Creating a More Ethical, Sustainable Supply Chain

Man using tablet in warehouse, with graphics representing supply chain and logistics concepts above tablet

Consumers in the U.S., especially millennials and members of Gen Z, are more informed than ever. The younger generations are changing their buying and spending habits to support socially responsible, eco-friendly brands, and there’s been increased focus on companies’ commitments — or lack thereof — to sustainable initiatives.

This isn’t just bright-eyed idealism: 74% of millennial buyers are willing to change their buying habits in order to reduce environmental impact. Similarly, 72% of Gen Z shoppers are happy to fork over more money to support ethical, sustainable brands, according to a recent Nielsen survey.

Ethics and sustainability start in the supply chain. Creating a responsible supply chain can help in attracting more responsive, loyal, and lucrative customers, and can also help companies avoid legal issues and complications resulting from unwitting participation in unethical practices. Beyond this, a more responsible supply chain can allow companies to avoid the devastating social consequences that often result from poor practices, which can break a business’s reputation.

Luckily, as consumers continue to examine ethics and sustainability more closely, technology is being developed that can better meet this shifting demand, making it easier for companies to scrutinize their supply chains from beginning to end.

Human and Labor Rights

Intentional or not, complicity in any sort of unethical labor practices can severely damage a company’s reputation.

Disruptive technologies, such as the Internet of Things (IoT), can help reduce these risks. IoT devices are being employed in a wide range of applications and industries — especially within the supply chain and logistics sphere — and a well-thought-out compliance plan for suppliers, paired with real-time monitoring technology, allows businesses to rest assured that no illegal or unethical actions are underway. Companies can then pass along this peace of mind to their customers.

Blockchain, too, can be used to increase transparency, providing verifiable, ethical standards. Blockchain involves the use of distributed ledger, which is immutable. Paired with IoT technology, this can create a network of monitored actions and transactions throughout a supply chain, in a record that cannot be readily falsified or manipulated.

Many companies are also developing corporate social responsibility (CSR) plans and utilizing the DOL’s Bureau of International Labor Affairs (ILAB) app, Comply Chain, which works companies through a simple, eight-step process to reduce the risk of forced labor within their supply chain.

Environmental Sustainability

Consumers are increasingly interested in buying products that do not contribute to the destruction of the planet or the suffering of people and animals. Some of these concerns involve chemical ingredients, water use during production, pollution, landfill waste, and the living conditions of animals used in production.

This is why many major companies, such as Coca-Cola and Danon, have made it their mission to reduce waste and bring about greater sustainability in their products and processes. This often involves finding biodegradable, environmentally friendly solutions for packaging, such as those made from sawdust and even mushrooms.

Various technologies can now be used to help increase overall efficiency and sustainability. Some companies, for example, have created IoT systems that monitor crops individually, only watering and feeding them when it is effective to do so. Other businesses utilize IoT and blockchain to decrease power and water consumption in other ways, sometimes even using artificial intelligence (AI) to automate high-efficiency tasks; these may be as simple as turning off machines or even adjusting temperature conditions within a factory.

AI, the IoT, and blockchain are also being used to reduce the environmental impact of the supply chain in relation to trucking and shipments. Self-driving trucks, for instance, are quickly becoming a new reality, and resource and time tracking via blockchain and the IoT are being integrated into supply chain transportation processes.

Responsible Supply Chain, Loyal Customers

To create a more eco-friendly, socially responsible supply chain, aim to work with partners that incorporate sustainability into their own practices, and utilize appropriate technology to augment their efforts. Also, be sure to continually review and update supply chain partner best-practice agreements to ensure ongoing communication and effective collaboration. Your customers — and your bottom line — will thank you.

Image Credit: Photo By ToRz / Shutterstock.com

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