Five benefits of a sustainable supply chain

The supply chain connects your customers with products and services across the world, but at what cost to the environment? 

With supply chains contributing around 60% of global greenhouse gas emissions, improving the sustainability of your supply chain is one of the main steps you can take to mitigate this growing threat.

And it's not just the environment that is losing out. This lack of sustainability is having a significant impact on companies' profitability, with insurance broker Aon estimating that natural disasters caused global economic losses totalling $313bn in 2022.

To achieve a sustainable supply chain, a company has to address environmental, social, economic and legal concerns across its entire supply chain. This holistic approach helps reduce waste and environmental footprint while improving labour conditions and health and safety, preventing worker exploitation.

A fully sustainable supply chain is one that ensures socially responsible business practices. These practices are not only good for the planet and society, but they also support business growth.

The benefits of a sustainable supply chain are:

1. Reduced environmental impact

This may be an obvious benefit, but improving the sustainability of your supply chain can lead to a significant reduction in your organisation's impact on the environment.

Innocent Smoothies knows the importance of this after winning the 2023 CIPS Excellence in Procurement Awards for its sustainability project at its new Rotterdam site.

Innocent's 'The Blender' is a factory that has thought about sustainability at every step of the design process, becoming one of the world's first carbon-neutral factories built mainly with locally sourced materials.

By choosing the Port of Rotterdam as its home, the Blender has shortened Innocent's supply chain by 20%. Innocent also has the ambition to make the site entirely carbon neutral with a closed energy management system, including the Blender itself and the world's first fifty-tonne zero emission e-trucks for bulk transport, powered by solar panels and wind turbines.

2. Improved continuity of supply

Diversifying your supply chain not only limits your environmental impact by segmenting your network and cutting down on transport miles, but it can also help avoid over-reliance on a single link in your chain.

There have been many cases over the years of suppliers being unable to fulfil a service or product, which has then had knock-on effects on other businesses.

Having multiple suppliers in different parts of the world can help improve the continuity of your products or services, preventing costly downtime and reputational damage.

3. Protecting against reputational damage

With information readily available online, your supply chain also affects your brand reputation. It's essential to protect your reputation to enhance business growth.

Make sure your strategy for sustainability enhances the lives of every worker throughout the chain. This includes ensuring fair pay and working conditions and minimising your environmental impact.

Starbucks' Coffee and Farmer Equity (CAFE) Practices, for example, assesses coffee farms against economic, social, and environmental criteria. The initiative helps to promote transparent, profitable, and sustainable coffee growing practices while also safeguarding the well-being of coffee farmers and workers, as well as the communities in which they operate.

4. Potential for new partnerships

This one may be less obvious. A business with a sustainable supply chain is also an attractive prospect for other companies looking to partner with it. Your environmental credentials will likely align with the values of another brand, and this can help to open up potential partnership opportunities.

Downer New Zealand, which was highly commended at the 2023 CIPS Excellence in Procurement Awards, used its core values of Manaaki Taiao, which means care and respect for our environment, to establish a partnership with Upparel to help reduce, reuse and recycle textile waste, therefore reducing their greenhouse gas emissions from waste decomposition.

The new partnership programme is achieving significant waste and emissions reductions by collecting end-of-life Personal Protective Equipment (PPE) and corporate clothing and reusing or recycling it. Upparel then transforms the recycled textiles into new, useful products that can be reused in the community, and also by Downer, creating a circular economy.

5. Win more business

A sustainable supply chain can land you more business as you prove your green credentials. You can further support this through internationally recognised standards, such as ISO 14001. Often a requirement in business tenders, ISO 14001 is a management system that helps you identify gaps in your business where you could make green efficiency savings.

With an accreditation to support your environmental efforts, you are showing potential clients that you're taking essential strides to reduce your impact on the world.