3 Challenges of Sustainable Supply Chain Management [and How to Solve Them]
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Nowadays, the idea of improving sustainability is familiar and increasingly integrated into management thinking, especially across the US and Europe. Many managers even see sustainability as equal to or more important than profitability. Yet the concept of improving sustainability by applying it to supply chains is still in its infancy. With 80% of a typical consumer company’s greenhouse gas emissions originating in its supply chain, however, it’s the best place to start working on those sustainability goals.
We’ve already talked about How Integrating Sustainability Can Strengthen Your Supply Chain, but if it were an easy thing to do, most companies would have long ago jumped on the bandwagon. According to Sustainability: The Missing Link, a report conducted by The Economist Intelligence Unit and sponsored by LLamasoft on “how sustainability considerations are spurring companies to think differently about managing supply chains”, three of the prime barriers to adopting a strategy around supply chain sustainability and responsibility are:
Increased Costs (38%)
Difficulty in Monitoring Complex Supply Chains (29%)
Lack of Alignment in Responsibility / Sustainability Framework Across Supply Chains (20%)
So let’s have a look at these challenges companies face when implementing sustainability measures in their supply chains - and how to solve them.
1. Increased Costs
According to the above-mentioned report, survey participants were generally divided over whether the cost is a motivator or a barrier to creating a more sustainable supply chain. 38% believed that increased costs are the largest hurdle to overcome on the way to a sustainable supply chain, while a third stated that cost savings were the top incentive for implementing sustainability measures in their supply chain.
This opposite viewpoint stems from differing perspectives; namely, the short-term versus the long-term approach. From a short-term perspective, reassessing supply chains, setting new standards, and taking measures to change supply chains, do indeed use more resources and increase costs. Yet once they’re in place, sustainability strengthens the supply chain not just by reducing costs but by enhancing a brand and its reputation, developing new partnerships, and furthering innovation, to name a few.
In the long run, reputation and growth offer powerful motivators for supplier sustainability measures, counterbalancing upfront costs.
2. Difficulty in Monitoring Complex Supply Chains
Especially for large companies offering many different products, supply chains are complex beasts. A single product may have a myriad of different materials suppliers and manufacturers along its supply chain. On top of this, smart companies employ several suppliers per piece or product to ensure continued delivery in case one supplier drops out.
While a ‘complex’ supply chain doesn’t necessarily mean ‘complicated’, it does describe a condition of inter-connectedness and dependencies across the supply chain network, in which a small change in a single element can have a spiderweb-like effect on further elements. Add another layer of complexity - namely, keeping track of all sustainability measures applied in a product’s supply chain - and companies have their work of monitoring every step of a product’s manufacturing journey cut out for them. Especially considering the next barrier.
3. Lack of Alignment in Responsibility and Sustainability Framework Across Supply Chains
So your brand wants to switch to sustainably sourced and manufactured wares? A noble goal - but of course, you have to get your suppliers and manufacturers on board. Or switch to new ones that cater to sustainable products made in sustainable ways.
One of the reasons why sustainability in supply chains is such a hot topic is because it’s of varying importance to all the different players. Consumers and governments with their state-enforced regulations are putting pressure on brands to source and produce more sustainably. And many brands across the developed world see the necessity for sustainability and try to take up that mantle of responsibility. This can be tough, though, when overseas suppliers, especially from developing countries, don’t (yet) subscribe to the value of sustainability, and have little to no regulations enforced by the government (we talk more about the complexities of compliance regulations across countries here), and are being pressured by those sustainability-conscious brands to still produce as cost-effectively as possible. Basically, suppliers’ and manufacturers’ sense of responsibility and measures of sustainability often don’t align with that of the brand they’re catering to.
So how do you make sure that your suppliers’ and manufacturers’ sense and measures of responsibility and sustainability align with your own? And how can you monitor the sustainability measures taken across your entire supply chain, preferably in a way that also makes this information accessible to your customers?
Sounds unrealistic - but it doesn’t have to be! That’s where Bomler’s nSITE and Compliance Portal are a huge help. It is a consolidated platform, where sustainable suppliers connect to eco-friendly brands.
Sign up here for the platform and check out our sustainable suppliers in our compliance portal for yourself. Let us support you in reviewing your supply chain and making the necessary changes towards more sustainability, leading to big savings and better margins for your business, while also reducing the damage we’re doing to our planet.