In 2015, business strategies need to be sustainable. Therefore supply chains needs to be sustainable. It’s not an option, like whether you want cinnamon or chocolate powder on your cappuccino, it’s a necessity for any company that wants to keep success firmly under its belt.
Right now, maritime businesses all across the globe are being hit with a resource crunch. And one of the many responses to this is for companies to work towards full integration of the supply chain. To do this, businesses need to focus on how they can make their strategies more sustainable.
And don’t forget, it’s also what the customer wants. A survey published last November by DNV GL and research institute GFK Eurisko found that when choosing a supplier or making purchasing decisions, 96% of companies considered sustainability aspects. According to Luca Crisciotti, CEO of DNV GL Business Assurance, “companies that don’t act [to build sustainable supply chains] will have a hard time competing.”
With this in mind, here are three key ways that businesses will work towards more sustainable supply chains in 2015.
1. Innovation of materials
This year, multinational companies will need to take a closer look at the resources that are entering their supply chains and how they can tweak operations to work on a more circular material flow.
Many maritime businesses will also be looking to limit and ultimately decrease their consumption of primary materials. Purchasers specifically will be searching harder for companies who are focused on extending the lifecycle of the materials they use, either by reusing, recycling or changing to more naturally renewable components.
By moving towards this renewable material integration, business operations are able to get closer to that circular model which allows for a continuous flow of stock, demonstrating a strong commitment to social and environmental sustainability.
Driven by a need for more environmentally friendly fuels, over the last few years the maritime industry has been working towards using renewable energy to power vessels. Methanol has been touted as a marine fuel of the future, glycerine is being considered as a possible viable alternative, and even more recently, ship design company, Lade AS has been in the media with its wind power assisted vessel, the Vindskip.
2. Operating more eco-efficiently
Economics and the environment do not always play well together. For many maritime companies economic performance is directly affected by production efficiency, as is operational cost to total cost of ownership.
In comparison, sustainability by and large seems to be all about improving brand reputation, acquiescing to customer demands, and keeping things within the law.
With all these forces in play, mismanagement can have serious adverse effects. Economics and environment need to go hand-in-hand for businesses to continue to be profitable and competitive.
In 2015 it’s likely that companies will use a gate-to-gate approach to keep the production process as environmentally friendly as possible. The gate-to-gate approach means looking at each stage of a product’s lifecycle and working out how it can be optimised to efficiency.
One company who’s recently announced they are working towards this kind of sustainable practice is Erik’s, who launched their new initiative, The Blu Effect with energy efficiency consultancy, Economie d’Energie. The initiative was set up to help the company and its customers to saving energy and reduce waste within operations, with the aim of achieving cost savings and improving overall business efficiency.
3. Superior resource management
Better resource management is going to become a bigger focal point for companies who are looking to improve the efficiency (both cost and operational) and sustainability of their supply chains in 2015.
One way in which companies will do this is by establishing a business code of conduct for suppliers. An environmental and social code will ensure that all those in the process are held to a certain level of accountability. Having a code in place can also mean that each supplier in the chain will be held to a strict set of standards when it comes to protecting the environment, whether they are sourcing, manufacturing or distributing products, and also with the treatment of their employees and/or communities.
IMPA ACT is a programme that has a business code of conduct for suppliers. It is working with the international shipping and marine industry to promote responsible supply chain management (RSCM) and corporate social responsibility (CSR). Suppliers joining IMPA ACT are asked to commit to the Supplier Code of Conduct (SCoC), which encourages members to work towards the internationally endorsed minimum expectations for RSCM and CSR. [www.impa-act.org]
Along with a business code of conduct for suppliers, companies in 2015 will be focusing on building upstream partnerships. Working collaboratively and engaging with suppliers allows procurement teams to meet goals more easily and responsibly. It is also a great opportunity to find gaps in your business procurement strategy or supply chain and work to close them and drive responsible sourcing. Plus, there’s money in it too. A report by procurement and supply chain consultancy, State of Flux suggests developed supplier relationship management gives companies a financial advantage.
DB Schenker Logistics and Maersk Line have recently announced a new upstream partnership to tackle climate change. Under the agreement Maersk Line will reduce the carbon dioxide levels of every container it transports for DB Schenker Logistics by 20% from now until 2020.
Commenting on the partnership, Dr Karl-Friedrich Rausch, Chief Sustainability Officer of Deutsche Bahn AG, and management board member for transportation and logistics at DB Mobility Logistics AG said it was a “milestone in climate protection.”
“This is the first agreement between a global logistics services provider and a container shipping company," he said. “Together, we will increase our freight volumes and share responsibility for protecting the climate. The agreement is a milestone because we are incorporating aspects of sustainability into our business relationships.”
What other trends in sustainable supply chain practices do you see being important in 2015? And is your business getting on board?