State of Supply Chain Sustainability 2021 report finds that companies are more committed to supply chain sustainability than ever right now.
Sustainable supply chains that were once “nice to have” have become table stakes as organizations around the globe work to decrease their carbon footprints and operate more sustainably. Danone wants to eliminate deforestation in its supply chain, aluminum producer Novelis is reducing water intensity in its operations, and International Flavors & Fragrances aims to derive 75% of its energy from renewable sources—and reduce its energy usage by 20% —by 2025.
This is just handful of examples of how industrial organizations are committing to higher levels of supply chain sustainability. This trend accelerated in 2020 and has continued despite the ongoing impacts of the global COVID-19 pandemic.
“Last year, when the impact of the [pandemic] was still escalating, we expected the crisis to dampen companies’ enthusiasm for investing in supply chain sustainability,” MIT points out in its new State of Supply Chain Sustainability 2021 report. “Remarkably, the survey results suggest that COVID-19 did not significantly slow the push to make supply chains more sustainable.”
In fact, over 80% of companies interviewed for MIT’s report say the crisis had no impact or even increased their firm’s commitments to supply chain sustainability. “Executives were undeterred by the crisis,” it points out. “83% of the executives interviewed said that COVID-19 has either accelerated supply chain sustainability activity or, at the very least, increased awareness and brought urgency to this growing field.”
6 Key Takeaways
Here are six key takeaways from MIT’s State of Supply Chain Sustainability 2021 report:
- Large companies are leading the pack right now. MIT says the momentum appears to come primarily from large (1,000–10,000 employees) and very large (10,000+ employees) companies. Small- and medium-sized companies were more likely to pull back on their sustainability commitments in 2020, it adds, indicating they were not engaged before the pandemic and even less so during the crisis likely due to strained financial resources.
- Supply chain sustainability is not just a fad. The pressure to support sustainability in supply chains is coming from multiple sources, both internal and external. Between 2019 and 2020, pressure from investors, government, and international bodies grew the most of all sources. Internally, company executives emerged as critical supply chain sustainability champions. “Executives were the most significant source of pressure behind corporate commitments to supply chain sustainability across all issue areas,” MIT points out. “Given executives’ central role in setting and steering strategies for growth, this finding suggests that the drive toward supply chain sustainability is not a fad but rather a business trend to watch."
- A host of new sustainability issues have surfaced during the last year. MIT says that interest in some areas such as human rights protection, worker welfare and safety, and energy savings and renewable energy, increased significantly in 2020. For example, there’s been a growing interest in social and labor issues—changes that MIT says are rooted in the reprioritization of corporate goals during the pandemic. “It was surprising to see the focus on social issues,” David Correll, a research scientist at the MIT Center for Transportation and Logistics, told WSJ. “The notion of social issues as part of sustainability goals is something we didn’t expect to see generally accepted, but in fact there was an increase in interest in the respondents."
- The report sheds light on how companies put their supply chain sustainability promises into practice. Of the many ways to accomplish this, MIT says three common approaches emerged, including supplier development, supply chain visibility, and environmental impact reduction. Supplier development was the most common across all industries; however, visibility proved equally attractive in manufacturing and transportation.
- There’s more to come. The future will likely bring greater investments in sustainability—and scrutiny of the degree to which enterprises deliver on their promises, MIT predicts. And with that higher level of scrutiny comes more responsibility. “If the pressure from investors and regulators does indeed put companies’ supply chain sustainability practices under a microscope,” MIT explains, “this will in turn require more enterprises to increase transparency and disclosure of practices and activities in their supply chains.”
- Supply chain professionals are the agents of change. To support and help drive progress, more supply chain professionals will be engaged in sustainability efforts and help companies to overcome the many formidable barriers to supply chain sustainability that lie ahead. And this role will, if anything, only take on more significance. “The role of supply chain professionals has been evolving and will continue to do so,” says Concordia Supply Chain Group’s Dr. Donna Palumbo-Miele, in MIT’s report. “As leaders, it is our responsibility to foster an environment for supply chain professionals to be change agents."
Technology’s Critical Role in Supply Chain Sustainability
Technology has been proven to support supply chain sustainability in a world that’s demanding more and more of it. In fact, a recent Oxford Economics report said technology plays a critical role in meeting sustainability goals. “Executives are seeing concrete benefits from using cloud, mobile, and IoT in their supply chains in terms of greater process efficiency and more informed decision-making,” the organization points out.
By implementing state-of-the-art, cloud-based software, for example, organizations can use insight-driven dashboards and reporting to make better decisions and fast adjustments required to operate more sustainably. IntelliTrans’ Global Control Tower provides high levels of supply chain transparency; aggregates, completes, and enhances data from a variety of sources; offers visibility into and execution of different aspects of the supply chain; and generates data-driven alerts and analytics that ask deeper questions and deliver meaningful insights.
By leveraging tracking information, the Global Control Tower provides analytics that measures key performance indicators (KPIs) like fleet cycle time, origin/destination dwell time, lane and hauler performance, back orders, freight spend, load optimization, and more. With their rate, equipment, lease, tracking, and invoice data in a central repository that’s accessible 24/7, companies can position themselves for success in any market conditions.