The global supply chain, and the issues that plague it, have been thrust under the spotlight in recent years. Headlines were dominated by pandemic-era supply chain chaos, with product and staff shortages, closed borders, and eye-watering transportation prices. The market has calmed, and it is tempting to suggest this is in the past; however, the flaws and structural issues exposed by recent surges in demand and limits in capacity still remain.
As a result, scrutiny of the supply chain sector is at an all-time high. This now often includes pressure to consider the sustainability of their practices. Businesses must consider the environmental impact of their supply chains, which can often be one of the least sustainable parts of their operations. Across the logistics industry, we are seeing a range of solutions being trialled to combat this, such as the movement of production closer to home, stricter regulations and the use of sustainable materials.
While there are many options, most are costly, time-consuming, and sometimes largely ineffective. A digital approach to the supply chain can help reduce a business’s environmental impact.
It’s something few will want to admit, but when it comes to the manufacturing process, businesses are often ignorant of the exact details of the processes themselves. So, while a business might look ESG compliant on paper, the reality can be drastically different.
For example, the factory processes for creating denim require a large amount of water. This results in large quantities of contaminated water that, on paper, is disposed of in a way that doesn’t harm the environment. However, some manufacturers fail to follow guidelines or outsource necessary wet treatments to unqualified local firms, leading to harmful contaminants being introduced into the local environment.
The obvious response to a situation such as this is an increased ‘boots on the ground presence to ensure proper process and compliance. However, the majority of manufacturing is outsourced to distant locations like China. This means regular in-person monitoring is costly and has a notable environmental impact due to frequent travel. One-off site visits give a ‘point-in-time’ perspective, but there’s nothing to stop suppliers from showcasing an approved process during the visit and then returning to their normal, non-compliant process after the visit. When done well, digital visibility is one solution to this environmental issue. Brands need complete visibility of where their products are being made,
and ‘live’ final inspection information before products leave factories. Software and hardware that can give live access to reports and dashboards that can be sliced and diced according to requirements are essential. They need to see the product, factory, vendor, location, date, category, and more if they are to meet the sustainability challenge.
Increasingly, this is becoming the most effective way of managing suppliers at a distance in a way that will meet the ESG requirements of all stakeholders. In combination with high-level guidance on responsible sourcing strategy, specific compliance audits of partners and a broad supply chain risk review, technology is the key to providing a sustainable supply chain for
Real-time data and digital visibility present the opportunity for transparency across the supply chain – the carbon footprint, from sourcing all the way to final sale. Digital visibility greatly aids our understanding of the environmental impact of the supply chain. Information is a powerful tool to enable sound business decisions, help educate consumers and effect real change.
For example, clear real-time emissions data can help inform a business’s approach to their supply chain – what are the more sustainable transportation options? Where should I source my materials? How can I reduce my emissions? Clear data leads to informed decisions that look ahead to the future. Our industry often focuses on the short term, concerned with getting the fastest results and best deals. However, the perspective that digital visibility provides allows for a bigger-picture approach to the supply chain and reductions in environmental impact.
Digital and More
Concerns about supply chain sustainability are not going to go away; investors, brands and consumers will continue to ask questions and apply pressure on businesses that appear unconcerned. Increasingly, digital is becoming the most reliable way to manage suppliers at a distance in a way that will meet sustainability requirements.
Everyone is more aware of the impact of what they are doing. But the sustainability risk will remain until brands invest in the technology and guidance to meet these challenges. Businesses must understand that for business margins and the environment, the price of inaction is too high to pay.