Supply Chain Sustainability and Business Success

Stephen DeAngelis

November 18, 2019

Some people view sustainability efforts as tree hugging idealism and some business executives perceive sustainability efforts as wastes of money. Both views are short-sighted. Bloomberg reports a new analysis by University College London researchers concludes, “If the U.S. wants to extend economic growth, it should double down on cleaning up the environment and fighting climate change, which are fueling both jobs and revenue.”[1] Mark Maslin (@ProfMarkMaslin), a professor of geography and one of the authors behind the study, states, “Don’t listen to the political rhetoric. Just look at the data and be hard-nosed about it, and say, ‘Okay, if we’re going to support the economy and make it grow and have lots of employment, this is where I need to invest.'” According to the article, “Almost 9.5 million Americans, or about 4% of the workforce, are employed in a ‘green economy’ that generates $1.4 trillion in annual revenue, or about 7% of U.S. annual GDP.” You might be thinking: “So what? Our company doesn’t build or sell solar panels.” Christopher Martin (@cleantechchris) and Millicent Dent report all types of companies are profiting from pursuing sustainability. “Turns out,” they write, “it’s not just easy being green — it’s also profitable.”[2] They add, “It’s time to stop crediting corporate sustainability efforts as acts of altruism. For big business, protecting the environment often means padding the bottom line.”

The supply chain needs to be more sustainable

Kadir van Lohuizen (@mediakadir) reports, “The world generates at least 3.5 million tons of solid waste a day, 10 times the amount a century ago, according to World Bank researchers. If nothing is done, that figure will grow to 11 million tons by the end of the century, the researchers estimate.”[3] Waste is harming the environment and we are running out of options to deal with it. For years, rich companies shipped some of their waste to poorer countries. Bloomberg reports, “About 5.8 million tons of trash was exported between January and November last year, led by shipments from the U.S., Japan and Germany, according to Greenpeace. Now governments across Asia are saying no to the imports, which for decades fed mills that recycled waste plastic. As more and more waste came, the importing countries faced a mounting problem of how to deal with tainted garbage that couldn’t be easily recycled. … Social media have ensured public awareness of the problem in both developing countries and the wealthy nations that export the trash. That will make it increasingly difficult to export unwanted refuse.”[4] It will also bring unwanted attention to companies failing to address the garbage their products leave behind. The Bloomberg article notes efforts to deal with waste include burying it (i.e., in landfills), burning it, and recycling it. The article concludes, “Ultimately, the best solution is to not produce any rubbish that can’t be recycled.”

If waste isn’t a big enough environmental concern, companies are facing growing concerns over water and power usage as well as pollutants they spew into the atmosphere. Addressing environmental issues is essential for businesses hoping to thrive in the years ahead. Mike Hachtman, CEO of Relogistics, asserts, “The sustainable supply chain has become a vital — and ever more visible — element of social corporate responsibility.”[5] He adds, “A sustainable supply chain is about far more than the environment, though that’s where consumers might focus their attention. Sustainability is a confluence of social, ecological and economic environments. A sustainable supply chain must avoid compromising both the environment and the business itself.”

Fostering a sustainable supply chain

Hachtman suggests six steps a company can take to make its supply chain more sustainable. They are:

1. Mapping the supply chain. He writes, “Little, if nothing, can be accomplished within your supply chain if you don’t have useful visibility of it.”

2. Educating and changing culture. “Some measures to sustainability require not only procedural changes, but behavioral and cultural changes. An important step to achieving sustainability is earning buy-in from your own staff and that of suppliers.”

3. Encouraging upstream cooperation. “Sustainability can’t be accomplished unilaterally. You’ll need support and co-operation all the way back upstream.”

4. Leveraging technology. Platforms like the Enterra Supply Chain Intelligence System™ can help companies in their efforts to operate more sustainably. As Hachtman notes, “Technology has taken supply chain management from art to science. Continued advances in technology are providing organizations with once-inconceivable abilities to analyze, tweak, measure and optimize operational processes like inventory management, order and distribution management and transportation management. Insights gained through data and machine learning can be leveraged to find and exploit opportunities for sustainable processes.”

5. Collaborating. “Individual efforts don’t solve complex supply chain issues, at a personal level or even a company level. Many competing companies share portions of supply chains, and collaborating on efforts to develop and establish sustainable practices can benefit all.”

6. Building on success. “You can’t improve what you can’t measure, so develop sustainability objectives and track their successes. Then, build on these successes and use them as springboards to further your efforts.”

Consumers and investors now look beyond corporate PR statements about sustainability. They are looking for real impact. Julia Wilson (@Julia_N_Wilson), a sustainability expert at Nielsen, explains, “By 2021, shoppers in the U.S. alone will spend up to $150 billion on sustainable products, representing a quarter of all goods sold. Between 2017 and 2018, sales of sustainable products grew by almost 6 percent, higher than their non-sustainable competitors. Across industries such as media, advertising, retail and consumer packaged goods, sustainability is no longer a siloed conversation as consumers grow their voice and demonstrate their purchasing power.”[6] She goes to recommend steps similar to Hachtman. “Find new sustainability opportunities through your everyday analytics. Focus on the forces of change that affect us all — governmental, grassroots and corporate to discover what matters most for your company or brand. … [And] consider the full end-to-end sustainability across your company’s entire value chain.”

Concluding thoughts

Hachtman concludes, “Consumer demands and changing regulations have pushed environmental concerns into the discussion for businesses across the globe. Ultimately, a sustainable approach to supply chains will be the only viable choice for any company’s long-term success.” Wilson agrees. She writes, “Brands are actively building consumer demand for social and environmental action into their long-term plans for innovation and production and into how they engage with consumers post-consumption. Gone are the days when sustainability was a passing trend or relevant for only a certain customer profile.” Leveraging new technologies can help companies optimize operations and foster sustainable efforts that are a win for them, a win for consumers, and a win for the planet.

Footnotes
[1] Bloomberg, “America’s ‘Green Economy’ Is Now Worth $1.4 Trillion,” IndustryWeek, 15 October 2019.
[2] Christopher Martin and Millicent Dent, “Corporate America Has Found a Way to Turn a Profit Off Being Green,” Yahoo Finance, 20 September 2019.
[3] Kadir van Lohuizen, “Drowning in Garbage,” The Washington Post, 21 November 2017.
[4] Bloomberg, “The World’s 2-Billion-Ton Trash Problem Just Got More Alarming,” Supply Chain Brain, 15 July 2019.
[5] Mike Hachtman, “Six ways to achieve supply chain sustainability,” Supply Chain Digital, 9 September 2019.
[6] Julia Wilson, “Sustainability is a long-term growth opportunity with consumers,” Longitudes, 6 August 2019.