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09/09/2022

Trends shaping supply chain sustainability (SCS) in 2022 and beyond

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Supply chain sustainability issues are a major concern for retailers.

According to the EPA, supply chains often account for more than 90% of greenhouse gas (GHG) emissions.

However, historically, cost and service have been the overriding factors in deciding where a given supply chain was operating “optimally.” This is all changing as business, government, and consumer concern about environmental and sustainability issues are now shaping the future of supply chain management.

So, it is no surprise that MIT’s 2022 State of the Supply Chain Sustainability Reportfound that, although focus areas have shifted in the past year, supply chain sustainability (SCS) is trending upwards. The report shares deeper findings on how SCS practices are being implemented globally and what that means for professionals, enterprises, industries, and the planet.

Here are three findings from the report that can help retailers understand the current state of sustainability in supply chains.

SCS gains momentum
The highlight of this year’s report is that SCS is continuing to trend upwards, which is a positive for the industry. And for the second year in a row, over 80% of respondents shared that the ongoing COVID-19 pandemic did not slow their firm’s supply chain sustainability efforts.

This aligns with Blue Yonder’s 2022 Supply Chain and Logistics Survey, which found that nearly half of supply chain executives (43%) have invested in sustainability over the last year. According to the same survey, 39% of respondents plan to seek out more sustainable upstream operations (materials sourcing, suppliers and manufacturing), while 38% plan to offer flexible delivery windows for online orders to maximize sustainability throughout the supply chain.

Although many businesses are starting to prioritize sustainability, there is still work to do. Every step in the value chain has the potential to impact on the planet. The good news is retailers now realize they have a part to play in building a more sustainable tomorrow.

Frameworks and alignment from a global perspective
Experts have been trying to define what sustainability in the supply chain looks like for years, but the challenge is aligning frameworks globally.

Respondents to MIT’s survey noted that supplier audit (46%), supply chain mapping (38%), and code of conduct of the supplier (35%) were some of the top practices that were essential to the framework of managing supply chain sustainability.

These practices saw the greatest increase amongst organizations are following to better manage SCS efforts. On the contrary, collaboration with NGOs or third parties (12%), carbon offsets (14%), and third-party verification (18%) were less applied practices among respondents. One way to interpret this is that these are some of the practices that leading companies have adopted and that more companies will need to adopt them as their practices mature.

The best way to work toward a sustainable-friendly, global supply chain is as simple as this: everyone needs to be on the same page. By setting dimensions across various regions, improving transparency, and working as one to set an ideal framework, companies can steadily strengthen SCS.

Disclosing Supply Chain Sustainability Efforts
Across the board, there are several ways that respondents are seeing sustainability efforts come to fruition through communication tools within their company. Most often, SCS disclosures are happening through a company website (91%), a company sustainability & CSR report (84%) or press releases (83%).

Less often, this information was found through a third-party case study (60%) or a reporting organization (65%). Although these disclosure practices happen less frequently, these partnerships saw the most meaningful increase year-over-year after falling from 2019 to 2020.

Companies spanning retailers, manufacturers, and their logistics service providers are under immense pressure to improve their transparency of sustainability initiatives – in a Blue Yonder consumer survey conducted in March 2022, consumer spend is influenced by sustainably manufactured products and by sustainable retailers.

While steps are being taken to improve this transparency, there is varying degrees of difficulty in measurements between operations within the four-walls of the enterprise and those that require collaboration with outside entities – for example, transportation and distribution between suppliers and manufactures, as well as, manufacturers to retailers to consumers.

Although measuring sustainability metrics between entities is not always easy and requires the sharing of sensitive information, it is an important step to increasing SCS.

AI, ML and the future of SCS
Defining a sustainable top-level business strategy and enacting it across the value chain is still challenging, but there is a clear desire to keep sustainability as a focus. The good news is there are powerful new technologies that can help.

Emerging capabilities in AI/ML are proving that businesses can improve their SCS by decreasing waste, reducing carbon footprint, increasing operational efficiency, and providing higher margins and revenues. And when connected on a shared platform, these technologies can aid in breaking down silos to transform the global supply chain into a tool for environmental stewardship.

The research team from MIT’s Center for Transportation and Logistics, as well as thought leaders from the Council of Supply Chain Management Professionals (CSCMP), Blue Yonder, project 44, Avetta, and C.H. Robinson, will hold an interactive dialogue about the current state of global supply chain sustainability. The session will be held on Thursday, October 13 in Boston. See more information here.

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