Building Sustainable Supply Chains for the Future

Social Sustainability & Change: Empowering Businesses Together 

Living in a time gripped by a global pandemic can be challenging. Moreover, the impact of traditional supply chain practices and outdated business systems can compromise a product's journey significantly.  

However, with cutting-edge and cloud-based supply chain solutions, the focus has shifted to change and leveraging social sustainability. Over the past few years, there has been an overwhelming amount of pressure on global enterprises to promote sustainable supply chain management.   

From the product conceptualization phase all the way till delivery, sustainable supply chain management solutions impact a product's journey through environmental and human-related factors.   

While traditional supply chain management strategies primarily focus on cost reduction, speed and robustness, sustainable supply chain management works on issues like climate change, water conservation, human rights and ethical labor practices.   

Therefore, as a business incorporating sustainable supply chain strategies, the need to conserve resources and mitigate disruptions is important.  

Supply Chain Risk Management – Identifying Risks and Transforming Businesses  

Irrespective of any business environment, risk is inevitable. The secret lies in identifying the source, analyzing the alternatives and eventually growing as a business.   

As a large number of products need to be analyzed, processed and shipped across the globe, a typical supply chain strategy fails to identify risks. To avoid this, enterprises have to manage:   

1. Environmental factors.  

2. Economic factors.  

3. Political factors.   

Environmental factors include natural disasters that can hamper logistics or delay the process of product delivery. Similarly, economic factors arise when a vendor or a supplier goes bankrupt, while political factors involve change in policies and tariff changes by a new leader or government.   

Furthermore, to avoid political or economic disruption, businesses must rank and prioritize their objectives for a smooth transition. For example, choosing different suppliers across a designated geographic location is a viable option in case of any natural disaster in close vicinity.   

Sustainable Supply Chain Management – Reducing Health & Safety Risks  

In addition to creating a streamlined supply chain process to mitigate risks, it is important that enterprises focus on health and safety.   

Health and safety in supply chain management caters to occupational health standards, mitigating unsustainable business practices and promoting an ideal of a safe and healthy workplace.   

For example, adhering to global health standards promoting worker participation can induce inclusiveness and effective maintenance of a safe working environment.  

Importance of Sustainability in Supply Chain Management  

Supply chain management in any business is responsible for its impact on the environment. It goes without saying that supply chain operations involve large-scale production and transportation.   

Be it through a cargo aircraft or via roadways, the impact on the environment can be massive. Therefore, the primary responsibility of enterprises must be to make sustainable changes to their supply chain operations rather than changing in-house business solutions.   

In supply chain management, sustainability goes a long way. For instance, although minimizing risks regarding production and logistics are important, it is equally important to be aware of labor conditions and laws at your supplier's factory.  

Key Supply Chain Social Sustainability Numbers  

Data can drive resilient and robust supply chains.  

In the near future, it must become imperative that businesses focus on sustainable supply chain practices rather than what needs to be done to get the ball rolling.  

New research conducted by COYOTE logistics proves that more than 81% of enterprises are more focused on the impact of sustainability than they were three years ago.   

Regarding supply chain emissions, according to Financial Express, the UN Environment Programme's Food Waste Index showed that 931 million tons of food in 2019 went to waste, which is responsible for 8-10% of global GHG (Green House Gas) emissions.    

Procurement and Spend Management – The Future of Sustainable Supply Chains are Here  

Sustainable supply chain management caters to the immediate requirement of safe and healthy workplaces, minimizing expenses and improving business efficiency.  

Similarly, the world of supply chain is governed by strategies that help in managing resources, money and most importantly, people.   

Spend management in supply chain is the process of monitoring supplier relationships, expenses and money spent to make the most of financial resources.   

Also, spend management practices integrate and automate every spending-related activity from procurement to delivery so vendors are paid in compliance with legal agreements.  

From a broader perspective, Spend Management helps in:   

1. Efficiency – Increases process efficiency due to automation.  

2. Lower cost and risks – By effective planning, goods are bought at the right price from the right suppliers.  

3. Collaboration – Effective relationships between partners and inter-functional teams.   

4. Productivity – Increases productivity as time is saved for strategic decision-making.    

SAP, with its rich experience in offering sustainable supply chain solutions, has believed in change, efficient business practices and accessibility. For more on Spend Management, Supply Chain Risk Management and the role of sustainability in managing disruptions, visit here.