Environmental sustainability in the supply chain is top of mind for consumers, and a brand that fails to hold itself responsible risks reputational damage that will affect the bottom line.
Sound sustainability and supply chain management processes mean that organizations can not only reduce their carbon footprint but optimize end-to-end operations for cost savings and increased profitability while satisfying consumers at the same time.
There are six goals for environmental supply chain sustainability:
- Reducing energy consumption
- Improving waste
- Tracing and recovering products
- Using recycled content
- Efficiently using raw materials
- Utilizing return and restore
Through the intelligent use of technology, organizations can meet these goals and reduce the environmental impact of their supply chains to improve environmental stewardship, reduce damage to the planet, and ensure that sourcing is done sustainably. Let’s take a look at the strategy to achieve environmental sustainability in the supply chain, the tools available to help, and the capabilities that will help companies achieve these goals.
The Supply Chain and Environmental Sustainability
The news about climate change gets worse every day. An unfortunate truth is that the supply chain of the typical consumer company creates greater environmental costs than its own operations. They account for more than 80% of greenhouse gas emissions and 90% of the consequences on the air, land, water, geological resources, and biodiversity.
By focusing on making their supply chains more sustainable, companies can reduce their impact on the environment and improve the overall ethics of their operations.
Technology and the Green Supply Chain
GSCM includes green initiatives to accomplish the ultimate goals: green materials, green production, reverse logistics, closed-loop supply chains, and green procurement and returns.
GSCM can best be accomplished through the use of technology. Digital solutions that utilize artificial intelligence bring important environmental benefits by increasing efficiency and cutting down energy consumption and emissions to improve supply chain sustainability.
How Technology Can Improve Supply Chain Environmental Sustainability
The first step to reducing your carbon footprint is to conduct an environmental audit of your supply chain. Look at how your business operates as well as your partners’.
With artificial intelligence (AI), you can more accurately forecast demand and optimize inventory through deeper insight that detects shortages, disruptions, and other challenges while allowing you to quickly simulate and evaluate different scenarios.
The use of AI-fueled solutions leads to continuous process improvement in the supply chain. Solid analytics and reporting work with these technologies to make incremental changes to environmental sustainability that reduce waste, speed delivery, and improve quality.
Carbon Footprint and Energy Reduction
To reduce your carbon footprint, and therefore the use of energy, you might want to order larger shipments less frequently or assess whether it really is cheaper to source overseas. Local sourcing might seem more expensive, but local suppliers may be more flexible, require shorter lead times, and have lower transportation costs as well as a smaller carbon footprint.
By using predictive analytics, you can forecast when goods will arrive and where to consolidate shipments from multiple vendors to multiple destinations so you use containers, trailers, and transportation more efficiently to reduce the greenhouse gasses generated. It’s predicted that AI can reduce global greenhouse gas emissions by 4% by 2030, which is 2.4 billion tons of CO2 emissions.
Renew, Reuse, and Restore to Reduce Waste
Reverse logistics can be seen as the ultimate recycling process, managing goods from the point of consumption to their point of origin. A sound reverse logistics strategy means that customer returns become either waste or a new item, with the emphasis on recycling or reusing whenever possible.
This closed-loop system can be used to reduce waste as well. For example, the Sierra Nevada Brewing company composts its waste into fertilizer for its on-site gardens, diverting 99.8% of its waste from going into landfills.
By re-using or re-building returned items or items at end of life, fewer end up in landfills. This emphasizes the importance of life cycle planning to improve demand planning in every part of the supply chain and support the environmentally conscious options today’s consumers demand.
Use Recycled Materials for Less Waste
Manufacturers have begun meeting customer sustainability demands by re-using their waste. For example, BMW creates its cars from 85% recycled materials.
Efficiently Use Raw Materials
Materials production uses a large amount of energy, accounting for 25% of all energy and process-related CO2 emissions. This process must be made more efficient through better supply planning and optimization, which leads not only to efficient materials production on the supplier end but also increases profitability for you through improved inventory management.
With real visibility into customer demands and product and material requirements, there’s better information sharing and collaboration that can affect material production and consumption. Manufacturing is made more efficient and market demand is satisfied.
Build Environmental Sustainability into your Supply Chain with Logility
Logility delivers a digital, sustainable supply chain to power the resilient enterprise.
We combine volumetric and financial analysis with a collaborative workflow to create a single, flexible planning and decision-support system that changes the game for your organization.
You can drive more accurate demand plans, target markets, and product life cycles all while improving longer-term prediction for new products, phase-outs, short life cycle products, and promotions. Have the ability to visualize the qualities of different business scenarios to evaluate both risks and opportunities and gain new insights that increase forecast accuracy for strategies involving demand, inventory, and supply to meet social and environmental sustainability goals.