A sustainable supply chain enhances a company's image, resilience, and cost efficiency, making it particularly desirable for the process industry. However, designing a supply chain that aligns with sustainable criteria is not straightforward, as there are various approaches to achieving sustainable supply chain management. Here are six essential tips and tricks to guide you as you embark on this journey.
No company operates in isolation. The extent of its interdependence becomes evident during disruptions such as halted orders, surging raw material prices, or supplier crises. In the process industry, companies rely heavily on each other, forming extensive networks and partnerships to thrive in the market. Therefore, the term “supply chain” can be somewhat misleading and is more aptly described as a network or a well-coordinated mechanism where every component plays a pivotal role in the overall process. Each part must work together precisely and harmoniously for the system to function seamlessly.
Sustainability is becoming increasingly important within this intricate interplay. Regulatory requirements and customer expectations are placing increasing pressure on companies to scrutinize and adapt their networks towards greater sustainability. For this to succeed, companies must not only improve their own standards, but also hold their partners and suppliers to account. After all, sustainability extends beyond the company's own operations.
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Sustainable Practices as a Competitive Model
A sustainable supply chain encompasses not just economic considerations, but also ecological, ethical, and social factors. It involves promoting fair working conditions, minimizing environmental impact, responsibly managing resources, and upholding human rights.
As such, these sustainable practices should be integrated into the overall business model. By doing so, they become more than isolated initiatives; instead, they become intrinsic components of the corporate strategy. This integration enables companies to operate in an environmentally and socially responsible manner while maintaining economic success.
Responsible and sustainable companies are already incorporating their supply chains into their organizational development. Sustainable supply chain management is not just a question of company size. The following starting points are applicable for both large and small companies.
1. Don't guess, measure
The temptation to swiftly modify a parameter in the supply chain is strong and well-intentioned, but it often fails to lead to significant progress. The initial crucial step is to gain a comprehensive overview and map the supply chain: which companies are within our network? What facts, figures, and data do we possess regarding their and our impact on the planet? However, it's important to remember that your company can only consistently enhance the sustainability of its supply chain if it
- Sets goals
- Monitors key figures
- Uses data and analyses to adapt its processes
2. Connect in the cloud
When your company and the supply chain form a network, collaboration becomes the key to success. To achieve this, you need a central meeting point – and it's not in the company canteen! Agile sustainability is the result of close connectivity between systems, people, and technologies in the cloud, ideally in a cloud ERP.
This refers to enterprise resource planning software accessible via the internet. It allows all supply chain participants to access real-time insights and reports, with various datasets integrated and analyzed. This capability enables companies to access their mission-critical applications irrespective of time and location.
3. Set uniform standards
For a sustainable supply chain concept to be successful, clear benchmarks, targets, and guidelines must be defined and communicated to all stakeholders and suppliers. Acceptance of these targets is crucial. There are numerous organizations that assist companies in setting targets and criteria, including:
- Global Reporting Initiative (GRI)
- Carbon Disclosure Project (CDP)
- United Nations Global Compact (UNGC)
Modern digital technologies such as SAP Sustainability Footprint Management also make it easier to monitor and control compliance with these sustainability targets and make the entire process more transparent and efficient.
Do you have lots of plans but achieve little by way of results? Then this blog post is for you: From Data to Action: How the Process Industry Is Putting Sustainability into Practice.
4. Create and demand transparency
Let’s assume you collect data and have an ERP platform to share it with the stakeholders in your supply chain. An essential subsequent step would be to ensure that pertinent information regarding the origin of goods, working conditions, and practices within the supply chain is readily accessible.
Transparency is one of the factors that makes the biggest difference but is the hardest to implement in practice. It makes a big difference because it is the only way to enforce and reliably apply sustainability standards. It is difficult to implement because many suppliers cannot immediately provide watertight documentation or other evidence of environmental and ethical practices.
Modern software such as ERP systems, IIoT platforms, or blockchain help to track products and raw materials precisely and trace their journey from production to delivery.
5. Optimize routes
Are you familiar with this dilemma? On one hand, customers are demanding sustainable practices in logistics; on the other hand, they insist on same-day delivery. Trying to act both quickly and sustainably puts enormous pressure on the supply chain.
One solution could be a route optimization tool:
- This uses historical and current traffic data to calculate the best delivery routes for the day.
- Artificial intelligence processes large volumes of data in real time.
- By minimizing driving distances and avoiding traffic jams, optimized routes contribute directly to reducing CO2 emissions.
6. Reduce waste
Overproduction, single-use packaging materials, and damaged or unusable goods: companies in the manufacturing industry often have substantial potential to improve the amount of waste in their supply chain. By minimizing waste, they can contribute to the conservation of natural resources.
At the same time, more efficient use of materials leads to considerable cost savings, as less money has to be spent on waste disposal. Compliance with strict environmental laws and regulations is also made easier.
You can check the following measures:
- More efficient use of materials: Lean management practices optimize production processes and reduce waste.
- Recycling and reuse: Which production waste can be reused?
- Sustainable suppliers: Prioritize the issue of waste when selecting your suppliers.
- Technologies: With IIoT sensors and big data, you can identify efficient production processes in your company and supply chain.
Address the Sustainability Factors in Your Supply Chain Now
Sustainable supply chains are not a topic to be postponed. Economic policy changes such as the EU Supply Chain Act, pressure from B2B and end customers, and the need for greater resilience and predictability mean time is of the essence.
Our final recommendation at this juncture is to prioritize the development of your sustainable supply chain immediately. Your ERP system will assist you in sustainability management. We are available to discuss how well-prepared your company is for sustainable supply chain management, covering both process readiness and technological capabilities.
