Why Is Sustainable Supply Chain Management Important?
How are supply chains impacting the planet and its people? Learn why sustainable supply chain management is important
What’s the standard course of a supply chain today? From raw materials in the ground, to a consumer, to a junkyard — from cradle to grave.
The need for sustainable supply chain management is pressing. That is why the University of Liverpool's School of Management has dedicated a research center to discover how companies can achieve a more sustainable supply chain model.
Professor Jo Meehan works for the University of Liverpool Management School as a professor of Responsible Procurement and is the Centre for Sustainable Business director, she examines the importance of sustainable supply chains, slowing things down, and increasing transparency in every step of supply chain management.
Moving toward a circular sustainable supply chain model
Mining and manufacturing new materials takes an overwhelming amount of energy, even before the goods are transported across the world, used briefly, and disposed of.
"Manufacturing and operations are where our biggest carbon footprint lies, particularly in things like agriculture or fast fashion," Jo (pictured) explains.
Finite resources such as lithium, cobalt, oil, and gas significantly effect a supply chain's negative environmental impact. Every time we take these resources out of the ground, we deplete the number of resources available. They also take a large amount of energy to mine and transport from countries like the Democratic Republic of Congo, Australia, and Chile.
Jo's team looks towards a circular supply chain model to counter this issue.
"We need to think about how we can repair and reuse materials," Jo says. "Now, it's more a cradle-to-cradle model — how can materials at the end of a supply chain feedback as a raw material?"
However, materials such as lithium and cobalt occupy our supply chains and aren't designed to be reused. "Often, it takes more energy to break those products down than it does to make them new. So, the economic incentive isn't there," Jo says.
A right-to-repair law has cropped up in the UK and various parts of the EU. This legislation is pressing businesses to think about how they produce goods so they are repairable and can be reused more efficiently.
Along with trying to repair and reuse materials the circular supply chain model would look at coordinating and optimizing logistics, so no trucks or boats are traveling back with an empty load.
Reducing consumption in supply chains
Companies' pressure to provide an extensive selection of goods and materials quickly has a marked impact on our environment. Humans have become accustomed to next-day delivery, seeing tropical and out-of-season fruit and vegetables in the grocery store, and having anything they want at a press of a button.
Jo and the research team at Liverpool aim to push back on these expectations and find a new way of consuming.
"We have cheap clothes, made cheaply; you use them, dispose of them, then buy new ones," Jo explains. "The transformative change is breaking that demand for consumer products."
After a 12% drop in revenue during the pandemic, the global fast fashion industry has recovered with experts predicting the market will rise to $28 billion in revenue in 2023. Globally, the industry produces an estimated 92 million tons of textiles waste each year, and the equivalent of a rubbish truck full of clothes ends up on landfill sites every second.
Jo highlights how easing the pressures and demands of consumer supply chains starts at a local level. This can be seen with a move towards vintage clothes shopping or sharing models.
The Library of Things is an organization that lends out infrequently used resources, such as a jet washer or air fryer, to the local community. Apps for renting clothes or accessories for specific occasions, such as an interview or wedding, have also gained popularity.
"These new economic models are starting to pop up, which are starting to rethink this linear mindset of 'I want something? I must own it,'" Jo says.
Consumption issues don’t stop at fast fashion: our food consumption is also environmentally impactful. Instead of eating fruit and vegetables from local sources when grown naturally, we use excessive fertilizers and false heat to have a variety from every corner of the globe year-round.
"Strawberries don't grow all year round, and apples don't grow all year round. So, we shouldn't expect to see those in our supermarkets all year round."
Jo suggests a more seasonal, local approach to food — instead of expecting to have everything available all the time, there is a variety from season to season.
"This would make us consumers more in touch with the cycles of nature, rather than demanding everything all the time," she says.
Understanding modern slavery risks of supply chains
The more global and intricate supply chains become, the greater the risk of underpaid, neglected workers. Companies use countless materials and products daily, from paper to cotton to lithium batteries. The volume of complex supply chains that daily feed into companies makes it hard for businesses to know what goes on at every level.
"Part of the issue we have with businesses is that they don't have that connection of where their products come from," Jo says.
Jo and her team work with companies to identify modern slavery risks within their supply chains. One continuing area at risk of modern slavery is the cotton industry, with significant problems with forced labor and unfair wages — This is also a substantial problem with the fast fashion industry.
Jo reminds businesses, such as car or construction companies, that even though they don't work in fashion, they will still use cotton supply chains with employee uniforms or car seat materials.
"It's about breaking that down and going: what are all the various components? What are the stages of production? And how do we start to get visibility?"
To make supply chains more sustainable and try and reduce modern slavery risks, Jo discusses using blockchain to track workers at every stage of the process.
"We've got all this information about products. GPS lets us track all our trucks, planes, and boats."
So how can we use technology and data to understand more about where our products come from having visibility of products, but not just the product we need to have visibility of workers," Jo says.
The research center at Liverpool is gaining more and more insight into the need for sustainable supply chains both for the planet and for the people in it. Jo emphasizes the need for us to change our expectations and connect with supply chains on a more local, slower, and seasonal level.
Having worked with students at the Liverpool research center, Jo has high hopes for the future.
"Students will be the future leaders; they will lead the supply chains, leading these big companies making these big decisions. And the climate emergency and social inequality will be even bigger in their intuition than it is for us now."
This October, in recognition for the 20th anniversary of the school of management, Liverpool is launching the Center of Sustainable Business with Jo as the director. This center will be dedicated to holding companies accountable and driving change.
"It's very much about business not-as-usual. How does business need to change? How do we need to report non-financial information? How do we change accountability for business? How do we use technology to disrupt some of these consumer systems? How do we move to circularity and have more responsible consumption of products that requires new ways of thinking?"
BB Insights draws on the expertise of world leading business school professors to cover the most important business topics of today.