In the complex web of global commerce, supply chain sustainability has shifted from a practice preferred by environmentally conscious companies to a strategic imperative for all businesses. Companies can adopt certain environmental, social, and economic standards from the travel, transportation, and logistics industry and beyond to build resilience, care for communities and the planet, and improve the bottom line.
This guide explains sustainability in supply chains, with a close look at the practices and value of a
sustainable approach to business.
What is a Sustainable Supply Chain?
A sustainable supply chain is a product creation network that considers the impact of sourcing, production, logistics, sales, and distribution on the environment, economy, and human beings. The practice of supply chain sustainability makes an effort to determine and use socially, economically, and ecologically responsible practices, focusing on improving agility and resilience.
Several practices are necessary to transform a traditional supply chain into one that is sustainable, and they include the following:
- Environmental Standards: The ecological component of sustainability is often the first that comes to mind. It centers around responsible resource management, respecting the planet and the humans and animals that live within it. The efforts include preventing deforestation, limiting greenhouse gas emissions, eliminating sources of pollution, supporting water security, and more.
- Social Standards: Sustainable supply chains focus on more than just the environment. They also care for individuals and communities. To that end, sustainability efforts seek to improve working conditions, opt for fair labor practices, and prioritize the health and safety of those involved in and impacted by the supply chain.
- Economic Standards: Economic sustainability is also a priority, as a healthy supply chain is financially stable and contributes positively to the overall economy. Economic sustainability includes reducing waste, streamlining processes to minimize costs, ensuring fair compensation for labor and goods, diversifying suppliers and sourcing to remain agile throughout various market conditions, and prioritizing long-term value over short-term profits.
- Visibility: Supply chain visibility is a critical component of sustainability as the ability to track and understand all aspects of sourcing, manufacturing, logistics, and distribution provides crucial data and insights to make informed and responsible decisions.
- Risk Management: A robust risk management solution is necessary to protect the supply chain from environmental, social, and economic harms and contribute to the well-being of society and the planet.
Importance of a Sustainable Supply Chain
- Improves Reputations: Making sustainability a top priority positions businesses as leaders in their field, earning other businesses' and consumers' trust and loyalty.
- Increases Efficiency: A sustainable supply chain grants more than peace of mind and a clear conscience. It is also great for businesses as sustainable measures help improve productivity and reduce the resources required to achieve the same results.
- Drives Cost Savings: Sustainable supply practices typically lead to lower energy consumption and waste generation, which translate to significant cost savings for businesses over the long term.
- Enhances Resilience: Compared to traditional supply chains, sustainable ones are better prepared to handle disruptions caused by resource scarcity, geopolitical events, and climate change.
- Conserves Resources: As the planet's resources are finite, sustainable practices like minimizing water use, using recycled materials, and optimizing logistics help ensure availability for future generations.
- Protects Ecosystems: Many traditional supply chain practices can harm fragile ecosystems, thwarting biodiversity and contributing to extinction of plants and animals. Supply chains can minimize damage, contribute to regeneration, and protect the planet through sustainable sourcing, responsible production, and ethical waste disposal.
- Supports Local Communities: As part of the socially responsible initiatives, sustainable supply chains engage with and empower local communities in proximity to their sources and production facilities, fostering development, improving livelihoods, and contributing to the well-being of society.
- Creates Opportunities for Profitable Partnerships: Environmental, economic, and social responsibility are a top priority across industries, leading more companies to work exclusively with those that also value sustainability. Advancing in this direction opens up opportunities to conduct business with other sustainable companies and take advantage of the agility, growth, and stability unlocked by sustainable supply chains.
Create a Sustainable Supply Chain with Encora
Encora has a long history of delivering exceptional software engineering and product engineering services across various tech-enabled industries, including travel, transportation, and logistics. Encora's team of software engineers is experienced in helping business leaders pave the way for optimization and digital transformation, which is why fast-growing tech companies partner with Encora to outsource product development and drive growth. We are deeply expert in the various disciplines, tools, and technologies that power the emerging economy, and this is one of the primary reasons that clients choose Encora over the many strategic alternatives that they have.
To create a sustainable supply chain, contact Encora today!
