Green Supply Chain Practices for Sustainable Logistics
When you're working to achieve long-term supply chain sustainability, how do you understand the needs and restrictions across your supply chains and tiers? Once you have a fairly good lay of the land, scalability and increased operational sustainability is certainly achievable with much less stress.
In this blog post, we'll walk through 5 steps to help you get started building a better operational roadmap...
#1: Supply Chain Mapping
Many companies lack comprehension of their supply chain sustainability. To begin, you need to inventory your suppliers, identify their social and environmental challenges, and prioritize your efforts with them.
New Balance, the athletic shoe company, reduced suppliers based on how the suppliers performed against the company's sustainability criteria. Instead of quantity, New Balance focused on solid supplier partnerships and reduced its supply chain.
It's unrealistic to tackle every supply chain discrepancy in one fell swoop. Begin with readily achievable goals and prioritize those that will result in the highest ROI. Set short-term goals for operations and map how the environmental, economic, and social aspects interact. Remove the most critical issues, and then work your way through every problem in order of urgency.
Thanks to technology, supply chain management has advanced from an art to a science. There are endless possibilities for optimizing routes, reducing waste, cutting fuel consumption, finding better fuel alternatives, or identifying underperforming carriers.
Engage your suppliers through green sourcing practices and get them involved in the process.
#2: Explore Corporate Responsibility
Senior management should develop internal objectives to meet corporate responsibility. Creating your own environmental and social goals and being open about them is vital to proving your commitment to external stakeholders.
Leverage the insights gained through data analysis and reporting to unlock new opportunities for sustainable processes. Create policies that align with your strategies, goals, and objectives.
These actions likely will require change agents within your company – employees who understand the business processes and have the skills needed to redesign them. These change agents can pass along and reinforce what your sustainability strategy means.
#3: Benchmark Supplier Performance
It's hard to know when you need to change one supplier for another or engage a supplier to make sustainability improvements with you. But to build a sustainable supply chain, you must have a baseline for supplier performance.
To measure and monitor supplier performance, take advantage of industry indicators. Regularly compare your internal corporate responsibility goals to supplier performance to see who is on track to help you meet time-dependent objectives.
The most common KPIs used for supply chain monitoring include:
- 40% Daily performance
- 35% Cost reduction
- 29% Production service rate
- 28% Inventory turn
- 27% Production time
- 27% Lead time
- 25% Return rate
- 22% ROA
Suppliers at Tier 1 and Tier 2 levels had to turn over information on sustainability and show continuous improvement. Suppliers could earn “preferred” privileges based on business impact and volume.
#4: Use Industry Accreditations and Peer Groups
Recognize that addressing complex supply chain challenges can't be solved individually. A side benefit of working with industry peers is that it’s a great way to share knowledge about supplier sustainability performance.
Take advantage of the hard work done by accreditation providers. Research industry accreditation standards and work only with suppliers willing to meet them, especially ones related to sustainability. Share your company's accreditations on your website and other messaging to demonstrate your commitment.
#5: Drive Continuous Improvement
You may feel exhausted by this point. However, you've barely scratched the surface of building a sustainable supply chain. Retaining a commitment to adapt to new industry standards continuously is essential to keep making progress.
However, you must strive to focus on your company's long-term vision while expecting it to change over time as new standards emerge in the industry. Stay on the lookout for new chances to innovate. Spend time regularly researching new methods and materials.
The only harmful efforts are those that have you standing still or, worse yet, going backward.
Final Thoughts
Building a sustainable supply chain requires commitment, strategic planning, and continuous improvement. By following these five steps—mapping your supply chain, exploring corporate responsibility, benchmarking supplier performance, leveraging industry accreditations, and driving continuous improvement—you can create lasting operational sustainability.
FAQs
What are the first steps to improving supply chain sustainability?
The first step is supply chain mapping. Inventory your suppliers, identify their environmental and social challenges, and prioritize the issues that will create the highest return on effort. It is usually better to start with a few achievable goals, then work through the most urgent problems in order, rather than trying to fix everything at once.
How do you set sustainability goals for a supply chain?
You set sustainability goals by aligning internal corporate responsibility objectives with measurable operational priorities. Senior management should define environmental and social goals, publish clear policies, and use data analysis and reporting to identify opportunities for improvement. Those goals work best when they are practical, time-aware, and tied to real business processes.
How do you measure supplier performance for sustainability?
You measure supplier performance by establishing a baseline and comparing suppliers against your corporate responsibility goals over time. Common KPIs include daily performance, cost reduction, production service rate, inventory turn, lead time, return rate, and return on assets. Regular monitoring makes it easier to decide when to improve a supplier or replace one.
Why is supply chain mapping important for sustainability?
Supply chain mapping is important because you cannot improve what you do not understand. Mapping shows where suppliers create environmental, economic, and social impacts, which helps you target the biggest risks and opportunities first. It also makes it easier to identify underperforming carriers, reduce waste, cut fuel use, and engage suppliers through green sourcing.
What role do industry accreditations play in supply chain sustainability?
Industry accreditations help set a common standard for supplier behavior and performance. They make it easier to evaluate which suppliers are willing to meet sustainability expectations, and they give companies a credible way to show commitment through public messaging. Peer groups and accreditation providers also help businesses share knowledge instead of solving complex issues alone.
How can a company keep improving its sustainable supply chain over time?
A company keeps improving by treating sustainability as an ongoing process, not a one-time project. That means regularly reviewing standards, researching new methods and materials, and adjusting goals as the industry changes. The biggest mistake is standing still or moving backward; continuous improvement is what turns early progress into lasting operational sustainability.
