Sustainability, a lot of people regard it as an environmental issue, the climate change topic. Something that is far away from day-to-day life. But it is more. It is a way of thinking in which we are striving to a balance in economic, social, environmental and ethical value. A sustainable supply chain is the result of processes that meets the needs of the present without compromising the ability of future generations to meet their own needs. It encompasses more than care for the environment.
How can we incorporate the sustainability approach into our Supply Chain? By taking the below 7 steps into account.
7 Steps to Achieve – Sustainable Supply Chain
STEP 1: Change Consumption Habits
A study published in the Journal of Industrial Ecology shows that the stuff we consume – from food to knick-knacks – is responsible for up to 60 percent of global greenhouse gas emissions and between 50 and 80 percent of total land, material, and water use.
“We all like to put the blame on someone else, the government, or businesses. ….. But between 60-80 percent of the impacts on the planet come from household consumption. If we change our consumption habits, this would have a drastic effect on our environmental footprint as well,”
So, the first step to becoming more sustainable is without any doubt: Change consumption habits. This would have a drastic effect on our environmental footprint and will create
That sounds easier on paper than in practice. In changing habits, we also try to finger at others. But what are our own habits?
At my home, there are living – besides me, my wife and the cat – four teenagers. They discovered early the benefits of online shopping. Every day there are some parcels coming from Amazon, AliExpress or other eCommerce retailers. And what is inside? Mostly rubbish from China.
” Oh daddy, I bought this nice phone cover for only $1, free shipping. I couldn’t resist it.”
And after a couple of weeks, it usually ends up as trash. But this is not the only example of how we introduce bad habits in our lives. …… Do we separate our trash? Is the trip with the car really necessary? Should we fly three or more times per year to have a holiday? Usually, this is the point where sustainability discussion stops. May I do not enjoy life? I cannot change the world alone. I am not the only cause of climate change, waste or overconsumption. And then we continue … to do nothing.
“You must change your consumption habits, but it is not necessary to that drastically in one run.”
But we can do something. Start with changing only one bad habit into a more sustainable alternative and encourage people in your environment to do the same. Make small steps, but implement it in such a way that it stays a sustainable supply chain. You can also implement it in your business supply chain. Take for instance 10 suppliers, and let them make 1 sustainable change in their supply chain, and ask them to do the same with 10 of their suppliers. The multiplier effect will be huge and we will change gradually our consumption habits.
“One small change, that must be doable…. but a lot of small changes can make that needed big change.”
Secondly, businesses have to start to emphasize sustainability and changing behavior. Being a leader means to look critically at all aspects of your business. Engage in the debate and enabling customers, co-workers, and partners to take action and contribute. Even though IKEA has accomplished many things, they state that they are only at the beginning and there is still much to be done. They will – together with others – define what sustainable supply chain consumption means for IKEA. They will develop all products using their design approach and circular design principles. We will work together with others to prolong the life of products and materials and thereby promote a sharing and circular economy. Coca Cola announced in 2018 a pledge to recycle a used bottle or can for each one the company sells by 2030. Coca Cola uses three million tons of plastic packaging in one year. To imagine that, take the volume of one blue whale and multiply that with 15.000. That’s roughly three million tons.
The other way to change consumption behavior, is done by the governments. An example is the Single-Use Plastic Directive of the EU. These rules on single-use of plastics items and fishing gear – addressing the ten most found items on EU beaches – place the EU at the forefront of the global fight against marine litter. They are part of the EU Plastics Strategy – the most comprehensive strategy in the world adopting a material-specific lifecycle approach with the vision and objectives to have all plastic packaging placed on the EU market as reusable or recyclable by 2030.
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STEP 2: Reduce the Amount of Material Needed
Reduction of materials, we are already doing that. It is simple because it directly impacts our cost price and therefore directly touches our bottom line. We might overlook this step, considering that it not a sustainability approach. But less is true.
Did you look to introduce other processes as well? A simple example. If you make plastic components you are likely using an injection molding process. Change it to 3D printing which uses only the material it needs when layer by layer is added and the plastic waste can be reused. And more important, 3D printing is using grids, and not solids forms. The use of base materials can easily be reduced by 50%.
Another example is the After Eight chocolates. Is it really necessary to have all those layers of packaging? How easy can it be to eliminate one or two layers?
“It is a simple approach. The material you don’t use, doesn’t give you a sustainability headache.”
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STEP 3: Use Low Impact and Recycled Materials
But if we use materials, then we have to consider the impact, reuse and recycling possibilities of the materials to achieve Sustainable Supply Chain.
Another – more thinking out-of-the box – approach was used by Kenco Coffee in their eco packaging from already some years ago. Nowadays we see the same approach with canned soups and other canned food. Compared to the standard glass jar, an Eco Refill contains 97% less packaging weight per gram of coffee. It reduces the overall mass of waste being sent to landfill compared to jars: this is because while the glass jar is recyclable, the jar lid is difficult to recycle (it is made of polypropylene which is not widely recycled in the UK) and so in most cases will be thrown away. The Eco Refill pack weighs less than the jar lid alone, so consumers who purchase the refills ultimately send less waste to landfill than those who recycle the glass jar but have to throw away the plastic lid of the glass jar.
As part of its recent pledge to only use recycled plastics by 2024, Adidas has created a new running shoe that is made from 100% recyclable materials. The Futurecraft Loop was designed using nothing but thermoplastic polyurethane (TPU), a plastic material that dons the entire sneaker, including the tongue, laces, upper and the midsole with Boost cushioning technology. Of course, Futurecraft Loop is part of the German sportswear giant’s vision for sustainability, which is playing a key role in its overall business. In 2016, Adidas teamed up with Parley to make a shoe out of recycled ocean plastic, and in 2019 that partnership is expected to produce 11 million pairs. Sustainability Supply Chain can pay off in real money.
H&M has introduced a garment collection plan. Drop your bag of unwanted clothing in the recycling box at your local store. All textiles are welcome – any brand, any condition – even odd socks, worn-out T-shirts and old sheets. The textiles are then sent to the nearest recycling plant, where they’re sorted by hand. For every bag of textiles, you drop off, you’ll receive a discount card for 15% off your next in-store purchase.
Sustainable Logistics and Supply Chain Management: Principles and Practices for Sustainable Operations and Management
STEP 4: Use Processes Which Need Less Energy
As about 60% of the total energy consumption is used in the industry – of which approximately 25% in energy-intensive manufacturing – it makes sense to focus on energy-efficient processes. An average person is using in 30GJ of primary energy per year, mainly in housing. To make a comparison, a cheese factory is using the equivalent of 7.500 persons, a pharmaceutical company the equivalent of 75.000 persons and a refinery is using the same as an average town (750.000 persons). When we want to change something and make our supply chain more sustainable, we cannot ignore the energy consumption of industrial processes. Therefore, the next step is to make use of:
- Clean energy technologies, as the cost are rapidly falling down.
- Electrification of energy, as the low-carbon solution and possibilities are growing.
- Services-oriented economy, products as a service will encourage the circular economy.
- Cleaner energy mix, as oil and coal fall back and renewables ramp up strongly.
One of the most promising short-term industrial electrification technologies is power-to-heat, the switch from gas- to electricity-based heat. As many industrial processes are driven by medium and high-temperature heat, changing its energy source to renewable power will immediately impact the industrial carbon footprint.
Currently, two main approaches can be adopted for the use of green energy in the industrial sector:
- Direct use of electricity/heat energy from renewables. Use of clean electrical energy from sustainable sources can create a carbon neutral industrial atmosphere.
- Energy from fossil fuels integrated with CO2 capture and utilization. Industrial processes, which cannot be electrified can reduce their CO2 emissions by increasing energy efficiency and using energy from renewables.
Next to the industry, the transportation sector is using a huge portion of the energy in the world. That is one of the – economic driven – reasons why they focus heavily on energy reduction. Of course, the other trigger is the regulatory pressure of emission reduction. Like its rivals COSCO and CMA CGM, MAERSK has invested in new, fuel-efficient vessels and retrofitted older ships with energy-saving designs. Its real-time tracking system allows it to avoid delays, maximize cargo space, and optimize ship speeds for fuel-efficiency. Thanks to these measures, the company’s container division — the largest in the world — has seen a 43-percent drop in emissions per container moved since 2007.
STEP 5: Source Materials Locally
Most of the times we do not think of transport when procure ‘green’ materials to be used in our products. Far too often, green products are defined by individual characteristics such as Volatile Organic Compounds (VOC) levels or recyclability. By specifying regional materials, however, a product’s sustainability profile can be extended to extraction, manufacturing, and transportation practices. Consider how far a product must travel between its point of origin, the manufacturing site, and your manufacturing or distribution site. Each step of the journey burns transportation fuel. If you cut down on the travel distance, however, a product’s environmental impact is greatly lessened. This creates a much smaller carbon footprint for your complete product, and this they are considered ‘greener’, more sustainable supply chain
Apart from the impact on the environment sourcing locally has the following benefits:
- More Flexibility. Local suppliers are typically more reactive than suppliers who are farther away.
- Greater Control. The further away you are from elements of your supply chain, the less control you have over them.
- Reduced Supply Chain Costs. Source all over the globe and the expenses can add up as quickly as the miles.
- More Revenue. Companies in your region may be impressed by your efforts to keep a tight and fast-paced supply chain, which can help you attract new customers.
- Good For The Community. As sourcing locally increases your bottom line, it would do the same for other suppliers and manufacturers in your area.
“Buying local is growing in importance as many people begin to consider the impact of their own carbon footprint on the environment.”
In the fast-food industry, glocalization is becoming a unique selling point. McDonald’s has made no secret of its desire to buy locally: in Britain it has committed to use only British potatoes for its French fries, On the other hand Chipotle – probably the biggest fast-food chain with a commitment to sustainably raised food – sources organic and local produce “when practical. Chipotle has shown that fast-food chains can steer a greener course when they put their minds to it. The company has put solar panels on restaurants, uses low VOC paints and energy-efficient lights, and paper products made from unbleached paper.
Sustainable Supply Chains: A Research-Based Textbook on Operations and Strategy (Springer Series in Supply Chain Management)
STEP 6: Increase Durability / Product life
One of the key step is develop sustainable Increasing the durability or lifetime of products will not be the first reason how organizations thinking of contributing to sustainability goals. The longer the product life, the more products I need to sell, is the basic thought. But when we move from a product-oriented economy towards a service-oriented economy, this will open new opportunities.
“A minimal increase of 1% of value added by economic activities related to a longer lifetime for products would have an aggregated effect of 7.9billion EUR per year a cross the European economy”
A longer lifetime for products should, however, not be treated as synonymous with the ability to retain the value of the materials used in a product, which can be seen as a definition of a circular economy. Moreover, a product ’s life time has implications for:
- Sustainable material use. The environmental impact of a product is mainly determined by its material component, as related to its lifetime.
- Enduring knowledge and skills. Potential measures for a longer lifetime for products should consider the preservation of the know-how required to maintain, repair or refurbish them.
- Extended utility. A longer lifetime for a product is extending its utility i.e, giving it a longer economic lifetime.
Especially in the second element the new opportunities can be found. Prolonging the use of products that still work is the best way to combat the linear economy and promote savings. By providing services, the business model can become a sustainable supply chain, even when you might sell less (new) products. But even that statement can be doubtful, as you may attract new buyers. Some examples of current business model which are exploiting this approach:
Malongo is a family firm from the area of Nice, France. They produce 7.000 tons of coffee each year. They launched the unique concept of machines and pods. The design is based on durability, not on take-back systems. The interplay between machines and processed raw materials (coffee) with corporate social responsibility ensures the exchange of knowledge between stakeholders involved in their value chain. Malongo describes itself as a company that creates quality coffee rather than merely machinery. It aspires to be a company that appreciates fair trade.
Leapp sells Apple products with the service and guaranty of new Apple products. Because they purchase used products and refurbish them, cost (i.e. the price) is lower than new Apple products, with the voluntarily benefit that all products have at least a 12-month warranty.
Tesla cars have body and motor designs that clearly set the product apart from other manufacturers in their sector. Moreover, Tesla allows customers to upgrade components (e.g. battery swaps) in their cars, allowing new functionality to consumers without having to replace the total product. Finally, Tesla allows others to use their technology (effectively, sharing patents) if they use it “in good faith.”
STEP 7: Consider Responsible End-of-life
As we have discussed several possibilities to reduce, reuse and recycle we come to a point that we have to consider a responsible end-of life of the product.
When a Jaguar reaches the end of its life, their commitment to sustainable supply chain remains. Using their take-back service, each of their cars is designed to be 85% recyclable and 95% recoverable, with no more than 5% going to landfill. With their disassembly partners Jaguar ensures that materials are disposed of responsibly; while they study this process and feed the results into new designs to create more sustainable supply chain components. With the emergence of new technologies, they are also remanufacturing more parts – reducing waste and extending the life of their cars.
Bottomline still 5% is left, and should go to a landfill. Are there options to do that more as sustainable supply chain? Basically, there are two. We can either bury it or burn it. Nowadays, burning it means using waste-to-energy (WTE) technology, which burns waste to generate electricity. In addition to disposing of garbage and reducing landfill space, WTE generates 500kWh of electricity per ton of waste – roughly the same amount of power generated by a third of a ton of coal.
Apart from burning, there are other techniques.
- Plasma arc recycling heats the waste to thousands of degrees instead of hundreds. It vaporizes the waste. When it cools, only gasses remain of organic waste, mostly carbon monoxide and hydrogen. Inorganic waste, including heavy metals, cools back to chunks of glass-like solids.
- Pyrolysis works on plastics and biomass by subjecting it to high heat in the absence of oxygen. The lack of oxygen prevents combustion. Not all plastics are suitable for pyrolysis, however. But it is a proven technology, known as both a sustainable supply chain and profitable.
Of course, we regard the responsible end-of-life as the last resort, and try to not have it. Nevertheless, it could be a part of any sustainable strategy. As an example, Sweden sends less than 1% of its trash to landfills. Instead, its 32 WTE incinerators burn trash to produce steam that runs turbines at electric plants. Swedes also recycle about half of their household waste. Swedish law makes the process of reuse, reduce, recycle more efficient than anywhere else in the world.
About the author:
Paul Denneman, is a supply chain expert and international master trainer. He is also a leading author in Sustainable Supply Chain. He is observing changes in supply chains for the past 25 years. Want have more insights, please visit www.mutatis-mutandis.com