ASL Blog

Unlocking the Benefits of Sustainable Supply Chains

Written by Viktoria Lamprinaki | Mar 11, 2020 12:41:56 PM

In the last of this blog series, our CSR Specialist, Viktoria Lamprinaki, examines the potential benefits that can be unlocked by creating sustainable supply chains.

Benefits of sustainable business practices

Incorporating sustainability in your supply chain can contribute to the societies’ overall improvement and yield benefits for your company. In order to exploit all possible benefits, sustainability approaches need to be implemented throughout the entire supply chain.

Only a complete integration allows companies to take full advantage. The supply chain connects customers with products and services around the world, but it has a cost to the environment. A typical consumer company’s supply chain accounts for more than 80% of its greenhouse-gas emissions. To achieve a sustainable supply chain, a company has to address environmental, social, economic and legal concerns across its entire supply chain.

Taking a holistic approach will reduce waste and environmental footprint, while also improving labour conditions and health and safety. A fully sustainable supply chain that ensures socially responsible business practices also supports business growth.

So let’s take a closer to look at the benefits of integrating sustainability in company’s supply chain:

1. Reduced environmental impact can lead to lower costs and increased efficiency

While reducing the environmental impact of a business comes at a cost, it can lead to big savings. A company can see quick returns by reducing waste and increasing the efficiency of buildings, vehicles and machinery. Using resources efficiently allows companies to reduce waste and energy consumption. Consequently, production costs and overall costs can be decreased.

2. Innovation

The wider spread of sustainability offers companies the possibility to create innovative products, services, and solutions which meet the customer’s needs while simultaneously concentrating on sustainability. In particular, by integrating sustainability in their product development, design, and manufacturing, companies can drive innovation. Suppliers can also improve operations and help companies accomplish innovation goals by understanding the company’s vision and suggesting changes or new processes.

3. Differentiation and Competitive Advantage

By applying a CSR approach and engaging in sustainability a company can differentiate itself and its products/services from its competitors. It helps attract new potential customers, gain competitive advantage and strengthen a company’s position in the market. Nevertheless, as a growing number of companies operate in an environmental, social, and economic friendly way, a company must evolve its approach and identify potential innovative approaches to sustainability. Sustainable business practices still contribute positively to a company’s brand image and reputation.

4. Serve modified needs of customers

Nowadays the needs of the customers have been modified, especially regarding the integration of sustainability in both the product itself and its sourcing and manufacturing process. The implementation of sustainability through the entire supply chain can help a company to serve these clients. Furthermore, CSR can be seen as a new communication tool for promoting the commitment towards sustainability. This is both for business-to-consumer and business-to-business markets.

5. Improved risk management and resilience

Engaging in sustainable business practices allows companies to reduce their risks and simultaneously increase the companies’ resilience to cope with unforeseen events. Incorporating sustainability in the supply chain can help diversify it and avoid over-reliance on a single link.  A well designed, risk-oriented sustainable supply chain management can put companies in a privileged position to deliver reliable long-term benefits to all stakeholders in the value chain. Sustainability related supply chain risks such as weather conditions, labour incidents etc. can be managed, and most of the times prevented, if sustainability is made a part of the supply chain strategy.

6. Protecting against reputational damage

Awareness of sustainability issues is growing, and therefore if any of those issues are found in an organisation’s supply chain they pose a risk. The news that operations have an undue environmental impact, or that raw materials for products are being collected in dangerous conditions by underpaid workers, could cause serious damage to a company’s reputation, to its revenue, and even to its future. There’s a record number of shareholder resolutions related to supply chain sustainability in recent years, as well as social media pressure on companies to ensure they are viewed as committed to sustainable and responsible business practices. Various stakeholders are increasingly putting pressure on businesses to extend their sustainability policies into their supply chains.

7. Potential for new partnerships

Adopting a sustainable supply chain makes a company an attractive prospect for other companies looking to partner with it. If the companies’ environmental credentials and values are aligned, this opens up potential partnership opportunities. Also, sustainability could lead to the cooperation of agents in the supply chain that depend on each other like for example partnerships between farmers and companies. Furthermore, new partnership opportunities can come from planning to avoid a sustainability related risk. Of course, one should not overlook the Global Organizations and Institutes that are engaging in sustainability through various activities and can help a business gain knowledge and potential financial benefits through partnering with them.

8. Win more business

Last but not least, ‘green credentials’, especially the ones related to the sustainability of the supply chain, can help a company win more business. Internationally recognised standards, such as ISO 14001, are often a requirement in business tenders. With such accreditation supporting a company’s sustainability efforts, potential clients can see that the company is taking essential strides to reduce its impact on the world. Taking positive action can lead to big savings and better margins, along with reducing the damage done to the planet.

Sustainability in the supply chain is a complex issue that requires good planning and commitment from all relevant stakeholders. How to best approach it can depend on a variety of factors and the challenges along the way can feel discouraging. Creating a sustainable supply chain not only helps the planet but also provides tangible benefits to the companies involved. A sustainable supply chain must avoid compromising both the environment and the business itself.

ASL Global is committed to conducting our business in a responsible & sustainable way. Acting with passion and integrity, our people work with customers, suppliers and other stakeholders to make a positive contribution to social responsibility and environmental sustainability in communities around the world.

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