5 Steps To Create A Supply Chain Strategy That Is More Sustainable In 2023

Written by: Corey Bobak, Executive Contributor

Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.

The last few years, have catapulted Supply Chain to the forefront of people’s minds in most areas of their everyday life. At the same time, government regulations and consumer behavior is driving many businesses to think about how they can make their operations more sustainable.

One of the biggest misconceptions about a “sustainable” supply chain is that we need to have “green” elements at every step of the process, however sustainable by definition is something that is “able to be maintained at a certain rate or level”. By definition, a sustainable supply chain would acknowledge that there is a “level” or “rate” at which the supply chain can function sustainably. The problem often is that the world and a supply chain move at a pace where there isn’t often enough time to reflect on how the “level” of your supply chain can keep pace with the growing demand or shifting supply needs.

The environmentally sustainable supply chain is just as much a focus for the modern consumer and there are many ways to marry both a supply chain running at the right level and a supply chain that operates well for the environment. Governments are keenly focused on this with the first “green tariff” adopted by the EU being one of many examples of governments taking aim at corporations to ensure that their impact on the environment is at the forefront of their business priorities.

Luckily, a new year allows for some time of reflection, and this article is a guide to taking stock of your supply chain “levels” and levers you can manage to make your supply chain more sustainable in 2023!

1. Understanding your impact directly and indirectly

Use this EPA Guide to understand your Scope 1 – 3 direct or indirect GHG (greenhouse gas emissions) to realize what impacts your operations have but this is only one data point. Water preservation, green facilities, renewable energy, and more in the same EPA guide can help you understand ways your choices as an organization can impact the environment.

From an operations perspective, an easy choice would be to fill a container or consolidate orders as much as possible to minimize the amount of transportation required to meet your supply needs. In a more complex way, you could explore the way artificial intelligence can batch orders together and optimize some of those decisions without requiring a manual effort.

2. Draw out your supply chain and identify the improvement areas

After understanding your impact and potential, outlining the end-to-end picture of your supply chain is a great way to identify risk. Laying out the supplier network of your organization in a visual helps uncover areas for diversification in your supplier base. I see more and more organizations asking for more data from their suppliers to help inform them on supply risk, business stability, and overall collaboration on orders to improve the business relationship.

Control towers have increased in popularity in the supply chain space, while definitions vary as to whether they are used for visibility or as a central place to control the levels of your supply chain. Connectivity and visibility are major focuses in any control tower, being able to quickly go from aggregation to granularity is necessary to identify high-level problems and drill down into a solution.

3. Define a supply chain strategy using ESG as a framework

Often the term ESG (Environmental Social Governance) is portrayed as a movement or a standard when discussed in the news. However, using ESG as a framework helps articulate the ways your organization and supply chain can operate more sustainably this year.

Environmental – these are your organization's impacts on things like climate change, water management, carbon emissions, deforestation, pollution, etc. A good example of making an environmental decision to support this component of your strategy would be to only source paper products for your organization from companies that plant trees to replace the resources your organization is consuming.

Social – all the relationships and people your organization touches. While Gender and Diversity, Equity and Inclusion are important components of this pillar, holistically your organization is touching suppliers, carriers, customers, and most importantly your employees. Every supply chain has had issues with having adequate staffing and the primary driver of this is the field is the most in demand it has ever been, thinking of ways to structure your organization for more room for advancement or variable compensation improvements based on performance is creating opportunities for your team can keep them engaged and happy.

Governance – structure and defined ways of operating. There is some concept of governance in most things in life like laws, regulations, etc. however, in this setting having the data and processes in place to track your organization's progress in any of the areas mentioned is key to not only tracking toward your goal but being able to celebrate and iterate on your goals as they become reality

4. Using your new strategy, identify the process and data elements needed to govern those goals.

This is a fantastic opportunity to take account of all the processes that live within your organization and the different data components and systems that enable the process.

Once you review the process inventory of your organization, this is a natural point to try and fix any inefficiencies identified. However, this is the chance to reinforce the strategy you defined so be sure to evaluate improvements through that lens. If for example, you are having issues with supplier lead times, identify where the increases or decreases in lead time come from. After thinking through scenarios like that, document any system or data that would help identify those improvement areas.

5. Define a cadence and format to review progress made on the ESG Strategy

Now that you have the strategy, process, and data to support your goals, define an appropriate cadence to revisit your impact and progress toward your goals. This is not a quick fix, as a lot of operations have worked well for a long time, but in this world of disruption adding to it by making a bunch of changes in the name of sustainability is an effective way to sow doubt in the team.

Making sure the change management and rationale behind the changes that are proposed are sound and avoid introducing more risk to the organization is a fine balance. Remembering that sustainability has multiple meanings is a wonderful way to pivot your operations to a greener alternative while ensuring operations go uninterrupted.

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Corey Bobak, Executive Contributor Brainz Magazine

Corey Bobak is a Principal focused on Supply Chain solutions in the Digital team at Inspire11. He has worked with industries such as Aerospace & Defense, Automotive, Consumer Packaged Goods, Lumber, Manufacturing, Retail, High Tech, and more to leverage various supply chain technologies to build world class supply chains.