Modern production is global which means the problems it faces are also massive. The complexity of the global supply chain includes risk and agility KPIs (Key Performance Indicators) that threaten the smooth functioning of this whole system.
Unprecedented global events, faults and delays, high costs, lack of labour or storage and more factors hamper supply chains. These and some more of the challenges of sustainable supply chain management need addressing to make it more efficient. In this blog, we will look at supply chain sustainability challenges and try to find solutions.
7 Challenges of Sustainable Supply Chain Management
Rising Risks
Risks in supply chains are the result of volatility in markets. Other risks that a supply chain faces are raw material shortages, climate change, stricter environmental regulations, changing consumer demand, trade wars, economic uncertainties and policy changes, industrial unrest, etc., contributing to supply chain management risks and challenges.
Unexpected Delays
Supply chains involve large distances that the packages need to travel. Many steps make them vulnerable to delays. Long lead times for good make them susceptible to delays increasing costs.
Increased Costs
Another one of the challenges of sustainable supply chain management is an increase in costs. When you take the “sustainable” route companies and supply chains might feel caught in between the economics and social responsibility or consumer demands. Here are some cost pressures that companies and supply chains can implement to overcome such challenges:
- Hiring experts to advise on new systems, policies and protocols
- Cost of creating additional checkpoints and procedural processes in workflow
- Cost of vetting suppliers or sourcing exclusively from sustainable suppliers
- Tracking new metrics
- Cost of non-compliance
- Cost of reputation damage due to negative environmental impacts
The gap between low-cost procurement and sustainability is closing. This gives rise to other sustainability issues in supply chain management.
Cost Control= Sustainability
Public and consumers prefer sustainable brands and products that are “green”. They insist on corporate social responsibility. They agree with the costs and they deem it to be justifiable for they are recoverable. For instance, choosing emission-efficient vehicles in supply chains might levy heavy costs initially, but in the long run, it yields a sizable return.
Amongst all the major challenges of sustainable supply chain management, one is the rising cost of labour, raw materials energy and freight. In such a scenario, delivery of goods at a reasonable rate is going to keep the operations and production running without interruptions. Therefore, businesses must tighten cost control.
Eliminating Data Access Issues with Collaboration and Syncing
The key to effective supply chain management lies in access to supply chain data. Since there are a multitude of data points in global supply chains, data management falls amongst the challenges of sustainable supply chain management. Proper data helps to uphold sustainability in global supply chains.
A lack of proper data and access to accurate data usually results in challenges to sustainable supply chain management like demand forecasting. Having the right data allows experts to make forecasts in terms of supply and demand. This ensures that there are enough items in inventory to meet the demand and avoid any supply chain disruptions.
Digital Dilemma
Since logistics has a lot to do with data, companies and supply chains need proper data servers and tools to assess them. Using data can help them to track, log and report inventory. It helps to identify delivered items in the supply chain, or in transit or damaged.
However, the major challenges of sustainable supply chain management lie in implementing technologies in the process. Companies and supply chains can bring about digital transformation by adopting technologies like IoT, AI, drones and robotics to improve operations. However, a big challenge also lies in implementing such technologies across all existing supply chain operations.
Port Congestion
The challenges of sustainable supply chain management stretch beyond logistics and data. Post-pandemic supply chains are facing restrictions on freight loading and unloading operations, causing port congestion. This has resulted in delayed dispatches and deliveries.
Such a challenge will urge supply chains to rethink and redesign their operational strategies. The goal is to maintain healthy bottom lines and retain a customer base.
A few challenges that global supply chains must address are:
- Navigating an environment of persistent unpredictability
- Labour shortages
- Ripple effects of global bottlenecks
- Equipment availability
Such supply chain issues arise mostly due to the players in the chain itself. However, there are challenges to sustainable supply chain management that solely occur due to multiple channels of consumption. Let’s see what they are and how supply chains can tackle them.
Supply Chain Problems Due to Multiple Channels
Consumer buying behaviour is constantly evolving. Especially in the last few years, it has gone through constant evolution. Consumers can now search for and buy products across every possible channel. Hence, brands must have an omnichannel presence.
Companies usually use different channels either solely or several the same time depending on their requirements and business size. For instance,
- D2C eCommerce websites require last-mile delivery and local logistics
- eCommerce retailers have their fulfilment options and terms and conditions that retailers need to adhere to.
- Traditional brick-and-mortar stores and wholesalers require huge storage locations to keep up with their demands.
- Dropshipping service needs fast service logistics to ensure that customers receive goods on time.
Apart from assessing multiple channels to ensure the smooth running of supply chains, companies also need to pay attention to visibility. Building sustainable supply chains means the entire process needs to have end-to-end visibility. See how visibility helps to overcome all challenges of sustainable supply chain management.
End-to-End Visibility
End-to-end visibility simply means full transparency. Transparency at all stages of a supply chain-right from procurement through end delivery of finished goods to the customers. Companies can incorporate end-to-end visibility in six primary areas: procurement and inventory, finance, logistics, operations, quality control and sales and customer service.
To achieve supply chain visibility, organisations need a single source of truth for operational data, historical data to facilitate improvement and forecasting, and immediate alerts to identify supply issues and simulate alternative plans.
With this, we go onto the last one in this list of “challenges of sustainable supply chain management”. This upcoming challenge directly addresses the very essence of the “green” or “sustainable” supply chain. How will you make a supply chain sustainable in the first place? Find out below.
Lack of Supply Chain Sustainability Goals
To address the sustainability challenges, companies need to first identify their sustainability goals. Without proper goals, they cannot close the gaps that are resisting 100% sustainability. Ideally, all goals must align with the global agenda on sustainability.
For instance, it includes cutting down emissions across the entire supply chain and setting a clear target. This target aims to reduce greenhouse gas emissions over the next 10 years by at least 30%.
To reduce and face such challenges of sustainable supply chain management, companies need to reduce waste and advance human rights maintenance. They must also start sourcing renewable materials to reduce the company’s carbon footprint. Consumer companies need to set a high standard for their suppliers when it comes to sustainability-which must be in line with company goals.
FAQs: Unravelling the Top 7 Challenges of Sustainable Supply Chain Management
What are the effects of green supply chain management practices on sustainability performance?
Green supply chains help to improve environmental sustainability. This leads to reduced resource consumption, waste generation and improved efficiency. Not just that, it also improves the firm’s image and encourages more client trust.
What are some supply chain sustainability trends?
Supply chain transparency, sustainable resilience, regulatory changes, and technology-driven ESG decisions are a few popular factors that influence supply chains.
What steps can companies take to ensure ethical sourcing and fair labour practices throughout their supply chain?
Companies must adhere to existing laws and regulations regarding material sourcing. Some other challenges of sustainable supply chain management are sourcing materials from vendors that supply organic materials or recycled sources. They can also employ suppliers and vendors who have a low carbon footprint.
How does technology contribute to overcoming challenges in sustainable supply chain management?
IoT devices help to track inventory, and blockchain technology improves supply chain transparency. Machine learning algorithms optimise supply chain operations saving cost and time.
How do you achieve supply chain transparency?
To achieve supply chain transparency, implement robust tracking systems, utilise blockchain technology for secure records, collaborate closely with suppliers, and employ data analytics to monitor and share real-time information, promoting visibility and accountability.
Conclusion
A resilient and agile supply chain is of utmost importance. To build such a supply chain, you must eliminate all risks and address volatility and extra costs. Overcoming these challenges of sustainable supply chain management with Qodenext requires a holistic approach, integrating technology, ethical practices, and strategic planning to navigate this complex landscape of modern production and uphold the principles of sustainability.
