Supply Chain Sustainability – The Human Element

When we consider supply chain sustainability, the first thing that typically comes to mind is the production process, as well as the transportation of goods from one location to another. Examples include the amount of water required to make a pair of denim jeans, whether a product is made from animal or plant products, or the amount of carbon emitted to move products from the country of origin to its final destination.

While the environmental element is crucial and must be managed responsibly, there is another element that is often overlooked; the relationship that people have with the processes and workflows required to get products to market. The United Nations Sustainable Development goals lays out the following definition:

“We define supply chain sustainability as the management of environmental and social impacts within and across networks consisting of suppliers, manufacturers, distributors, and customers, in line with the UN Sustainable Development Goals. This spans every phase of the supply chain, from raw materials sourcing and extraction to product use and end of product life.” (MIT, 2022)

In terms of the human element, working conditions can have a profound effect on the health of a supply chain, and its overall sustainability. We see this impact most readily in countries or regions where products are grown, sourced, manufactured, or assembled. For many reasons, it’s in a company’s best interest to utilize ethical and humane business practices in these regions as consistent access to quality goods is paramount to success. In fact, modern consumers demand that the goods and services they purchase come with visibility into these practices, or at the very least the guarantee that no human or animal was abused or misused in the production of the products they consume. This comes through certifications such as “fair trade” labels.

Recently, there has been considerable attention and global effort to correct historical injustices and exploitation. This is an ongoing initiative and one which is being monitored very closely, particularly by the younger generations. In the near term there is another strategy that companies can implement to have an immediate impact on their supply chain sustainability, and that is through digitization.

The Case for Digitization

In a recent Gartner survey, “34% of respondents reported that adapting to new technology is the most important strategic change that supply chain organizations will face in the next five years” (Ashcroft, 2022) Digitization is the foundation of this adaptation. Notable advantages include:

  • Speed – Bring products to market more quickly through increased collaboration.
  • Flexibility – React in real time to the vicissitudes of the geopolitical landscape.
  • Accuracy – Reduce the impact of human error through automation.
  • Efficiency – Improved organization increases instances of successful execution.
  • Inclusivity – Give all stakeholders access to supply chain information.

By digitizing supply chains and automating processes, companies can alleviate some of the pressures on workers and offer a more reasonable work/life balance. This reduces the amount of human error in performing tasks, increases overall productivity, and improves margins and profitability. By taking this first digital step, companies make themselves more sustainable, and studies indicate that companies with higher levels of supply chain sustainability “experience less employee turnover” indicating they have greater employee satisfaction and a more stable workforce (Sustainalytics, 2022).

Some argue that the cost associated with sustainability standards outweigh the benefits, to which the only logical response is, “does it matter?” We are approaching an era where supply chain visibility is not only positively reinforced by consumer buying patterns, but in large part necessitated by them. According to Gartner, “Supply chain digital transformation is proven to drive growth, mitigate risk, and optimize costs, but requires strong alignment between business and supply chain strategy to succeed” (Gartner 2022). While there is some initial (and ongoing) investment to implement successfully, the return on investment is significant. Future markets will belong to those companies who confront this challenge wisely and confidently.

The GRID – Your Partner in Sustainability

The GRID is the modern standard for supply chain and business operations, combining the best aspects of ERP and PLM with robust collaboration, project management, and procurement layers across the platform. The GRID can support up to 25% faster time to market and up to 7% reduction in cost of goods sold (COGS). Through workflow digitization, GRID users are able to accelerate supply chain processes and operate more efficiently across the entire length of their supply chain.

As Rachel Schwalbach, Vice President for Environmental, Social, & Governance, C.H. Robinson has stated, “Supply chains are so complex that no one can tackle sustainability alone. Collaborating with the right partners who have the right technology is essential” (MIT, 2022). If you are interested in learning more about what Suuchi’s GRID can do for your supply chain, click here to schedule a demo.

References

Ashcroft, S. (2022, June 21). Sustainability tools head 2022 supply chain trends – Gartner. Sustainability tools head 2022 supply chain trends – Gartner. Retrieved August 31, 2022, from https://supplychaindigital.com/digital-supply-chain/sustainability-tools-head-2022-supply-chain-trends-gartner

Gartner. (2022). Supply Chain Digital Transformation: Business Case on a Page.

MIT Center for Transportation & Logistics. (2022, July). State of Supply Chain Sustainability. State of Supply Chain Sustainability 2022. Retrieved August 31, 2022, from https://sscs.mit.edu/wp-content/uploads/2022/07/MIT-CTL-State-Supply-Chain-Sustainability-2022.pdf

MIT Center for Transportation & Logistics. (2022, July 28). Report finds supply chain sustainability focus areas continue to shift, evolve. Retrieved August 31, 2022, from https://ctl.mit.edu/news/report-finds-supply-chain-sustainability-focus-areas-continue-shift-evolve.

Sustainalytics. (2022). Future-Proofing Supply Chains – Supply Chain Sustainability and Key Trends in 2022.

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