How to Move to a Green Supply Chain (And Mistakes to Avoid)

Step 1: Assess your current supply chain

Take a deep dive into how green your current supply chain is. Conduct a sustainability audit within your organization and throughout your supply partners’ operations to help you benchmark your current performance. By carrying out the audit, you will be able to track your progress. 

Analyze your environmental, social, and governance (ESG) data if you already report, as well as that of any suppliers who currently measure sustainability metrics. If you do not yet collect this data, look into the popular ESG standards for guidance on what to measure and how to present your results. This will provide granular insights into how green your supply chain is. 

This process will help you identify the major environmental risks within your operations, providing guidance on where you should target your efforts. It will also highlight inefficiencies that might be simple to adjust and provide quick wins when creating a more sustainable approach to sourcing. 

Step 2: Set clear sustainability goals

Once you have collected the data relating to the ESG standards, you have a picture of where you are in relation to sustainability. You can now compare your performance against your peers and make informed decisions on where you need to be in the short, medium, and long term. 

Align with the ESG standards against which you measured your performance and any legislation relating to your jurisdiction and industry to create specific goals for improvement in the necessary areas. The goals that are most pertinent to your organization will depend on the nature of your operations. For example:

• A fashion retailer might require suppliers to cut water usage in the production of textiles.

• A consumer electronics firm might look to increase the percentage of raw materials it sources from certified sustainable suppliers.

• A food processing company could attempt to reduce the amount of ingredients it sources that result from deforestation. 

However, it is not enough to put in place vague aims. You need to be specific and set measurable key performance indicators (KPIs) so that you can better measure success. For example, the fashion retailer above could encourage suppliers to cut water usage by 20% by 2027. Making sure the goals are clear creates a focus, a way of marking success, and a tangible positive impact on the environment. 

Step 3: Engage and educate your team

You need to gain buy-in from all stakeholders before you can effectively implement new ways of working. This requires you to make the case to leadership regarding the benefits and necessity of creating a more green supply chain. 

Help senior management understand why improving your sustainability performance is essential in the modern era. Cite surveys such as that carried out by Morgan Stanley that found more than half of investors planned to increase their allocations to sustainable investments and that more than 70% believed strong ESG practices could lead to higher returns. 

Work with employees and suppliers too, helping them understand their role in improving the sustainability of the supply chain. Hold training sessions on ethical practices and obligations, and provide resources to allow partners to improve their processes. 

Highlight to all parties what your aims are and the reasons for creating those goals. 

Step 4: Implement sustainable sourcing strategies

Create a supplier code of conduct that highlights your expectations in the areas in which you have chosen to concentrate your green efforts. This creates accountability and sets out expectations for existing and future suppliers. 

When sourcing goods, carry out due diligence to ensure that you work only with eco-friendly and ethical suppliers. Ask for evidence of their green credentials to understand how working with them will help you meet your sustainability goals. This might include certifications such as SA8000 (Social Accountability). 

Where possible, prioritize the sourcing of renewable and recyclable materials, which will reduce the potential amount of waste once used in your processes. Look for established programs such as the Fairtrade mark, which shows that producers are treated and remunerated in a fair manner. These strategies will help you work towards your aims and create a more sustainable supply chain. 

Step 5: Optimize manufacturing and production

Consider the workflows at your production facilities and what happens when the materials you source arrive at factories and foundries. These are areas with high energy usage, but it is possible to put in place procedures to reduce that and, in turn, your carbon emissions. 

You can begin by: 

• Monitoring your electricity consumption, identifying opportunities to cut usage by shutting down machines overnight if they are not used or lighting areas of the facility when people are not around.

• Upgrading your machinery to more efficient models that produce the same output using significantly less energy.

• Adopting more intuitive workflows that cut down on unnecessary transportation between different areas of the facility.

Think about waste and whether you can reuse or recycle by-products to cut down on your consumption. Do you need to send so much to landfill or are there alternatives? 

Find ways to make factories, warehouses, and other facilities energy efficient, seeking renewable energy sources to power them, such as solar PV. 

Step 6: Green your logistics and transportation

Much of a company’s supply chain’s environmental impact comes through logistics and transportation, a key source of greenhouse gas emissions. And, when you source materials from around the world, it is difficult to envisage ways to reduce them. One option is to source more locally, but this is not possible for many raw materials and can prove prohibitively costly in other cases. 

A solution is to optimize your routes so that you reduce the environmental impact as much as possible whilst still ensuring you get the shipments you need when you need them. Try mapping out your supply routes to work out less fuel-intense options. It is possible to do this manually, but the most effective solution is to harness technology and AI to analyze all potential routes and automate the process of finding that route which will produce the least damage. 

Beebolt uses analytics to identify more efficient routes, avoiding bottlenecks that cause delays and reduce efficiency. 

For onward distribution, work to transition your fleet to low-emission or electric vehicles that will reduce your carbon footprint as you move your products to your buyers. 

Step 7: Adopt sustainable packaging solutions

Packaging is one of the main end-use applications of plastics, accounting for 40% of plastic use in the world. Given the fact that plastics can take centuries to biodegrade and the negative impact they have on ecosystems and the environment, reducing plastic packaging is essential for any business looking to be more sustainable. 

Encourage a reduction in plastic and no-biodegradable packaging across your supply chain, seeking recyclable or compostable alternatives and ensuring that you minimize the amount of packaging waste too. This means only packaging materials if necessary as they pass through the supply chain, and seeking the least impactful solution if they do. 

Step 8: Improve warehousing and storage efficiency

By being more efficient in the way in which you store goods, you can reduce your environmental impact. For example, rather than holding excessive amounts of inventory, you can reduce the need for such large, energy-sapping warehouses by implementing techniques such as the just-in-time (JIT) method. This requires robust forecasting to receive raw materials exactly when they are needed. 

Palletization can make better use of the space too, allowing you to reduce the size of your warehouses or, at least, avoid having to open larger, less efficient premises as you scale. 

Step 9: Measure, monitor, and report progress

Once your policies and procedures are in place and you have collaborated with your supply chain partners, you will need to measure your performance over time. Monitor the efforts that you have put in place to understand whether they are making a material impact on your sustainability strategy. Measure water usage, greenhouse gas emissions, fuel consumption, and any other metrics that you highlighted at the start. 

Conduct regular audits to ensure that your supply chain entities are playing their part and meeting their obligations, and whether your efforts are on track to meet your goals. Adjust your strategy if you are falling short and report on your progress to internal and external stakeholders for transparency. This will hold you accountable to keep going and finessing your approach to make a significant difference in how your company impacts the environment.