Environmental, social, and governance (ESG) is a framework partly fuelled by increasing expectations from customers, employees, investors, and governments for companies to engage in acts that actively align with the growing business rationale for sustainable practices each year. While ESG focuses on sustainable practices throughout an organisation encompassing different departments, in this article, we examine how the practice of supply chain sustainability (SCS) has become the new focus point of organisations to achieve sustainable growth.
The supply chain process is notorious for consuming substantial company resources and finances while generating avoidable waste. As a result, attaining sustainability in supply chains is a pivotal goal for corporations that can sometimes go a long way towards ESG compliance. Companies are now diligently evaluating their products and services’ environmental and societal impacts across their entire life cycles.
In this article, we will discuss the practice of SCS and how it has become the best practice for a greener process for many companies.
What is Supply Chain Sustainability?
Supply chain sustainability involves a company’s commitment to understanding and mitigating its entire supply chain’s environmental and social impact. This encompasses every stage, from raw material sourcing and production to storage, delivery, and transportation.
The primary objective of SCS is to reduce the ecological footprint associated with all aspects of the production process while simultaneously fostering positive outcomes for the well-being of individuals and communities in proximity to the company’s operations.
Why is Supply Chain Sustainability important?
Companies globally are working to reduce carbon emissions and waste and improve labour conditions. Tracking sustainability metrics in SCM systems is crucial for monitoring various programmes, such as prioritising renewable energy, recycling, and promoting social responsibility among suppliers. Companies can use business intelligence and predefined rules to ensure products are shipped efficiently, reducing unnecessary transportation.
This focus on sustainability in the supply chain is essential as, for many companies, the majority of their environmental impact stems from supply chain activities, which often involve energy-intensive production and transportation. Making changes to the supply chain can have the most significant positive impact on the overall environmental footprint compared to other business operations.
Benefits of Supply Chain Sustainability
SCS benefits not only the companies’ interests but also the stakeholders, society and the planet. Here are some benefits that businesses get from sustainability:
Supply Chain Operations
Once the companies have set their emission targets with their suppliers, it helps them identify potential improvement areas and decrease their carbon footprint.
Companies’ Branding and Reputation
Companies that focus on being more socially responsible are seen as more desirable and attractive to consumers. With the boost from social media and digital communication, companies can gain a better reputation among potential customers.
New Partnership Possibilities and Investor Relations
Putting efforts into SCS could increase the possibilities of new corporate partnerships and opportunities. The organisation may appeal more to progressive, sustainable suppliers and clients than other organisations.
Humanising Corporate Image
SCS can improve corporate image and become more appealing to job candidates. Many candidates nowadays pay more attention to the company’s corporate culture and values, and sustainability plays a vital role in candidates’ consideration.
With the Paris Agreement and the United Nations’ 2030 deadline for achieving Sustainable Development Goals (SDG), governments worldwide are mandating greater supply chain sustainability. Government regulations cover many areas, including the traceability of pharmaceuticals, disposal of electronics and avoidance of conflict minerals.
How Cloud ERP helps businesses achieve Supply Chain Sustainability goals?
Cloud Enterprise Resource Planning (ERP) systems can significantly contribute to creating a sustainable supply chain in several ways:
Real-time Visibility and Collaboration
Real-time visibility across the entire supply chain offers efficient stakeholder collaboration for prompt monitoring, analysis, and decision-making.
Supply Chain Transparency
Cloud ERP offers a record of every transaction and movement on a secure, decentralised ledger; businesses can trace the origin and journey of products, ensuring adherence to ethical and sustainable standards.
Energy Efficiency and Cost Saving
The centralised nature of cloud infrastructure often results in lower energy consumption and operational costs, contributing to overall sustainability efforts.
Continuous Updates and Compliance
Businesses using cloud ERP systems remain compliant with evolving environmental and social regulations, reducing the risk of non-compliance issues.
Cloud ERP enhances sustainability by promoting digital documentation and automated processes, reducing paper-based transactions, therefore improving operational efficiency while minimising the environmental impact of printing.
Cloud ERP systems, like Oracle NetSuite, enable businesses to progress toward sustainability by providing instant visibility, transparency, energy efficiency, compliance assurance, and the shift to paperless processes. Integrating sustainable practices into supply chains is crucial in steering businesses towards a greener and more responsible future amid the intricacies of environmental and social responsibilities.