Supply, logistics, and distribution are significant areas affecting the environment and climate. To make business sustainable, companies use technology and trace their supply chains.
Consumption of goods and services is increasing all over the world. On the one hand, the consumer boom contributes to the development of the world economy, but on the other hand, it has a significant burden on the environment. One of the UN Sustainable Development Goals (SDGs) is aimed at solving this problem - "Goal 12: Ensuring the transition to rational consumption and production patterns".
Companies are moving towards sustainable management and focus on supply chain control. A sustainable supply chain requires the proper management of environmental, social, and economic impacts of all the processes and practices throughout the life cycle of a product or service.
Experts of the United Nations Environment Programme (UNEP) state that sustainable development benefits not only society and the environment, but also companies. By offering consumers high-quality and environmentally friendly products, companies become more competitive. Mainly, sustainable supply chain management will bring six major benefits:
· Improves risk management through closer collaboration with suppliers
· Decreases supply chain disruptions
· Increases brand loyalty and avoid negative media attention
· Reduces costs through increased efficiency
· Rises shareholder value by reducing costs and risks
· Lessens staff turnover and increases staff loyalty.
Companies are looking to strictly monitor the quality and the origin of products, including compliance with environmental and social standards in production processes throughout the supply chain.
According to the Nielsen study
, 66% of shoppers are willing to pay for a sustainable brand. The maximum percentage (72%) was achieved among the representatives of generation Z. It gives a reason to believe that soon the concern of sustainability will become one of the main stones in building the internal structure of the company.
In response to the demands of a changing market, leading industry companies advance new technologies and launch projects based on superior developments. For example, the IBM project will use the blockchain
to track the supply of cobalt throughout the value chain: from mining by Huayou Cobalt in China to LG factories producing electric batteries in Korea and the transfer to Ford and Volvo automotive enterprises. Technologies in supply chains are designed to establish a dialogue between all participants, ensure traceability
and improve manageability and flexibility.
Building relationships between suppliers is vital to all the participants. Interaction tools can be different, ranging from training representatives of third-party companies to the presentation of strict requirements for the production process and the final product. Already, most European retailers are looking to work with suppliers who reduce waste
, use renewable energy
, provide fair performance conditions for employees and take other measures to reduce their negative impact. It was the conclusion made by experts from the International Trade Center (ITC)
, who surveyed 550 retailers in France, Germany, Italy, the Netherlands, and Spain.
76% of respondents prefer responsible suppliers or strive to increase the number of goods sold under the principles of sustainable development in the coming years. The largest number of retailers who have undertaken such obligations are in Germany and the Netherlands. In addition, companies need to monitor the environmental and social impact of internal operations
, including logistics, stores, warehouses, distribution centers, and data centers. Companies prefer to use energy-saving equipment, take measures to reduce waste, and implement programs for building the circular economy.
Companies can no longer afford to lose profits and customer loyalty by having dark spots in their supply chains. Continuous tracking of fresh inventory, sales, and waste across the value chain through IoT devices that leverage cloud computing through data analytics and advanced analytics, shelves, and product sensors (IoT) gives a complete picture of reality for customers, employees, management, and investors. Blockchain and cognitive machine learning optimize orders, collaborative planning, and maximize freshness.
Technology-based sustainability also includes supporting supply chain compliance and predicting the diversion of less fresh products through IoT sensors, based on product shelf life and freshness. Technology is needed for urgent decision-making to weigh costs and options, avoid unnecessary garbage, unnecessary greenhouse gas emissions, and set up the supply chain
under unforeseen conditions.
In recent years, the world has faced many events that were previously considered extremely rare: hurricanes, tsunamis, data breaches, epidemics, pandemics. It is time for companies to think about a new paradigm in which reliability will be given as much attention as efficiency.