Supply chain management has traditionally prioritized efficiency, focusing on minimizing costs, speeding up production, and optimizing resources to maximize profitability, often at the expense of environmental and social considerations. In the late 20th century, awareness of the environmental and social impacts of these practices prompted organizations to shift their focus toward sustainable supply chains.
This shift emphasizes effectiveness, where the goal is not just operational efficiency but also aligning supply chain practices with environmental stewardship and social responsibility. Today, companies aim to minimize their negative impact on the planet and society, striving to do the right things for future generations rather than just doing things right.
In this article, we discuss:
- Putting sustainability into supply chains
- Greenhouse gas emissions in the supply chain
- Reducing the negative impacts of the supply chain
- Social standards in supply chain
- Boosting your business with sustainable supply chains
- The future of supply chain management
Putting Sustainability Into Supply Chains
What Is Sustainable Supply Chain Management?
Imagine a journey that transforms raw materials into the products we use every day. That’s supply chain management (SCM). This includes high-level business strategies like planning, sourcing, manufacturing, delivery, and returns; and daily logistical activities like process improvements and facilities management. It’s the behind-the-scenes magic that brings your favorite snacks to the corner store and the latest gadgets to your doorstep.
But why stop at efficiency? What if we could make this journey not just smooth, but also kind to our planet and its people? Sustainable supply chain management (SSCM), also known as green supply chain management, accomplishes this by utilizing environmentally and socially sustainable practices throughout these activities.
Why Does This Matter?
This green approach to supply chains isn’t just about feeling good. It’s about doing good while doing well. Sustainable supply chains play a pivotal role in shaping a company’s approach to environmental, social, and governance (ESG) investing. Here’s why it matters:
- It’s like giving Mother Nature a high-five. By promoting recycling, cutting down on fossil fuels, and minimizing waste, sustainable supply chains help businesses tread lightly on our planet.
- It’s about fairness for all. Picture a workplace where everyone is treated with humanity — equitable employment practices, fair wages, and no pay gaps. That’s the social impact of sustainable supply chains.
- It’s keeping promises and playing by the rules. Sustainable supply chains ensure compliance with laws and set new standards that oversee these practices.
Two major areas of interest in ESG investing are human rights protection and worker welfare and safety. Companies must work to mitigate human rights risks in all levels of their supply chain. To maintain the safety of workers, organizations should take thorough steps to eliminate work-related injuries and deaths, such as tracking workplace risks, automating difficult tasks and fostering open communication.
Sustainable supply chains aren’t just moving products: they’re moving us towards a better world. They’re the sharp minds asking “why not?”, the big hearts ensuring no one’s left behind, and the independent spirits charting a new course for business. It’s not just a journey from point A to point B — it’s an adventure in making every step count.
How Can USF Help?
To effectively create change and integrate sustainability in the SCM field, a deep understanding of management and sustainability is needed. The online MS in Management (MIM) from the Masagung Graduate School of Management at the University of San Francisco equips aspiring supply chain leaders with cutting-edge sustainability knowledge. Students explore eco-innovation, advanced technologies, and data-driven strategies to enhance sustainability across diverse sectors.
“The rapid advancement of technology and artificial intelligence presents new opportunities for sustainable practices, making these competencies critical for future leaders. This path aligns with the urgent need to address environmental challenges and societal shifts, equipping graduates with the skills to innovate and lead businesses toward sustainable development.”
Greenhouse Gas Emissions in the Supply Chain
It’s common knowledge now that greenhouse gas (GHG) emissions from human activities have a lasting effect on the environment. These effects can include warming of both air and ocean temperatures, abnormal precipitation, higher sea levels, and more. SCM professionals have the responsibility to keep track of and understand the level of GHG emissions their company is producing.
The emissions of any given organization can be broken down into three categories known as scopes. Scope 1 refers to direct emissions from the company, including those produced from fuel used by vehicles, while scopes 2 and 3 include indirect emissions like purchased energy.
Over 90 percent of an average organization’s emissions come from supply chains. One significant contributor to supply chain-related GHG emissions is the transportation and storage of resources, also known as logistics and distribution.
Eight supply chains are responsible for more than 50 percent of all greenhouse emissions: food, construction, fashion, fast-moving consumer goods, electronics, automotive, professional services, and freight.
4 Ways to Reduce Your Supply Chain’s Environmental Impact
An estimated 40 percent of all supply chain emissions could be decreased through accessible, inexpensive strategies. Here are four tactics to reduce emissions and other negative environmental impacts of supply chain:
1. Consider Product Design
According to the UNEP, municipal solid waste generation is predicted to grow from 2.3 billion metric tons in 2023 to 3.8 billion metric tons by 2050. Globally, an estimated $163 billion of supply chain waste is created each year due to overproduction. Tracking and maintaining an appropriate level of inventory can combat this issue.
For both the environment and their profit margin, companies should continually take stock of the product waste they generate and strive to create goods that have longer lifespans, use less material, and can be reused or recycled are all methods to make products more sustainable. Some ways companies consider sustainability in product design are:
- Circular design emphasizes creating products for a closed-loop system, where items are easily disassembled, reused, or recycled, reducing waste and enhancing material sustainability.
- Minimalist design is a sustainable approach that aligns with conscious consumerism by streamlining product design and functionality, thereby conserving resources, minimizing waste, and promoting intentional consumption, offering a quality-focused alternative to the fleeting allure of trends.
- Modular design is a sustainable approach that allows products to be easily disassembled and reassembled for straightforward repairs and maintenance, thereby decreasing the need for replacements and extending their lifespan.
2. Evaluate Suppliers
Companies should verify that the suppliers they work with are adhering to sustainable standards. Ericsson, a telecommunications company, for example, requires all suppliers pass Code of Conduct, Environmental, and OHS requirements.
It can be beneficial to assess suppliers not just on basic compliance but on their deeper commitment to sustainability and social responsibility by examining their environmental, labor, and community engagement policies; their goal-setting and reporting on emissions and resource use; and how they influence their own suppliers and subcontractors to uphold these standards.
It’s also crucial to assess the effectiveness of their policy implementation and sustainability goals by analyzing performance metrics like carbon footprint, water use, waste, recycling, renewable energy usage, social initiatives, employee satisfaction, and customer feedback, typically gathered through regular assessments, scorecards, site visits, or surveys.
3. Improve Logistics
Green logistics is the effort companies make to reduce the harmful impact of logistics activities.
The green logistics market is expected to reach $1,481.5 billion by 2028.
One area where we have seen concentrated effort are the improvements being made to freight transportation, which produces harmful emissions. Companies are taking action to introduce load consolidation and intermodal switching, as well as the adoption of cleaner fuels that lead to improved visibility.
Electric vehicles (EVs) are also becoming increasingly common. DHL Group has invested $7.5 billion toward greener logistics, including plans to have 80,000 EVs for last-mile deliveries by 2030. FedEx is also taking steps in this area; with plans to make its fleet 25 percent electric by 2025, and 100 percent by 2030.
Additionally, companies can advise drivers to operate vehicles in an eco-friendly way, such as avoiding heavy traffic and maintaining a consistent, moderate pace.
4. Maximize Energy Efficiency and Green Energy
People across the nation are pushing for more effective ways to use green energy in supply chain management both at a company level and nationally. In February 2022, the U.S. Department of Energy launched “America’s Strategy to Secure the Supply Chain for a Robust Clean Energy Transition” in response to Executive Order 14017. This strategy is the first comprehensive plan to enhance the U.S. Energy Sector Industrial Base, focusing on increasing domestic manufacturing, strengthening energy supply chains, and extending the global influence of U.S. clean energy technologies. It aims to support economic growth, job creation, and climate goals, targeting a net-zero emissions economy by 2050.
Companies can utilize energy efficiency applications and technologies to reduce their carbon footprint. LED bulbs are a cost-effective update, as they are 90 percent more energy efficient than incandescent bulbs and last 25 times longer.
Renewable energy, including solar or wind power, also reduces pollution and maximizes efficiency. At USF, our “Tech for Sustainable Solutions” course equips you with the know-how to implement these strategies and more.
Benefits of Sustainable Supply Chain Management
Increase Brand Value
Investing in sustainability not only improves a company’s Environmental, Social, and Governance (ESG) scores but also significantly enhances its brand equity, particularly in the financial sector. Research shows that companies with higher ESG scores and gender-diverse boards tend to have greater brand value. Furthermore, transparent reporting of these sustainable investments and practices, coupled with effective integrated marketing communications, helps companies differentiate themselves in the market, attracting more investors and capital.
Nearly 90 percent of business leaders are increasing their investment in sustainability.
Sustainability perceptions play a major role in the brand value of major companies. For example, Microsoft has one of the highest sustainability perception values of any brand, at $9 billion. It’s important that companies are forthright about their green initiatives; as nearly 80 percent of consumers said they had decreased loyalty after finding out a brand wasn’t embodying sustainability values.
Reduce Costs
Some companies considering green supply chain management are concerned it will be expensive, but taking steps to cut back on energy use, waste, and emissions can actually help companies save.
Companies focused on sustainability can see increased revenue growth through higher sales and access to new markets, with sustainable products often commanding a price premium of 5-30 percent. Cost reductions are achievable through improved energy efficiency and resource management, which can lower operating costs by up to 60 percent.
Through USF’s “Sustainable Financial Management” course, you’ll master the art of balancing financial success with environmental stewardship. This course equips you with the skills to make strategic decisions that consider both the bottom line and our planet’s future.
What Is Shaping the Future of Sustainable Supply Chain Management?
Corporate Certifications
The Enterprise Certification for Sustainability, launched by The Association for Supply Chain Management (ASCM) in 2019, evaluates an organization’s supply chain for ethical, economic, and ecological practices. It remains to be seen if the certification will gain traction as an industry staple or if other supply chain associations will develop a similar offering.
Impact of Emerging Technologies
- Internet of Things (IoT) technologies can help in many ways, including planning optimized transportation routes that use the least fuel.
- AI can assist in examining the supply chain and making recommendations for improvements.
- Blockchain aids in tracking and traceability.
- Steps can be taken to digitize paper documents and reduce environmental impact.
Increasing Regulations
Sustainable supply chain acts have been passed in Germany and other European countries, requiring organizations to report on sustainability. Australia and Norway are also taking steps to ensure supply chains are managed responsibly.
In March 2024, the U.S. Securities and Exchange Commission (SEC) issued new climate-related disclosure requirements. The rule requires public companies to increase transparency by publishing information about their greenhouse gas emissions.
The EU’s 2024 Corporate Sustainability Due Diligence Directive (CS3D) mandates sustainable and responsible business practices within the supply chains of companies operating in the EU. This regulation allows businesses time to adapt through a phased implementation plan (large companies must comply by 2025, while smaller firms have until 2027). This directive is part of a global trend toward corporate sustainability and accountability, which is requiring workforces to meet these new standards.
Surpassing Going Green
The concept of a circular economy isn’t new, but it’s becoming more widely adopted. A key feature of this system is reducing waste through reuse. It also considers the interconnectivity of various systems, such as food sources and transportation, and how collaboration between people and systems is key to making improvements.
It is clear that sustainable supply chain management is the way forward, with 80 percent of supply chain executives committed to focusing more on ESG programs. These initiatives are essential not only to the future of businesses, but the future of the planet.
In USF’s capstone project, you’ll get to apply all these future-forward concepts to real-world challenges. It’s your chance to be the change you want to see in the supply chain world.
About the Online MS in Management from the Masagung Graduate School of Management at the University of San Francisco
The University of San Francisco’s online Master of Science in Management (MIM) program is designed for aspiring executives and visionaries aiming to drive social good alongside organizational success. This innovative degree combines on-demand courses, live classes, and client-facing projects to provide a comprehensive education in foundational management concepts while emphasizing sustainable business solutions. Specifically crafted to meet the demand for workforce development, the program equips students with skills in sustainability reporting, technology innovations, and integrated solutions for social, environmental, human rights, and governance performance across sectors.
The curriculum is structured around three key areas: people, planet, and prosperity, offering a blend of core management courses and specialized sustainable social impact courses. Students benefit from the expertise of faculty who are industry leaders and gain practical experience through project-based learning opportunities with renowned companies.
The program provides personalized career support, networking opportunities, and access to a global job portal, extending beyond graduation. This program equips students with the skills and knowledge needed to become transformative leaders in today’s rapidly evolving business landscape.
Learn more about the Master in Management by downloading a brochure, or start your application today.
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