Why Are Enterprises Investing in Sustainable Supply Chains? 

Today’s marketplace demands businesses invest in supply chain sustainability — your customers and investors are watching. 

Key Takeaways 

  • Customers want to buy from brands that embrace sustainability and transparency 
  • Companies with sustainable supply chains are more attractive to investors 
  • Investment in supply chain sustainability creates business benefits, including higher ROI, supply chain continuity, and brand safety 
  • A digital supply chain platform helps build sustainability across the enterprise 

Businesses that prioritize supply chain sustainability realize many different benefits, irrespective of their industry. That’s why a recent study found that 81% of supply chain executives say their company has placed additional focus on sustainability in the past three years. 

Investor priorities, growing consumer demand for sustainability and transparency, and increased ROI are just some of the reasons enterprises see investing in supply chain sustainability as a necessity today. Achieving a sustainable supply chain takes a holistic approach that addresses environmental, social, legal, and economic matters throughout the entire supply chain with business practices that are good for the planet and its people while supporting business growth.  

The stakes have never been higher, but while creating a robust and workable sustainability model takes planning, a sustainable supply chain is imperative for business success today. Let’s look at why more and more businesses are making the commitment to invest in supply chain sustainability and the benefits it brings to the entire enterprise.

Consumers Demand Sustainability and Transparency 

As online shopping increased due to COVID-19, 45% of shoppers began focusing on sustainability when making purchasing decisions, and that is likely to continue and expand. Consumers also demand transparency as mistrust of brands has become a cultural touchpoint among younger generations.  

  • Transparency is of prime importance to 86% of consumers. Transparency also engenders loyalty, and companies who offer it will see buyers who are more forgiving of less-than-satisfactory experiences and not so quick to leave if there’s a company crisis. 
  • Social media has put a spotlight on business accountability for 81%. For 86%, if a company’s social media account doesn’t offer transparency, they will shop with a competitor
  • Most (73%) will pay more for products when total transparency is guaranteed.  

What is transparency, according to the consumer? It is openness, clarity, honesty, authenticity, integrity, and communication. The expectation that they will get these from the companies they patronize continues to grow, and companies that ignore the necessity of transparency risk losing business and slowing growth.

Companies with Sustainable Supply Chains Are More Attractive to Investors 

Customers are important to business, but so is capital investment. More than 85% of investment managers think businesses that do not invest in supply chain sustainability will see their share prices fall. Worse, 84% believe that companies with supply chain sustainability problems and low environmental, social and governance (ESG) standards pose an investment risk.  

Today’s investors (97%) take supply chain sustainability standards into consideration when they make investment decisions. ESG standards are an important part of 89% of investment conversations and will be a key factor in investment decisions in the next decade.

Investment in Supply Chain Sustainability Creates Business Benefits 

Aside from meeting essential consumer and investor demands, there’s a solid business case for investing in a sustainable supply chain. There’s no doubt it takes commitment, time, money, and resources, but your initiatives can pay off significantly in terms of a reduced environmental impact, which is an area your supply chain greatly impacts. Other benefits include: 

  • Boosted ROI: The return on investment for a sustainability initiative includes more than just money. While 67% of business leaders say they saved money thanks to making their supply chains more efficient and sustainable, 59% also realized reputational gains as well as higher opinions of their leadership. Simply helping suppliers reduce their emissions meant a total savings of $12.4 billion in 2016 alone.  
    It’s not just about saving money. Companies that integrate social impact, according to research, see as much as a 20% increase in sales, up to a 6% increase in share price, and a 13% increase in productivity. 
  • Supply continuity: Sustainability investment means scrutiny and vetting of suppliers. In turn, this helps build a more diverse and robust supply chain that can better weather disruptions
  • Reputational protection: A key case in point that highlights the importance of supply chain sustainability is Apple. Scrutiny of their supply chain in relation to the use of labor working under abusive conditions caused them to lose 27 places on the Reputational Quotient Poll between 2016 and 2017. This led, in 2019, to the company’s worst-performing quarter since 2016 and a loss of market share in both China and Japan.  

Investing in supply chain sustainability takes more than just planning. Building a supply chain that makes a competitive difference requires data intelligence that supports economic, environmental, and social responsibility. You need the right digital platform to achieve this. 

A Digital Supply Chain Platform Builds and Supports Sustainability Across the Enterprise 

Collecting and analyzing data effectively via manual processes is almost impossible, and data is what you need for sustainable supply chain planning and management. A digital platform and technologies like artificial intelligence (AI) can identify the most cost-effective ways to implement your initiatives, empower decision-making, and improve customer satisfaction by providing transparency. 

Through a digital platform, you can ensure that your vendors and suppliers are adhering to proper standards for labor, safety, and security; reducing energy consumption; and promoting efficient use of raw materials. Your platform should include digital solutions for traceability and corporate social responsibility (CSR) as well as providing the insight you need to achieve your sustainability goals while improving business performance. 

Reach Your Sustainability Objectives with Logility 

The Logility® Digital Supply Chain Platform accelerates the sustainable digital supply chain by leveraging data-driven technology such as advanced analytics and AI. These technologies empower your business with greater visibility that allows accurate planning, accelerated cycle times, improved precision, and increased operating performance, all while meeting your transparency goals. 

We help global enterprises sense and respond to changing market dynamics and more profitably manage their businesses to become more resilient and sustainable. It’s time for a digital, sustainable supply chain. Reach out to our specialists today to discuss our supply chain solutions

Mark Burstein

Written by

Mark Burstein

Short bio

EVP, Industry Principal, Logility Mark Burstein is a seasoned expert in fashion and retail working with the world’s most renowned brands. He is active in industry organizations including the National Retail Federation (NRF) and sits on the board of the American Apparel & Footwear Association (AAFA), the California Fashion Association and Goodwill Industries. He earned an MBA from Emory University and a bachelor’s degree in Finance from the University of Florida. Supply Chain Brief