If you're like most small business owners, you are always looking for ways to run your business more efficiently and stay competitive.
One area that you may not have given much thought to is supply chain sustainability.
However, this is an important aspect of doing business that you can't afford to ignore.
In this blog post, we will discuss three elements of supply chain sustainability that are crucial for SMBs. Before we get into the three elements of supply chain sustainability, it's important to understand what it is.
What is Supply Chain Sustainability in The Shipping Industry?
In the shipping industry, supply chain sustainability is the ability to maintain a consistent flow of goods and services while minimizing negative financial, environmental, and social impacts.
Sustainability has become an important issue for businesses of all sizes, and shipping is no exception. As consumers become more aware of the environmental impact of their purchases, they are demanding that brands take responsibility for the entire life cycle of their products, from production to disposal. In fact, as many as eight in ten (86%) of consumers are willing to delay deliveries if it's more sustainable. This means that businesses need to rethink their supply chains in order to minimize their environmental footprint.
Now that we've covered what supply chain sustainability is, let's take a look at its three elements and how you can implement them in your business.
3 Elements of Supply Chain Sustainability
There are three main elements of supply chain sustainability: economic, environmental, and social. Each element is important in its own right, but they are also interconnected.
For example, a company that focuses solely on economic growth may inadvertently damage the environment or create social inequities. Conversely, a company that is environmentally friendly may find it difficult to remain profitable if it does not take into account the needs of its workers or the communities it operates in.
A truly sustainable supply chain considers all three elements equally and works to strike a balance between them. This can be a challenge, but it is essential for the long-term health of both the planet and its people.
#1 Economic Sustainability
The shipping industry has a long history of environmental sustainability initiatives, often led by economic motivations. There are countless reasons why sustainability should be a priority for SMBs, but at the end of the day it all comes down to dollars and cents.
Financial sustainability refers to the financial viability of the supply chain and includes factors such as:
- Cost — consider the long-term financial impact of your decisions. For example, choosing less than container load (LCL) shipping instead of full container load (FCL) shipping may be more expensive upfront, but it can lead to significant cost savings down the road.
- Risk — identify and manage risks associated with the supply chain. For instance, supplier risk can be mitigated by diversifying the supplier base and developing long-term relationships.
- Working capital — optimize working capital to free up cash flow and improve profitability. For example, extending payment terms with suppliers can help businesses improve their cash flow.
- Return on investment (ROI) — focus on initiatives that will generate the highest ROI. For example, investing in a digital tool to streamline your operations might be more expensive upfront, but it can save you money in the long run.
By taking a holistic view of the supply chain and considering its financial sustainability, businesses can make decisions that will improve their bottom line. While saving money is certainly important, it's not the only factor that businesses need to consider when it comes to supply chain sustainability.
#2 Environmental Sustainability
The shipping supply chain is a complicated and important process that helps to keep the global economy moving. Every day, millions of containers full of goods are shipped around the world, and the efficient transport of these goods is essential for businesses and consumers alike.
However, the shipping industry has come under fire in recent years for its environmental impact. The global shipping industry accounts for 3% of global carbon dioxide emissions. As a result, there is an increasing focus on environmental sustainability in the shipping industry.
There are a number of ways that businesses can make their supply chains more environmentally sustainable, such as:
- Reducing emissions — one way to do this is by using cleaner fuel sources or investing in energy-efficient technologies.
- Minimizing waste — businesses can reduce waste by reusing and recycling materials, as well as by streamlining their operations to minimize waste.
- Improving packaging — using lighter, more sustainable packaging materials can help to reduce the environmental impact of shipping.
By implementing some of these changes, businesses can make their supply chains more environmentally sustainable and help to protect the planet.
#3 Social Sustainability
While the shipping industry faces a lot of challenges in terms of environmental sustainability, social sustainability is an often forgotten element. The shipping supply chain is a complex process that involves a large number of people and businesses, all of which need to be treated fairly and with respect.
There are a number of ways to make sure that your supply chain is socially sustainable, such as:
- Ensuring good working conditions — this includes providing safe working conditions, fair wages, and access to social benefits like healthcare
- Providing training and development opportunities — by investing in employee training and development, businesses can help to improve the skills of the workforce and create better job prospects for workers.
- Considering the impact on local communities — ensuring that local residents aren't negatively impacted
- Supporting local communities — businesses can do this by sourcing materials locally or investing in community development projects
Making sure that your supply chain is socially sustainable is important for the well-being of everyone involved — the workers, business, and communities. By taking steps to improve the social sustainability of their supply chains, businesses can create a positive impact on the people and communities that they rely on.
Running a Sustainable Shipping Business
The three elements of supply chain sustainability — financial, environmental, and social — are all important factors that businesses need to consider. By taking a holistic view of the supply chain and making sustainable choices, businesses can improve their bottom line while also creating positive changes in their environment.
Many businesses have already taken steps to improve the sustainability of their supply chains. Take these 3 eco-conscious shipping companies as an example. However, there's still a long road ahead of us.
As consumers become more environmentally and socially conscious, they will increasingly demand that businesses take steps to improve the sustainability of their operations. Those that don't take sustainability seriously are likely to find themselves at a disadvantage in the future.
If you want to learn more about how to make your business more sustainable by digitalizing your shipping supply chain, contact us today. We would be happy to discuss your specific needs and help you find a solution that fits your business.
