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Closing the loop on sustainable supply chains in retail

Business and environmental sustainability are not new considerations for supply chains. Organisations have often looked at ways they can minimise impact and create sustainable supply chains. They do this through operational elements such as optimised logistics and inventory or environmental considerations such as recycling and reusability of components.

Traditionally, cost and service have been the most important factors in deciding whether a supply chain was operating ‘optimally.’ If profits and margins were high and customers were satisfied, a supply chain was considered successful. However, in the current economic, political and social climate, this has changed.

Sustainability is a new driving force to judge a retailers ultimate performance.  

Sustainable manufacturing

Sustainable manufacturing is emerging as the operating model of choice. It has become the driving force for innovative products, processes, and systems for next-generation manufacturing and the supply chains that support them.

Sustainability focusses on a balance between business survivability and minimising the environmental and social impacts of operating.

Today’s increasingly complex, interdependent, and volatile markets demand agile and resilient supply chains. Retailers need to understand the current and emerging challenges facing supply chains. They need to pivot and embrace new technologies and processes such as AI and automation. Then, they can optimise the value chain for better stakeholder outcomes and business continuity. By taking this approach, retailers will also reduce costs and materials consumption, make more efficient use of resources, and increase their adaptability in times of crisis or rapid market shifts.

Our recent report, Creating a Blueprint for UK Competitiveness, found that a combination of talent, technology, future readiness and the ecosystem represent the key ingredients in any organisation’s future success. Essential to accelerating innovation and competitiveness is a collaborative approach focussed on business and industry impacting goals.

Resiliency and sustainable supply chains

Retailers must evolve their foundational supply chain practices quickly, with sustainability as a strategic priority. The current forces driving a resilient supply chain amplify seven key considerations for retailers. Business leaders must address immediate challenges and plan for future needs on supply chain sustainability:

Infographic showing seven key considerations for retail supply chains

Why is now the time to act?

In the 2018 World Economic Forum’s Global Risks Report, extreme weather events, natural disasters, and failure of climate change mitigation and adaptation topped the list of risks with the highest likelihood and impact supply chains. These are long-term trends that will continue.

There is an increasing urgency to modernise practises while these forces drive a need for organisations to rethink the supply chain. As a result, business leaders are taking immediate steps to build resilience into every aspect of planning and execution in the supply chain.

"Sustainable businesses and finance is now an imperative for the global economy, and for building a better society as a whole." - Andrea Stone, Chief Customer Proposition Officer, Refinitiv.

A new approach to sustainable supply chains

In the past, supply chains were linear, push-based, focussed on ad-hoc production and stocking. Systems that were not fully integrated across the value chain sometimes were reactive in nature. They are not the most sustainable option.

The circular supply chain model – as an extension of the circular economy – encourages businesses to loop their supply chains. This achieves cost efficiencies, facilitates innovation, reduces waste and excess inventory, and minimises environmental impact.

Image of a traditional supply chain next to a model of a circular supply chain.

Businesses with a consistent, connected technology platform can now predict and pivot to address customer changes immediately. This also allows the ability to link people, processes and technology together much more tightly across partnerships. This allows for real-time intelligence sharing across the value chain.

"While adopting a circular economy model can increase manufacturers' exposure to risks, it presents an opportunity for positive economic growth combined with positive environmental social impact." - Rafael Go, Senior Research Analyst, Navigant Research

The role of digital technology in sustainable supply chains

One of the key enablers of supply chain evolution is technology. The digital supply chain enables visibility, orchestrated processes, insights, and resilience. It enables you to make faster and better decisions with data and AI. It allows you to reduce your costs while potentially creating new and innovative business models and products.

The ability to gain real-time and predictive insights across supply chains based on external factors such as weather, consumer spending, and trends together with your internal data offers the ability to make faster decisions, serve customers better, and manage warehouses. AI can help identify areas of operational efficiency, predict and prevent disruptions, reduce waste and promote sustainable practices.

Sustainable supply chains are driven by empowered employees. To be more resilient, leaders need to drive a diverse and inclusive workforce, increase digital skills and encourage employees to be active stakeholders in business innovation. Only 48 percent of employees said their organisation offered some type of training in new skills[1]. Successful firms with sustainable supply chains have encouraged staff to re- or up-skill to match new technology.

Where does the journey start?

Retailers have struggled to balance competition and economic fluctuations with the complexities of environmental and societal challenges from their suppliers and customers.

But now smart software solutions, connected on a shared platform, can aid in breaking down silos to transform the global supply chain into a key aspect to deliver a corporate sustainability strategy.

The journey starts now. Not only is there a financial and a moral case, but technology enables us to deliver a strong balance sheet and sustainability improvements now and in the future.

Find out more

Get the eBook: The New Intelligent Supply Chain.

Get the playbook: Sustainability. Good for Business.

Download the Retail Trends Playbook: Driving operational resiliency with connected people and systems

Download the report: Creating a blueprint for UK competitiveness

Ensuring products are made in a sustainable way has never been more important

Ali Rezvan, a man wearing glasses and a suit and tieAbout the author

Ali is a highly successful award-winning industry-business leader, with a successful career spanning 22 years working in the retail and technology sectors including Executive Director of Retail at Verizon. He works as the Microsoft UK Retail Industry Executive creating visionary, business, and technology outcomes for customers and partners in this area.

Outside of Microsoft Ali, hosts and runs The Retail Podcast. He is also an advocate for (CALM) a leading movement against suicide. Every week 125 people in the UK take their own lives. And 75 percent of all UK suicides are male.