According to a February 2023 report by McKinsey and NielsenIQ, products marketed with sustainability messaging achieved 28% growth over the previous five years. Products without that messaging grew only 20% over the same time period. And in a 2021 survey, 85% of global consumers had become more environmentally-conscious in their buying habits over the previous five years.
Sustainability initiatives are more important than ever to successful brands – and not just so they can put “eco-friendly” labels on their products. Sustainable supply chain practices offer plenty of other benefits: they help you optimize your operations, improve productivity and save time and money.
Efforts to improve supply chain sustainability also help you pull new investment money into your business. Deloitte reports that Environmental, Social and Governance (ESG)-mandated investments could make up 50% of all managed assets in the U.S. by 2025.
But how do you turn your current supply chain into a more sustainable operation? It can be a complex and overwhelming task, but there are some steps you can take to get a clear picture of where you are now and how to get to an eco-friendlier place.
Evaluate Your Supply Chain
There are a lot of moving parts to your supply chain, including suppliers and vendors for your components, packaging and transportation. Even if you’ve taken strong steps toward sustainability in your own organization, partners who aren’t on board with those policies can still keep your overall carbon footprint high – and hurt your brand’s reputation among consumers.
This is especially problematic if you or your vendors source raw materials or components from emerging markets or countries with lax environmental regulations. But there are ways you can improve supply chain sustainability across the board, such as:
- Setting and tracking your organization’s ongoing and long-term sustainability goals.
- Pledging to only work with vendors who also have environmental goals and standards.
- Ensuring your vendors – all the way to lower-tier vendors supplying raw materials – can keep up with production capacity without resorting to harmful practices (like dumping toxins they lack the capacity to deal with responsibly).
You should also take a close look at where your own weak spots are in terms of sustainability. Some stages of a product’s life cycle may produce more emissions than others, and these points of added emissions may be different from product to product. For example, in food production, the biggest culprit may be transportation across the country from the point of origin. Finding ways to optimize or create more sustainable practices in these areas (such as shipping from distribution centers closer to a product’s final destination) can have a significant impact.
Optimize Your Inventory Management
If your supply chain isn’t as efficient as it should be, you may have issues like out-of-stock items in one distribution center or retail location and overstock in another. Having to shuffle products where they’re needed (especially when out of stock and trying to satisfy impatient customers) adds to your overall carbon footprint. You may also find yourself needing bigger warehouses to hold more inventory for fear of running into these stocking struggles.
You can reduce or solve this problem by improving your demand forecasting and inventory management through the use of software or partnering with a 3PL who can handle that for you. With more accurate forecasts, you’ll be able to improve supply chain sustainability by maintaining smaller warehouses with the right inventory in each region and optimize inventory flow to reduce transportation miles.
Improve and Recycle Your Packaging
The problem with plastic isn’t news to most – everyone understands that plastic doesn’t break down, and mountains of it end up in landfills every year. What’s less widely known is that many plastics either can’t be recycled or have to be melted down only with the same types of plastic – meaning that a lot of it goes to the landfill even if conscientious consumers put it in their recycling bin.
A big step toward supply chain sustainability could be just switching your operation over to biodegradable or reusable packaging materials. Not only will you reduce the amount of plastic ending up at the dump or in the ocean, but you’ll also reduce emissions caused by plastic being produced in the first place.
Adopting ecologically friendly practices isn’t just important for brand reputation and customer retention – it’s also the right thing to do. By starting with an evaluation of your supply chain and identifying smaller first steps, you can create a more sustainable supply chain without a lot of upheaval in your organization.