Retail Supply Chain Sustainability: Driving Environmental and Social Impact
As we’re all becoming abundantly aware, the need for widespread sustainability initiatives has never been more profound. With the climate crisis reaching new heights of concern every year, it’s up to everyone, especially retail businesses and brands to make positive changes for the sake of the environment. Also, information about widespread poverty and unacceptable working standards is more available than ever. Now is the time for supply chain sustainability.
When it comes to sustainability in retail, operations are driven by the supply chain. We’ve put together this blog to showcase some supply chain sustainability examples, elaborating on how logistics leaders can integrate eco-friendly and community-minded practices into their systems.
The Role of Sustainability in Reshaping Retail Supply Chains
At its core, sustainability in the retail supply chain refers to integrating more responsible practices across the supply chain, with both environmental and social focuses. From the initial steps of sourcing raw materials and producing goods to delivering products and stocking shelves, there are various limbs to a sustainable supply chain.
The tangible impacts of supply chain sustainability can include:
- Reduced carbon emissions
- Reduced waste generation
- More efficient resource usage
- Promoted social equity in workspaces
- Widespread economic prosperity
Sustainability isn’t all about using electric cars – there are essential human elements that are vital for a truly sustainable approach. When brands effectively take on sustainable practices, they can influence competitors to improve their operations, also enhancing their reputation among consumers.
The Key Motivators Driving Sustainability
Consumer Demand: In 2024, consumers care more about sustainability than ever, with a majority of consumers saying that it will influence their purchasing decisions. Having a transparent, sustainable supply chain is an effective way to meet consumer demand.
Regulatory Pressures: Many governments and regulatory bodies across the world are imposing stricter environmental and labor regulations, especially for newer businesses. It’s important to stay abreast of regulatory developments to avoid penalties.
Cost Savings: Sustainable practices, while often requiring some investment to get started, can help businesses save money over time. With reduced energy consumption, supply chain efficiency, and better waste management systems, brands can cut costs significantly.
Brand Reputation: Beyond simply meeting consumer demand in a transactional sense, reputational gains can be made by embracing sustainability in the supply chain. It can help brands to stand out from the competition while attracting a new sect of sustainability-minded customers.
Risk Mitigation: There are practical benefits to brands that embrace sustainability, as climate change impacts can lead to resource scarcity and supply chain disruptions. Supply chain sustainability helps to ensure that brands are protected in the case of unexpected environmental emergencies.
Encouraging Innovation: The brands that embrace innovation are the ones that maintain longevity. To stay ahead of the curve in logistics sustainability, brands must get creative in terms of materials, strategies, and ultimately, market opportunities.
Retail supply chain sustainability is becoming increasingly widespread, for both meeting consumer demand and contributing to the fight for the world’s future. As a retailer, sustainability initiatives can do wonders for developing a competitive edge in everything from brand image to embracing forward-thinking perspectives – don’t let your supply chain fall behind.
Initiatives for Sustainable Retail Supply Chains
If you’re unsure of where to start when building a sustainable supply chain, there are various steps along the way where conscious decisions can be made. From gathering the raw materials to delivering the finished product, businesses can push for sustainability at every stage.
Ethical Sourcing
This is where sustainability starts, with a distinctly human focus. Whether making your products from raw materials or sourcing white-label goods, ethical sourcing ensures that everything is done according to fair labor practices that facilitate community empowerment. A major ethical source initiative is the Fairtrade Foundation, which has held accountable the sourcing and production of various consumer products, such as jewelry, confectionary, fashion, and more
Eco-Friendly Packaging
Packaging is a great way to include sustainability into a supply chain strategy. Some products simply can’t be made from biodegradable materials but by making the shift in packaging decisions, brands can reduce the overarching impact that the goods have. Brands like ASOS, JUST Water, Calvin Klein, and Samsung are leading the charge in eco-friendly packaging, whether with biodegradable, reusable, recycled/recyclable, or minimalistic designs.
Renewable Energy Adoption
With renewable energy becoming more available in general, retail operations can adopt them for various reasons. Solar, wind, hydro, tidal, geothermal, and biomass energy are all on the rise, becoming more popular for many different purposes, with some retailers using them for production energy or initiatives like electric shipping. Brands like Walmart, Amazon, Target, Ikea, Apple, H&M, and Tesco have all committed to embracing more renewable energy solutions.
Waste Reduction
Minimizing waste at various stages of the supply chain is an effective sustainability measure. Beyond ethical sourcing and conscious packaging, various logistical techniques like enhanced inventory management, demand forecasting, and general process efficiency ensure that resources aren’t used excessively. Supply chain route optimization, closed-loop supply chains, and the Japanese principle of Kaizen are all relevant strategies that can help to reduce waste.
These are some of the most common sustainability initiatives in the retail sector, all of which can be adapted and interpreted to support a business’s shift towards conscious practices. Remember to look at companies that have developed reputations within these practices – their approaches will help to inform your own.
Supply Chain Sustainability Examples: Companies Leading the Charge
When elevating your business’s sustainability practices, it’s always worth looking at the leading brands and analyzing their approaches. We’ve gathered some facts on leaders in retail approaching the supply chain in an innovative, sustainable way.
Adidas
Adidas, one of the world’s leading sportswear brands, embraced a procurement traceability system, ensuring that any delivered goods come with a fully traceable history using TrusTrace. Adidas has also worked hard to reduce waste, using 96% recycled polyester in their products in 2023 already!
By holding themselves to account with traceability, they allow potential customers to penalize them, which helps to build a more positive reputation. In a more physical sense, shifting towards recycled polyester is a great waste reduction strategy.
IKEA
IKEA is one of the leading consumer brands known for building a sustainable supply chain. For years they’ve been working with the WWF to source sustainable cotton, only buying wood from verified locations, and encouraging recycling amongst their customers.
Beyond the sustainable choices they make in sourcing and post-purchase education, IKEA is also developing a reforestation scheme, to help restore areas affected by their production. Like Adidas, they’re also committing to transparency.
Coca-Cola
The world’s favorite soft drink Coca-Cola has been working towards carbon neutrality for some time now. They’ve been consistently reducing their energy consumption, achieving a 30% drop, and water use, dropping by 22%, since 2010.
By investing millions into energy-saving projects every year, such as solar energy, biogas-powered vehicles, and CHP plants, along with collaborations with sustainable suppliers, Coca-Cola is well on its way to achieving net zero emissions by 2040.
Patagonia
Patagonia is a leading brand in the sustainable fashion space, operating with total transparency along the supply chain. Its farms, factories, and mills can all be traced and investigated for their fair labor practices, while they also commit significantly to low-emission shipping solutions.
The apparel brand is also a part of ZEMBA, a coalition to reduce maritime emissions in retail operations, while also moving towards recycled materials and applying regenerative organic practices to minimize the impact of their production process.
It’s important to note that these brands are all major multinational companies, each with significant resources that they can put towards their sustainable supply chain practices. However, there’s still inspiration that can be taken from each of them, with a major lesson being the need for transparency – ensuring that your business can be held accountable for its supply chain operations.
Challenges and Opportunities of Building a Sustainable Supply Chain
While larger businesses have the resources and money to meet their sustainability responsibilities, it can be harder for smaller retailers to achieve the same sorts of feats in their supply chains. However, the challenges can also produce some impressive opportunities for innovation.
Challenges
Cost Constraints: Investing into sustainability can be difficult for smaller retailers, with sustainable sourcing, eco-friendly packaging, and renewable energy all being tough to budget for.
Supply Chain Complexity: In the early days, it can be hard for smaller businesses to fully trace and understand their supplier’s operations, with so many stakeholders involved.
Consumer Behavior: Despite the widespread increase in consumer demand for sustainable businesses, certain products in certain markets can be harder to demand the premium prices of sustainability.
Regulatory Compliance: Staying up to date with eco regulations and standards can be hard for smaller brands. Constantly keeping your finger on the pulse of developments can be highly time-consuming.
Technology and Infrastructure: Sustainability and technological advancement tend to go hand in hand, but enhancing infrastructure requires a fairly significant investment.
Opportunities
Innovation and Product Differentiation: By embracing a sustainable supply chain, brands can gain a competitive advantage, grow their product range, and ultimately enhance their profitability.
Collaboration and Partnerships: Sustainability often requires collaboration, such as with suppliers, NGOs, and research institutions – facilitating the sharing of knowledge and resources.
Operational Efficiency and Cost Savings: Despite the initial investment sustainable practices often lead to increased operational efficiencies, which result in reduced costs.
Brand Reputation and Consumer Trust: As touched on before, the enhancement of brand reputation and consumer trust can increase credibility, loyalty, and income.
Regulatory Compliance and Risk Mitigation: By staying ahead of regulations and compliance issues, businesses can increase market access in various industries and locations.
Despite the challenges of implementing sustainability in the supply chain, being proactive and addressing these challenges will only open your brand up for more opportunities. While it might take some investment, effort, and time for your business to adapt, it’s likely to benefit your revenue over time.
Conclusion
Sustainability is becoming increasingly essential every year, and for any retail brand, it starts in the supply chain. While there are challenges, especially for smaller businesses, every brand has steps that it can take to reduce its carbon footprint and enhance its sustainability, all of which benefit the business in the long run.
Whether rethinking suppliers or working to minimize waste in a production process, creating a sustainable supply chain is something that sets retailers apart in the industry landscape of today.
To stay on top of the newest supply chain solutions and logistics tools, retailers can attend this year’s Retail Supply Chain & Logistics Expo at the Las Vegas Convention Center. Across two days, this event will bring together countless professionals to browse the newest industry technology, network with one another, and absorb insightful talks from the business’s brightest minds. Register for your tickets today to guarantee a spot at the industry event of the year!
