and instruction, which will enable smaller businesses to improve their businesses, is hugely important in this case. This education and knowledge sharing throughout the supply chain help to build an interconnected network of sustainable practices and shape a modern, responsible market.