Supply chain management impacts business and the economy, the global population and the environment. Supply chain management is a logistical and operational exercise that faces many challenges along the way. Not only is executing this process difficult, trying to do it in a sustainable manner is even more of a challenge.
The Food Journey
Let’s say you buy a fruit juice smoothie at the supermarket. Before the fruit juice smoothie came into your hands, the customer, it had to go to a retailer. In this case the retailer is the supermarket. The smoothie was shipped to the supermarket by the beverage and smoothie manufacturer. The smoothie could have traveled long or short distances to get there. Transporting options are varied and could have included planes, trains, trucks, or shipping containers on boats.
The manufacturer produces the smoothie inside the bottle. In this example, the manufacturer does not produce plastic bottles. Instead, the plastic bottle would have been shipped to them by a separate manufacturer who produces plastic products. However, just because the bottle manufacturer produces the smoothie bottle, does not mean they have the raw materials to make the bottle. The bottle manufacturer needs to source the raw materials from another supplier. These materials are oil based so there is still more sourcing to be done.
This is a very simplified version of the journey that one product goes through in the supply chain. There are more things to consider as well. These include labelling and branding of the bottle, sourcing the ingredients that go into the smoothie, and the industrial process of blending the ingredients together. Each step in this process is important to monitor.
Balancing Financial and Environmental Responsibilities
Supply chain managers are in charge of keeping everything running smoothly, while trying to optimise costs for their business. There are large financial and environmental implications faced by supply chain managers. This process is integral to bringing business success and customer satisfaction. Not only do supply chain managers face many challenges to keep this a fluid process, but they also face challenges by trying to achieve sustainable practices.
Sustainability holds businesses accountable to be socially responsible in their operations. Sustainability focuses on three core foundations: people, the planet, and profit. If a company can impact on these areas in a positive manner, they are considered to be more sustainable.
Rewinding back to our example, you’ll remember all of the transport options and the logistics involved in delivering just one item in the supply chain. A logistics manager is not only in charge of being efficient, but is now being held responsible for doing it in a sustainable way.
Some companies have set goals to reduce the amount of kilometres driven by their delivery trucks by 30%. They execute this by carefully planning routes and managing order delivery. This means carefully managing inventory control so stock can be allocated efficiently for the specific shipments. By optimising inventory control to align better with shipments, it can also help reduce energy usage, CO2 emissions, waste disposal and water usage. Moreover, by having better planned logistics and aligning it with inventory control efforts companies can save significant amounts of money through operational costs reduction.
Supply chain management plays such a significant role in both business and our world. This means companies need to look further and become more creative on how to optimise these supply chains to make sustainable efforts for our environment.