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
1.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.
2.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.
3.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.
4.Cost Control= Sustainability
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.
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.
5.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.
6.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.
7.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 fulfillment 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 in Sustainable Supply Chain Management
End-to-end visibility refers to complete transparency throughout every stage of the supply chain—from procurement and inventory management to finance, logistics, operations, quality control, sales, and customer service. It enables organizations to monitor and analyze each segment seamlessly to ensure smooth and sustainable operations.
Key Components to Achieve Supply Chain Visibility
To build effective end-to-end visibility, companies must establish:
- A Single Source of Truth: Centralized operational data that unifies information across the supply chain.
- Historical Data Access: Comprehensive records to identify patterns and support continuous improvement and accurate forecasting.
- Real-Time Alerts and Monitoring: Immediate notifications of supply issues, enabling quick action and the ability to simulate alternative plans.
This level of transparency helps companies proactively manage risks, improve efficiency, and support sustainability objectives.
Addressing the Lack of Supply Chain Sustainability Goals
One of the fundamental challenges in sustainable supply chain management is the absence of clear and measurable sustainability goals. Without well-defined targets, companies struggle to close the gaps preventing full sustainability.
Establishing Effective Sustainability Goals
- Alignment with Global Sustainability Agendas: Sustainability goals should be in harmony with international standards and initiatives addressing climate change and environmental protection.
- Emission Reduction Targets: Setting concrete goals—such as reducing greenhouse gas emissions by at least 30% across the entire supply chain within the next decade—provides direction and accountability.
- Waste Reduction and Responsible Sourcing: Companies must implement measures to minimize waste generation and responsibly source renewable materials to lower their carbon footprint.
- Upholding Human Rights and Ethical Practices:Advancing labor rights and ethical standards within their supply chains is essential for social sustainability.
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.
FAQs: Unravelling the Top 7 Challenges of Sustainable Supply Chain Management
1.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.
2.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.
3.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.
4.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.
5.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.
6.What causes port congestion, and how does it affect supply chains?
Freight loading restrictions, labor shortages, and global bottlenecks create port congestion, delaying dispatches and deliveries, which necessitate operational redesign for sustainability.
7.How do multiple consumption channels complicate supply chain sustainability?
Diverse channels—such as D2C eCommerce, traditional retail, and dropshipping—require tailored logistics, inventory, and fulfillment solutions, increasing complexity for sustainable management.
8.What does end-to-end visibility mean in supply chain sustainability?
It involves transparent tracking of goods and data from procurement to customer delivery, enabling improved forecasting, rapid issue detection, and effective response to supply disruptions.
9.Why are clear sustainability goals crucial for supply chains?
Without defined sustainability targets, companies struggle to reduce emissions, manage waste, uphold human rights, and implement renewable sourcing consistently across the supply chain.
