With 2020 on the horizon, supply chain leaders should be looking into immediate steps to make their supply chain more sustainable in the coming year, maintain analysts at Blume Global.
They note that a recent McKinsey report, that indicates that more than 90 percent of the damage caused to the environment by consumer-packaged goods (CPG) comes from the supply chain – including 80 percent of greenhouse gas emissions.
While this news might have once shocked the public, today, increasing environmental awareness continues to guide the decision-making of consumers, meaning brands need to make sure that sustainability is a focus for the coming year.
In this exclusive interview Glenn Jones, GVP of Product Strategy at Blume Global, puts together a few key insights on why and how companies should upgrade supply chain technology to bolster sustainability in 2020.
Supply Chain Management Review: How can supply chain managers best predict and reduce environmental risk?
Glen Jones: Supply chain sustainability has impacts beyond whether a shipment arrives on time and public perception of the company. Introducing more ethical and sustainable supply chains improves regulatory compliance, enhances business branding and reputation, reduces waste and overhead, and reassures consumers of a company’s commitment to ethical environmental sourcing.
SCMR: Can you provide an example?
Jones: Yes. Consider issues like wildfires on the west coast of the U.S., rising sea levels, water scarcity or lower agricultural yields have a profound impact on consumers’ daily lives and business operations. They directly influence the efficiency, quality and speed of the supply chain, and supply chain technology helps predict these risks and allows supply chain managers to mitigate the impact and put contingency plans in place.
SCMR: How important is shipper involvement?
Jones: It’s absolutely key. Creating a purpose-driven supply chain will mean the seller/shipper has taken steps to improve its internal procurement and shipping processes to eliminate unproductive practices. That includes everything from optimizing shipping routes and eliminating empty miles, to upgrading trucks to reduce harmful emissions. A purpose-driven supply chain is optimized, efficient, effective and beneficial to the larger supply chain ecosystem.
SCMR: What about planning for growth?
Jones: As consumer demand increases, global supply chains grow and become more complex to meet this greater need for products, ingredients and raw materials, which in turn directly translates into increased environmental impact. Not limited to greenhouse gas emissions, environmental impacts include water scarcity, issues with land use, toxic waste, water pollution, deforestation, air quality and energy use.
SCMR: What advice do you have for incorporating sustainable practices in larger supply chain trends?
Jones: A focus on renewable energy, the increased use of recycled materials during production, and the introduction of electric vehicles are just some initiatives companies adopt to cut back on energy use. Amazon, for example, now allows customers to select one day per week to receive deliveries, and it has already placed a large order for electric vans. These efforts are designed to reduce greenhouse gas emissions that certainly increased, originally, due to the company’s consistent one-day delivery services.
SCMR: Anything else you care to add?
Jones: Advanced analytics can even update routes in real-time by taking into account congestion and other relevant data. Until carriers completely move to electric and other smart vehicles, route optimization is one of the best ways to reduce the environmental impact of transportation and distribution.
SCMR: Finally, who stands to gain the most benefit from these strategies?
Jones: “Despite carrier motivations to be more environmentally conscious, these changes guarantee an efficient supply chain that will better benefit the company, it’s employees, and customers. Food producer Nestle has responded to the effects of climate change on the supply chain, and by 2020 stated it will use only 100 percent responsibly-sourced palm oil and cut ties with companies that don’t align with their policies. It will also utilize satellite technology to confirm no deforestation is taking place in its supply chain. Whether or not these actions lead to cost savings, a forward-looking supply chain strategy combined with the right technology solutions result in more sustainable, responsible and ethical supply chains — and that’s good for everyone.”
About the Author
Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]