Supply chain sustainability and the future of manufacturingBy Chris Billingham on February 7, 2024
In recent years, sustainability has become an increasingly-central focus in the realm of supply chain management.
This shift has been driven by rising awareness of environmental concerns, regulatory pressures and a growing consumer demand for businesses to adhere to more ethical and sustainable practices.
For supply chain leaders and those operating in the manufacturing space, understanding and integrating sustainable practices is no longer optional — it’s imperative for future success. In fact, many teams now have ambitious KPIs covering these issues in their scorecards, as well as publicly-facing pledges outlining their business’ sustainability goals.
The state of sustainability in the supply chain
The MIT Center for Transportation & Logistics and the Council of Supply Chain Management Professionals, in their 2023 State of Supply Chain Sustainability report, highlighted key trends and challenges in this area.
One of the notable findings was that, despite economic uncertainties and global crises such as the COVID-19 pandemic and geopolitical tensions, commitment to supply chain sustainability has remained resilient. However, it’s also evident that this commitment is not uniform across the globe, with net-zero carbon emissions goals more prevalent in wealthier countries compared to lower-income regions.
The pressure to enhance supply chain sustainability continues to grow. This is evident from the increasing focus on improving sustainability profiles, with a particular emphasis on Scope 3 emissions — the indirect emissions in a company’s value chain which are often the most challenging to measure and reduce.
We found net-zero goals to be widely adopted among firms in rich countries but less so in comparatively lower-income regions of the world. This reveals a concerning disconnect.
MIT Center for Transportation & Logistics
Implications of the State of Supply Chain Sustainability 2023
Advancements and trends in supply chain sustainability
Advancements in technology, particularly in measuring carbon footprints, have played a crucial role in this evolution. Enhanced data analytics and emerging technologies have enabled businesses to measure their greenhouse gas emissions with greater accuracy, facilitating more effective carbon reduction strategies.
We’re also now seeing a significant push towards greater transparency in supply chains. These are being driven by consumer demand, investor expectations and regulatory requirements, with companies focusing more on ethical sourcing and reducing environmental impacts. This trend is aligned with regulatory developments like the US and UK’s rules on climate-related disclosures and Germany’s Supply Chain Act.
AI as a catalyst for more sustainable supply chains
As we look to the future, the integration of artificial intelligence (AI) into supply chains stands out as a significantly transformative factor. This game-changing technology carries immense potential for enhancing environmental management and operational efficiency. For instance, AI can optimize resource usage, reduce waste and support more informed decision making — all of which contribute to more sustainable business practices.
Peak’s suite of AI applications can support efforts to directly effect and reduce a company’s environmental impact. By leveraging Dynamic Inventory, for example, you can ensure that you hold only the stock that you need, not the stock that you think you need thanks to optimized safety stock modeling. Peak’s Reorder and Replenishment applications, meanwhile, allow you to minimize the number of orders you may need to make from your suppliers or the number of times you need to replenish your stores or warehouses, reducing unnecessary mileage.
The application of AI and big data is not just about optimization, but also about enabling businesses to achieve their sustainability goals more effectively — and a business that is working efficiently uses its resources sparingly.
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Collaboration for greater impact
Another emerging theme is the importance of better collaboration in achieving sustainability goals. The challenges of environmental and social sustainability are too vast for any single entity to tackle alone. This means that there’s a growing trend of partnerships among businesses, governments and nongovernmental organizations (NGOs), who are now pooling resources and sharing knowledge to make a more substantial impact.
A call to action
The journey towards sustainable supply chains is complex and often seems to present insurmountable problems. For supply chain managers and those in the manufacturing sector, the path ahead involves embracing technological advancements like AI, delivering on transparency and collaborating across sectors. As the world grapples with environmental challenges, the role of supply chains in driving sustainable practices becomes increasingly critical. The future of supply chain management is inextricably linked with sustainability, and the time to act is now. AI can ensure that that journey, whilst complicated, can leverage the best technology available.
For those in leadership positions, the message is clear: integrating sustainability into supply chain practices is not just about compliance or public image, but about securing a viable future for businesses and the planet. The intersection of technology, collaboration and strategic planning forms the backbone of this new era in supply chain management — one where sustainability is at the forefront of decision making.