How Sustainability Drives Supply Chain Resilience
If COVID-19 has shown us anything, it’s the vulnerabilities and fragilities of global supply chains. Since day one, news headlines have been filled with how broken some of the largest companies' supply chains were. Nobody expected COVID to come and sweep everyone off the ground. From PPE to food supply shortages, businesses were forced to adapt to a rapidly changing landscape.
The pandemic may be an extreme example, but disruptions to the supply chain aren’t a new concept. Natural disasters, political instability, and other unforeseen events have long threatened supply chain stability. So how do we build a supply chain that weathers these challenges? Sustainability.
This blog will explore the concept of sustainability as a pathway to supply chain resilience, the benefits of integrating sustainability into the supply chain, and trends to look out for.
The Path to Supply Chain Resilience
The concept of a sustainable supply chain emerged in the early 90s, with the Forest Stewardship Council (FSC) promoting responsible forest management. In the early 2000s, "green supply chain management" emerged to reduce the environmental impact of supply chain operations. Companies increasingly recognize the importance of sustainability in building resilient supply chains.
There are many ways sustainability can help build a resilient supply chain, including:
Risk Mitigation Through Diversified Sourcing
Sustainable practices can help mitigate supply chain risks by diversifying your sourcing channels. For example, the COVID-19 pandemic exposed the dangers of relying on a single area for production, as disruptions in China affected the global supply chain. By diversifying sourcing and production, you can better adapt to disruptions and minimize the impact on your operations.
According to an MIT Sloan Management Review survey, companies implementing sustainability practices were more likely to report fewer disruptions and less severe impacts from those disruptions.
Environmental and Social Impacts
Sustainable practices can reduce the environmental impact of supply chain operations (such as greenhouse gas emissions, water consumption, and waste generation), benefiting the environment, reducing costs, and increasing efficiency. For example, Walmart's sustainability program has helped the company reduce greenhouse gas emissions by 28% and save over $1 billion in energy costs.
Sustainable practices can also improve social well-being by promoting ethical and responsible business practices. For example, ensuring fair labor practices and safe working conditions can improve worker satisfaction and reduce the risk of labor disputes or legal action. Similarly, promoting diversity and inclusion can improve employee morale and attract a wider talent pool.
The Intersection of Sustainability and Supply Chain Resilience
Due to sustainability being a mainstream issue in stakeholders' meeting rooms, many trends and predictions are emerging at the intersection of sustainability and supply chain resilience. Here are three prominent examples:
Circular Economy
Imagine an economy that is restorative and regenerative by design, aiming to keep products, components, and materials at their highest utility and value. The circular economy concept has been making waves in many European countries, and early data shows some promising results.
A recent study estimates that applying circular economy principles across the EU economy can increase EU GDP by an additional 0.5% by 2030 and create around 700 000 new jobs.
Digitalization and Use of Technology
The digitalization of supply chains will continue accelerating and be widely accepted, even by small and medium businesses. Technologies like artificial intelligence, blockchain, and IoT will become mainstream. These tools will enable companies to optimize their operations, reduce waste and inefficiencies, and promote sustainability and resilience in their supply chains.
Resilience Planning
COVID taught us to prepare for the best and plan for the worst. Today, many companies focus on resilience planning to ensure their supply chains can withstand and recover from disruptions. Resilience planning involves:
- Identifying potential risks and vulnerabilities.
- Developing contingency plans.
- Building resilience into the supply chain strategy.
Building a Resilient Supply Chain is a Long Game!
As these trends and predictions continue to come to life, businesses that can adapt quickly will be better positioned to create a more sustainable and resilient world for all.
Ziing's logistics solutions can bring you one step closer to a resilient supply chain. We work around the clock with a national network of knowledgeable employees and service partners to offer the sustainable logistic solution you’ve been searching for.
With our technology-first approach and fool-proof ecosystem, your supply chain can withstand disruptions, and your customers can receive their deliveries at a competitive price.
Want to see how our market-leading logistics solutions can help build supply chain resilience? Contact our sales team here.
