What Makes A Supply Chain Sustainable & Why It Is Important
Supply chains are robust, complex networks, consisting of all the stages involved in producing a product or service, from A to Z and everything in between. These networks are made up of businesses, people, resources, raw materials, ingredients, processes, activities, and information that work together to form a product or service to the delivery of the final product to the consumer.
Sustainable and ethical supply chains evaluate their environmental impacts, social responsibility, and economic viability at every level for traceability and transparency.
Traceability is identifying, tracking, and tracing a product's journey throughout every stage of the supply chain, from the origins of raw materials to the production processes and distribution of finished products to the end consumer. This involves documenting and recording information about the product's location, status, and history at every stage.
Transparency is the visibility of the supply chain information; making it available and accessible to all stakeholders, including customers, suppliers, and regulators to understand where and how the raw materials are grown and where they are from, the manufacturing processes, labor practices, environmental impact, product distribution, and more.
WHY IS IT IMPORTANT
There are growing concerns about product safety, labor conditions, and environmental impacts, transparency helps brands and suppliers meet these expectations. Supply chain traceability and transparency are essential to building trust, assuring ethical practices and quality assurance, mitigating risks, and ensuring sustainability.
Environmental Accountability
Photo Credit | Sid Suratia
Traceability allows companies to track and monitor the environmental impact of each stage in the production process, from cultivation to processing to delivery. Identifying areas that harm the environment and allowing companies to reassess and implement sustainable methods. It lets companies and consumers understand the amount of water, energy, and chemicals used, as well as the amount of carbon emissions released at every step.
Monitoring Agricultural Practices
Sustainable agricultural practices such as organic farming, low-impact harvesting, and minimal water usage are vital for long-term food security, environmental protection, and economic viability, reducing harmful practices like deforestation, excessive water consumption, and soil degradation.
Natural fibers like cotton, hemp, bamboo, and sisal each have unique environmental considerations, from soil health to water usage. Adopting sustainable practices can minimize negative environmental impacts, improve production methods, and enhance resource management, ultimately leading to a more resilient and sustainable system.
Waste and Pollution Management
Processes throughout the supply chain can result in waste and pollution, impacting local communities, ecosystems, natural resources, and the company's bottom line.
Waste and pollution are unwanted byproducts and harmful substances generated throughout the processes of sourcing, manufacturing, distribution, and consumption of goods.
Waste is unusable or inefficiently used materials, anything that does not add value to producing and delivering a product to the end consumer. This includes unused or spoiled raw materials, discarded or reworked products that do not meet quality standards, overstocking, overpackaging, unnecessary transportation, fuel consumption, and emissions associated with moving goods.
Impact: increases costs, resource depletion, reduces efficiency, and damages the environment.
Pollution is toxic substances released into the air, water, and land, harmful to the environment and living organisms. Types of pollution include greenhouse gas emissions from transportation, manufacturing processes, waste disposal, chemical runoff from industrial processes including dying and finishing of materials, that enter waterways, and plastic pollution ending up in landfills or oceans.
Impact: Pollution damages ecosystems, harms human health, and contributes to climate change.
Businesses are able to identify and address impacts along the supply chain through traceability, minimizing negative environmental impacts such as deforestation, unsustainable resource extraction, and pollution runoff. Adopting practices through sustainable sourcing, manufacturing, and distribution, reducing waste, conserving resources, and promoting energy efficiency can have a significant impact on the environment and the communities' health and livelihood.
Ethical Labor Practices & Social Responsibility
Social and ethical responsibility in the supply chain ensures ethical and sustainable practices throughout the entire production process, from sourcing raw materials to delivering finished products.
Businesses should actively work to ensure their operations and those of their suppliers positively impact the communities they serve (locally and at large). This involves going beyond compliance with regulations and actively engaging with local communities, investing in their development, respecting their rights, cultures, and traditions, protecting human rights, promoting fair labor practices, environmental protection for communities, and community well-being.
Fair labor practices are crucial to ensure workers are treated fairly, paid living wages, and provided with safe and healthy working conditions. This includes adhering to labor laws and going beyond to ensure workers' rights are respected and their livelihoods are improved.
Protecting human rights throughout the supply chain is fundamental. This includes ensuring that no child labor or forced labor including human trafficking, is involved in production and that all workers are treated with dignity and respect including freedom of association, non-discrimination, and access to decent work at all levels of the supply chain.
Businesses should actively engage with communities in areas where the supply chain operates to address social, environmental, and economic concerns. By connecting with communities to create an open dialogue, listen actively, and share ideas, businesses can understand the needs and how to support local communities, while respecting indigenous rights and cultures. This can involve partnerships with local organizations, creating job opportunities, and contributing to community development projects.
Benefits of supply chain traceability & transparency
Cost and Resource Optimization
Transparent supply chains allow for better inventory management, optimized logistics, and reduced lead times. Identifying inefficiencies or waste enables brands to streamline processes, and improve resource use, which not only saves money but also reduces the environmental impact and excessive resource consumption.
Assurance of Quality & Material Authenticity
Tracking the origin of raw materials and fibers throughout the production process can help prevent the mixing of genuine natural fibers with lower-quality or synthetic alternatives.
With full visibility, brands can certify that raw materials are produced using organic or sustainable farming practices. This is especially important to validate natural fibers labeled as ‘organic’, ‘eco-friendly’, and ‘biobased’ which need to meet specific standards to be certified to claim these titles and to avoid greenwashing. Transparent supply chains help brands and consumers trust that they are getting the genuine, high-quality materials they expect.
Risk Management & Supply Chain Resilience
With clear visibility, brands can better manage supply chain disruptions, ensuring continuity in production.
A clear understanding of suppliers and their operations can help businesses identify vulnerabilities or potential disruptions in their supply chain and develop strategies to mitigate them before they become major issues, such as environmental degradation, unethical labor practices, or quality concerns. Not depending on a single supplier or a specific region leads to a more resilient supply chain that can better withstand disruptions like natural disasters or geopolitical events.
Informed Decision-Making & Supplier Relationships
A clear understanding of supplier policies, practices, and performance, enables businesses to make informed decisions about which suppliers to work with, materials and processes, and ethical practices throughout the supply chain and all other areas of their business.
Facilitating Compliance & Future-Proofing
With climate change and resource scarcity becoming urgent global issues, governments worldwide are introducing stricter regulations on supply chain transparency and environmental responsibility. Traceable supply chains allow companies to stay compliant with regulations, avoid fines, and adapt and plan to ensure resource availability for long-term viability.
Supporting Circularity & Sustainable End-of-Life Management
Tracking materials from growth to production to the end of life facilitates closed-loop systems where natural fibers can be collected, recycled, and reintegrated into new materials and products, prioritizing circularity starting at the design process.
Utilizing circular and regenerative design principles aligns with transparent supply chains verifying that materials can be placed back into the system through various forms such as recycling, upcycling, and biodegradability.
Building Consumer Trust & Brand Credibility
Consumers are more educated about sustainability and demand clear information about where their products come from, what they are made of, and the impacts they have.
Honest and open communication about a brand's supply chain, material selection, environmental and social impacts, and give-back programs establishes it as trustworthy, builds confidence, strengthens its reputation, attracts conscious consumers, and builds lasting loyalty. Transparency aligns with growing consumer values around responsible consumption, giving brands a competitive edge.
Supply chain traceability and transparency are the foundation for sustainable, ethical, and responsible industry practices. It allows brands to hold themselves accountable, track impact, align with evolving regulations, and meet the ethical demands of today’s informed consumers. It gives customers the validation they need to make conscious choices that drive their purchasing decisions, fostering a positive impact on both people and the planet.
