Creating a Sustainable Supply Chain: Tips for SMEs

As the world grapples with the mounting challenges of climate change and resource depletion, the role of business in fostering sustainability has never been more critical. A key area where businesses, especially small and medium-sized enterprises (SMEs), can make a significant impact is within their supply chains. From the extraction of raw materials to product disposal, supply chains have far-reaching implications for our planet’s health and well-being.

Yet, navigating supply chain operations – a complex network of activities spread across diverse geographies and industries – to establish sustainable practices can appear an intimidating task. The prospect can be particularly daunting for SMEs who may face constraints such as limited resources and expertise.

However, the transition towards a sustainable supply chain isn’t merely an exercise in environmental stewardship. It also presents a compelling business case. This transformation can yield a win-win outcome: mitigating environmental harm while delivering substantial business benefits. These advantages span from cost savings and operational efficiencies to bolstering brand reputation and enhancing business resilience.

In this blog post, we explore the strategies SMEs can embark on sustainable supply chain management overcoming challenges and embracing opportunities for positive change. Because, in the end, every step taken towards sustainability makes a difference and takes us closer to a greener, more equitable future.

What is sustainable supply chain management?

Sustainable supply chain management (SSCM) is a holistic approach that involves integrating sustainability principles into the business processes from the very beginning of the supply chain to the end. This includes everything from the extraction and sourcing of raw materials to the production, transportation, and distribution of finished products, as well as their disposal at the end of their life cycle.

SSCM aims to reduce negative environmental, social, and economic impacts while maintaining the efficiency and competitiveness of business operations. It seeks to balance the three pillars of sustainability: environmental responsibility, social equity, and economic viability, commonly referred to as the ‘triple bottom line’.

Strategies to Build a Sustainable Supply Chain

Transitioning from broader concepts, let’s dive deeper into specific strategies for building a sustainable supply chain, offering practical advice for SMEs on this transformative journey.

1. Assess Your Current Supply Chain

The first step towards creating a sustainable supply chain is understanding your current situation. Conduct a comprehensive audit of your supply chain, assessing all processes from sourcing to manufacturing, logistics, and disposal. Uncover the hidden environmental costs at each stage, whether it’s excessive water use, high energy consumption, waste generation, or greenhouse gas emissions. Evaluating your supply chain’s current state lets you identify areas that need improvement, revealing both inefficiencies and potential opportunities for greener practices.

2. Establish Sustainability Goals

Next, clearly define what sustainability within the supply chain means for your company. Identify key performance indicators (KPIs) that align with your business objectives and environmental, social, and governance (ESG) goals. These could include reducing greenhouse gas emissions, waste, or water usage, or increasing the percentage of sourced materials that are recyclable or come from renewable resources. A tangible example of this could be transitioning to sustainable paper products for packaging or office supplies. This could drastically reduce your company’s carbon footprint and demonstrate a commitment to renewable resources, all while appealing to environmentally conscious customers.

3. Engage with Suppliers

A sustainable supply chain is a shared responsibility. It’s crucial to establish strong communication lines with your suppliers, aligning them with your sustainability vision and goals. Ask about their environmental policies, procedures, and performance. Encourage suppliers to share their sustainability initiatives and explore opportunities for collaboration. For instance, could you work together to reduce packaging waste, promote energy efficiency, or support responsible forestry practices?

4. Implement Sustainable Practices

After setting your goals and aligning with your suppliers, it’s time to implement sustainable practices. This could involve sourcing from suppliers that prioritise sustainability, reducing packaging, optimising logistics for lower emissions, or investing in renewable energy for your operations. Remember, sustainability doesn’t always mean more expensive – many sustainable practices can lead to cost savings in the long run.

5. Track and Report on Progress

Accountability and transparency are key elements of sustainability. Regularly track your progress against the KPIs you’ve set and share your achievements and challenges with stakeholders, including employees, customers, investors, and the wider community. Regular reporting demonstrates your commitment to sustainability, encourages continued improvement, and builds trust with your stakeholders.

Moving Towards a Sustainable Future

Transitioning from the broader discussion of sustainability’s role in business, here at Asia Pulp & Paper, a part of Sinar Mas, we’ve made it our mission to champion sustainability in all facets of our operations. Our commitment to responsible sourcing is deeply ingrained, with rigorous guidelines such as our Forest Conservation Policy (FCP) and Responsible Fibre Procurement and Purchasing Policy (RFPPP) in place for all our suppliers. We’ve even developed tools like the Supplier Evaluation and Risk Assessment (SERA) to monitor compliance, resulting in a supply chain that firmly stands against the conversion of High Carbon Stock forests.

However, our sustainability journey extends far beyond sourcing. We’ve incorporated sustainability into our very core, changing how we approach energy, water, and waste. In the realm of energy, we’re making strides towards renewable fuels, which has substantially reduced our carbon footprint. When it comes to water, we’ve implemented a robust ‘3R’ strategy of reduce, reuse, and recycle, leading to a decrease in our water intensity. As for waste, we see it not as a problem but as an opportunity. Through innovative recycling initiatives, we’ve been able to transform by-products into energy sources, lessening our reliance on fossil fuels.

In essence, we have woven sustainability into the very fabric of our business, demonstrating the immense potential it holds for operational efficiency, cost savings, and environmental stewardship. This integrated approach serves as a testament to the transformative power of sustainability, offering valuable insights for SMEs embarking on their own sustainability journeys.