Supply Chain Management for Sustainability: How to Incorporate Environmental and Social Responsibility

Supply Chain Management (SCM) refers to the coordination and management of all activities involved in sourcing, procurement, conversion, and logistics management activities. It encompasses the entire flow of goods, information, and funds from the initial raw material stage to the delivery of the finished product to the end-user.

Supply chain management has become increasingly important in today’s business world, as companies strive to meet the demands of their customers while also ensuring profitability and efficiency. In order to stay ahead of the competition and maintain a competitive edge, companies must constantly evaluate and optimize their supply chain operations.

However, in recent years, the importance of sustainability has come to the forefront of business priorities. Companies are being held accountable for their environmental and social impact, and are expected to incorporate sustainable practices into their operations. This is where SCM can play a crucial role in promoting sustainability.

The purpose of this article is to discuss how SCM can be used for sustainability by incorporating environmental and social responsibility. By reducing the environmental impact of supply chain operations and ensuring social responsibility, companies can not only improve their reputation but also create long-term value for their stakeholders.

Defining Sustainability in the Supply Chain Management

Sustainability in the supply chain management refers to the integration of environmentally and socially responsible practices into all aspects of a company’s sourcing, procurement, conversion, and logistics management activities. It involves reducing the environmental impact of supply chain operations and ensuring social responsibility throughout the entire supply chain.

This involves considering the entire life cycle of a product, from the sourcing of raw materials to the disposal of the finished product. Companies that prioritize sustainability in their SCM strive to minimize their negative impact on the environment and society, while also creating long-term value for their stakeholders.

Sustainability in SCM [1] requires a holistic approach that considers not only the immediate costs and benefits of each supply chain decision, but also the long-term impacts on the environment and society. By incorporating sustainable practices into their supply chain operations, companies can improve their reputation, reduce their costs, and create a more sustainable future for themselves and future generations.

Environmental Responsibility in SCM

The environmental impact of supply chain operations is a critical issue that must be addressed by companies. As consumers become more conscious of the environmental impact of the products they purchase, companies are under increasing pressure to reduce their environmental footprint. Reducing the environmental impact of supply chain operations not only benefits the environment but also helps to improve a company’s reputation and reduce its costs.

Ways to Reduce Environmental Impact [2]:

  • Green Procurement: Green procurement involves the procurement of environmentally friendly products and services. This can include sourcing raw materials from suppliers that use sustainable practices, or purchasing products made from recycled materials.
  • Sustainable Packaging: Sustainable packaging refers to the use of materials and methods that minimize waste and reduce environmental impact. This can include using biodegradable or recycled materials, reducing packaging size, or using environmentally friendly methods of packaging production.
  • Energy and Resource Efficiency: Energy and resource efficiency involves reducing the use of non-renewable resources and energy in supply chain operations. This can include using energy-efficient equipment and vehicles, reducing waste, or recycling materials.
  • Climate-Friendly Transportation: Climate-friendly transportation refers to the use of transportation methods that minimize the carbon footprint of supply chain operations. This can include using electric vehicles, using more fuel-efficient vehicles, or reducing transportation distances.

Case Studies of Companies that have Successfully Reduced their Environmental Impact through SCM:

1. Patagonia: Patagonia is a company that prioritizes sustainability in its supply chain operations. It has implemented a number of environmentally friendly practices, including using sustainable materials, reducing waste, and minimizing its carbon footprint through climate-friendly transportation.

2. Unilever: Unilever is another company that has successfully reduced its environmental impact through SCM. It has implemented a number of initiatives, including reducing its energy and resource usage, using sustainable packaging, and sourcing raw materials from sustainable suppliers.

3. Nestle: Nestle has also made significant efforts to reduce its environmental impact through SCM. It has implemented a number of initiatives, including reducing its energy and resource usage, using sustainable packaging, and reducing its carbon footprint through climate-friendly transportation.

These are just a few examples of companies that have successfully reduced their environmental impact through SCM. By incorporating environmentally responsible practices into their supply chain operations, companies can not only improve their reputation but also create long-term value for their stakeholders.

Social responsibility in SCM

Social responsibility in supply chain management (SCM) involves taking steps to ensure that all parties involved in the supply chain, including suppliers, manufacturers, and workers, are treated ethically and responsibly. This includes ensuring that labor rights are respected, fair wages are paid, health and safety standards are met, and communities are engaged and supported.

Ways to ensure social responsibility in SCM include:

  • Ethical sourcing: Companies can ensure that their suppliers adhere to ethical sourcing standards by conducting regular audits, monitoring supplier practices, and establishing partnerships with suppliers that share their values.
  • Labor rights and fair wages: Companies can ensure that workers in their supply chain are treated fairly by establishing fair wage policies, monitoring working conditions, and advocating for workers’ rights.
  • Health and safety: Companies can ensure that workers in their supply chain are protected by implementing and enforcing health and safety policies, providing training and resources to workers, and monitoring working conditions.
  • Community engagement and development: Companies can support local communities by investing in community development programs, engaging in sustainable sourcing practices, and working with suppliers to promote social responsibility [3].

Case studies of companies that have successfully incorporated social responsibility into their SCM include:

1. Starbucks: Starbucks is a company that is committed to social responsibility in its supply chain operations. It has implemented a number of initiatives, including ethical sourcing practices, fair wage policies, and community development programs.

2. Nike: Nike has made significant efforts to incorporate social responsibility into its SCM. It has implemented a number of initiatives, including improving working conditions for workers in its supply chain, promoting fair wages, and supporting community development.

3. The Body Shop: The Body Shop is another company that has successfully incorporated social responsibility into its SCM. It has implemented a number of initiatives, including ethical sourcing practices, fair wage policies, and community engagement programs.

Integration of environmental and social responsibility in SCM

Incorporating environmental and social responsibility into SCM is crucial for companies to maintain long-term sustainability and resilience. It is essential for companies to take a holistic approach to sustainability, ensuring that their operations are not only environmentally friendly, but also socially responsible.

Challenges and barriers to incorporating environmental and social responsibility into SCM

Despite the importance of incorporating environmental and social responsibility into SCM, there are a number of challenges and barriers that companies may face. Some of the biggest challenges include:

  • Lack of understanding of the importance and benefits of incorporating environmental and social responsibility into SCM.
  • Resistance from suppliers and stakeholders to adopt sustainable practices.
  • Limited resources and lack of expertise in sustainability and social responsibility.
  • Difficulty in measuring and monitoring the impact of sustainable practices in the supply chain.

To overcome these challenges and effectively integrate environmental and social responsibility into SCM, companies can follow these best practices:

  • Transparency and accountability: Companies should be transparent about their sustainability efforts and hold themselves and their suppliers accountable for their actions.
  • Collaboration with suppliers and stakeholders: Companies should collaborate with their suppliers and stakeholders to promote sustainability throughout the supply chain.
  • Continuous improvement and monitoring: Companies should continuously monitor and improve their sustainability efforts to ensure that they are having the desired impact.

Case studies of companies that have successfully integrated environmental and social responsibility into their SCM

1. Adidas: Adidas has made a commitment to sustainability and has integrated environmental and social responsibility into its SCM. The company has implemented a number of initiatives, including using sustainable materials, reducing waste, and promoting ethical and sustainable practices throughout its supply chain.

2. The Body Shop: The Body Shop is another company that has successfully integrated environmental and social responsibility into its SCM. The company has implemented a number of initiatives, including using sustainable packaging, reducing its carbon footprint, and sourcing ingredients from sustainable suppliers.

3. Ben & Jerry’s: Ben & Jerry’s is a company that has made sustainability a priority and has successfully integrated environmental and social responsibility into its SCM. The company has implemented a number of initiatives, including using sustainable packaging, reducing waste, and promoting ethical and sustainable practices throughout its supply chain.

Incorporating environmental and social responsibility into supply chain management (SCM) is crucial for companies to maintain long-term sustainability and resilience. It is essential for companies to take a holistic approach to sustainability, ensuring that their operations are not only environmentally friendly, but also socially responsible.

The challenges and barriers to incorporating environmental and social responsibility into SCM can be overcome by following best practices such as transparency and accountability, collaboration with suppliers and stakeholders, and continuous improvement and monitoring. Companies such as Patagonia, Unilever, and Nestle have already successfully reduced their environmental impact through SCM. Other companies such as Adidas, The Body Shop, and Ben & Jerry’s have successfully integrated environmental and social responsibility into their SCM.

In the future, sustainable SCM will play an increasingly important role in promoting a better world. Companies that prioritize sustainability in their supply chain operations will not only benefit the environment, but also create a positive impact on their bottom line and improve their reputation. By incorporating environmental and social responsibility into SCM, companies can help to create a sustainable future for all.

FAQ:

Q: What is supply chain management (SCM)?

A: Supply chain management is the coordination and management of activities involved in the production and delivery of a product or service. It encompasses all the processes involved in sourcing raw materials, manufacturing, and delivering products to customers.

Q: Why is it important to incorporate environmental and social responsibility into SCM?

A: Incorporating environmental and social responsibility into SCM is important because it helps companies to maintain long-term sustainability and resilience. It also helps to create a positive impact on the environment and society, and improve a company’s reputation.

Q: What are some ways to reduce the environmental impact of supply chain operations?

A: Some ways to reduce the environmental impact of supply chain operations include green procurement, sustainable packaging, energy and resource efficiency, and climate-friendly transportation.

Q: What are the challenges and barriers to incorporating environmental and social responsibility into SCM?

A: Some of the challenges and barriers include a lack of understanding of the importance and benefits, resistance from suppliers and stakeholders, limited resources and lack of expertise in sustainability and social responsibility, and difficulty in measuring and monitoring the impact of sustainable practices in the supply chain.

Q: What are some best practices for integrating environmental and social responsibility into SCM?

A: Some best practices for integrating environmental and social responsibility into SCM include transparency and accountability, collaboration with suppliers and stakeholders, and continuous improvement and monitoring.

Author Bio:

Marijn Overvest is the founder of Procurement Tactics, a company that provides procurement solutions to businesses.. He has over 20 years of experience in procurement & negotiations: including 10+ years within the commercial department of a large global retailer and over five years in online start-ups & business funding.

He has negotiated deals up to 500 million euros and has dealt with 1500 different products delivered by 70 suppliers every year. Additionally, he created over 300+ negotiation plans,  being a sparring partner for procurement managers in their process of creating negotiation plans. 

 

Select references

[1] Kar, A. K., Choudhary, S. K., & Singh, V. K. (2022). How can artificial intelligence impact sustainability: A systematic literature review. Journal of Cleaner Production, 134120.
[2] Martins, C. L., & Pato, M. V. (2019). Supply chain sustainability: A tertiary literature review. Journal of cleaner production, 225, 995-1016.
[3] Kar, A. K., Ilavarasan, V., Gupta, M. P., Janssen, M., & Kothari, R. (2019). Moving beyond smart cities: Digital nations for social innovation & sustainability. Information Systems Frontiers, 21, 495-501.

By Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to [email protected].

%d bloggers like this: