What’s the current state of supply chain sustainability?
There has been plenty of talk about sustainability and CO2 emissions in the supply chain sector for some time. But where do businesses actually stand on the topic and what steps are they taking to become more environmentally friendly?
These are both tricky questions to answer, particularly as global supply chains and business networks continue to become more complex. The good news is that sustainability is firmly on the radar.
According to a 2021 Real-Time Visibility Trend Report, reducing their carbon footprint is one of the top five priorities for logistics professionals – along with issues such as optimising warehouse operations/streamlining processes and improving the customer experience.
However, many organisations still aren’t as advanced as they could be when it comes to measuring their environmental impact. For example, Transporeon’s 2021 carrier survey found that more than half (54%) of carriers are currently unable to calculate their CO2 emissions. What’s more, just 15% view environmental sustainability efforts as a relevant business opportunity. Clearly, there is still work to be done when it comes to fostering positive attitudes towards environmentally-friendly efforts.
That’s not to say it’s all bad news. When taking a closer look at the supply chain industry through the lens of sustainability, we can see plenty of positive steps being taken to ‘go green’ and reduce CO2 emissions.
For example, Italian multinational food company Barilla recently managed to take 5000 trucks off the road thanks to the train link between northern Italy and southern Germany, thereby reducing CO2 emissions by 70%.
Just last month, global consumer goods brand P&G opened a new Product Supply Innovation Center (PSIC) as part of a wider objective to cut its greenhouse gas emissions by 50% across operations. Another brand giant – Nestle – recently extended its support to the European Commission’s EU Code of Conduct for Responsible Business and Marketing Practices. Nestle has pledged to join the initiative, which is aimed at making food supply chains more sustainable, and contribute a set of 23 commitments to reduce its environmental footprint - which includes a shift to zero-emissions logistics.
Many governments around the world are also taking steps to encourage supply chain sustainability. For example, the German government recently announced the “Act on Corporate Due Diligence in Supply Chains”, which holds companies responsible for every step of the supply chain. Companies face being fined up to 2% of their annual revenue if their suppliers are found to breach environmental rules.
This poses a significant challenge for businesses. According to a recent Oxford Economics study of 1000 supply chain professionals, only half of the participants have significant or complete visibility into their own sourcing of sustainable products. What’s more, just 21% say they have complete visibility into their suppliers’ sourcing of sustainable products.
These initiatives are part of a much wider movement that is currently taking place – all pointing towards the 2020s as being the decade of supply chain sustainability. Several contributing factors are continuing to increase the emphasis on green practices, which businesses must act upon if they want to build a competitive advantage in the years to come.
Clearly, the sustainability movement is showing no signs of slowing down. In fact, it’s accelerating as businesses emerge from the shadow of the Covid-19 pandemic and look to endear themselves to a global consumer base that is more sensitive to environmental issues than ever before. Online searches for sustainable goods have increased by 71% globally over the last five years, while 70% of consumers believe it is important that the brands they buy from are sustainable. This is a trend that stretches across all elements of the business – even non-customer facing processes such as the supply chain.
The challenge many businesses face is that they simply don’t have adequate visibility into the efficiency of their activities. This makes reducing their environmental impact very difficult. However, it’s a problem that can be tackled by enhancing real-time visibility into operations.
For example, by gaining deeper insight into how trucks are being used and how transportation networks operate through actionable real-time visibility data, businesses can reduce empty mileage and more effectively match capacity and demand. This data can be used to help businesses optimise a wide range of supply chain processes, in turn reducing their carbon footprint.
The key is knowing where to start. Methods such a Transporeon’s Carbon Footprint Calculation outline how businesses can understand their current state and identify where improvements can be made.
By taking this first step, businesses can quickly gain enhanced environmental transparency across their transport operations. It may be a small step, but it’s essential to driving sustainability across the wider industry and reducing the supply chain’s significant environmental impact.
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