Supply chains have faced major challenges with the onset of the COVID-19 pandemic and have gone through complete evolution across sectors. To sustain in these challenging times, organizations need to manage their supply chains more effectively. Here are the top 10 ways to create efficient supply chains.
Today’s customers are more knowledgeable and conscious regarding their purchases, whether they are daily-use products or high-end appliances. Certain set standards and limitations are prerequisite and must be met as per customer requirements, including scrutinizing the supply chain. A growing consumer base always has a direct impact on supply chain operations, which also has a proportional impact on the environment, as per Mckinsey’s recent report.Â
It is a revealing fact that supply chains are the mainOpens a new window contributors â€” more than 90% of damage caused by pollution through CPG, including 80% of greenhouse gas emissions. Demand across sectors is growing, but only 20% or fewer supply chain managers have the necessary visibility to include sustainability practices in the supply chain, which is an alarming fact.
This is where a responsibly sourced supply chain comes into the picture â€” regulatory compliance, reduced wastage, and business branding. Technology plays a huge role in creating and enabling a responsibly sourced supply chain by tracking and tracing shipments in real-time. Increased focus on environmental sustainability, being accountable, and following ethical practices, right from supplying, purchasing, manufacturing, and retailing goods and services, has become crucial for today’s supply chains.
How to Create a Responsibly-Sourced Supply Chain?
Responsible sourcing is one of the critical functions of a supply chain. Let’s look at a few ways a company can work toward ensuring a responsibly sourced supply chain.
1. Optimize supply chain processes and reduce wastage
One can improve the supply chain by implementing major and minor changes, but these should be done through iterative improvements. Any change that reduces wastage will increase the supply chain’s speed through sub-processes such as delivery, enhancing quality, and increasing sustainability. Through the combined use of machine learning, analytics, and reporting, all processes in the supply chain can be continually improvised and optimized.
2. Introduce transparency and ensure ethical sourcing
The determining factor to ensuring whether suppliers are following sustainable standards is through visibility into the extraction and sourcing of raw materials. With the use of technologies such as blockchain, IoT, and others, companies can monitor, verify, and report supplier practices and working conditions.Â
The more the use of interconnected technology, the more the supply chain will be open and sustainable. Technology platforms help to track data and provide required access to everyone involved at any location. Transparency ensures the visibility of real-time progress.
3. Reduce overproduction by effective demand-supply planning
There has always been a correlation between supply and demand, which has to be in perfect equilibrium to result in neither overproduction nor underproduction. This includes effective utilization of raw materials, manufacturing goods, and distribution of products. Predictive planning with AI and other technologies will reduce wastage and ensure a reliable and efficient supply chain process.Â
4. Minimize the consumption of fossil fuels through real-time optimization of routes
The biggest factor in driving a sustainable supply chain is through reduced usage of fossil fuel, which directly impacts environmental conditions. This can be done using alternate modes of transportation such as electric vehicles or eco-friendly energy options.Â
Even at this juncture, AI has its role to play by pairing with GPS devices and optimizing domestic, national, and international shipping routes. With the help of more sophisticated advanced analytics, real-time updating of different routes is possible so that highly congested routes can be avoided, thus reducing the time taken to complete an operation.Â
5. Drive optimal utilization of containers and transportation by merging shipments
There have been numerous reported cases of empty or half-filled container transportation, which is a huge waste of resources. With the help of predictive analysis and analytics, companies can forecast when and where goods from various destinations reach a common point so that consolidation of multiple shipments from multiple suppliers can be done. This way, container space is well-organized and optimized. This reduces costs and energy usage, and more importantly, it reduces the emission of greenhouse gases.
6. Continuously monitor environmental risks and their impact
Supply chains are hugely impacted by environmental risks and climate changes such as floods, wildfires, water scarcity, rising sea levels, and drought-like conditions, which result in compromised speed, quality, and efficiency.Â
Active monitoring using supply chain technology to predict these risks will help supply chain managers plan and act accordingly. This lessens their impact to a considerable extent.Â Such measures can go a long way in saving costs and ensuring seamless supply chain operations.Â
7. Ensure equal growth of suppliers
Suppliers, buyers, and business actors together play a key role in creating responsible supply chain management. Business actors can build harmony with suppliers and buyers, and collectively revise strategies and focus on best practices. The process of building a smoother business results in continuous improvements and allows easy identification of procurement choices.Â
However, suppliers might require time to bring these strategies and practices into implementation. Still, gradually, such changes in the business will positively impact and allow them to continue following responsible practices. Standard strategies, operating procedures, and continuous supplier performance monitoring improve the buyer-seller association.
The direct result of having a sustainable and responsible supply chain model is a decrease in unwanted spending practices and increased environmental and social commitment from suppliers. It also leads to creating a greater partnership with less risk and leads to a positive societal impact without any extra capital. It is a known fact that every organization should encourage responsible business guidelines and practices throughout the supply base.
8. Work toward achieving a healthy ROI
Understanding how to achieve a healthy ROI and value proposition should be clearly determined, as every organization functions differently. Value drivers of an organization vary depending on their size, industry, sector, and geography. There are usually different factors to consider while identifying the lever of change â€” CSR, supplier feedback, supplier selection protocols, sustainability criteria â€” included in RFP and communication.Â Â Â
9. Analyze the effectiveness of implemented strategies
Planned and executed strategies should ensure that the supply chain is successfully responsible. The best way to analyze the strengths of strategy is to understand outcomes and map their effects. Effects will mostly turn out to be positive.Â
These include increased productivity, quality of products being maintained, cost reduction, and market expansion. Strategies leading to the said outcomes add great value to the business, and hence, these should continue for business development purposes. Also, strategies that have less impact on business improvement can be discontinued.
10. Work hand in hand with suppliers for better results
Successful implementation of a responsible supply chain program cannot come into existence without the contribution of suppliers. Ensure that your suppliers understand the need for responsible sourcing and the value it adds to the business. Also explain the program, strategies to be planned, guidelines to be followed, and the expectations from the program.
It is good to have a team that supports the suppliers in communicating the plans, carrying out surveys to gather information, work on continuous program improvements, and take up requests from the suppliers.Â
The number of consumers across regions portraying their interest in how goods are sourced, produced, and distributed is increasing by the day. Therefore, reducing the impact of supply chains on the environment will only become more important as the years go by.Â
A forward-looking strategy backed by the right technological solutions will go a long way in ensuring that your supply chain is a responsibly sourced one. It will benefit companies, suppliers, consumers, and the world as a whole.