September 12, 2024 How to Build More Sustainable and Resilient Supply Chains

A look at how Australian businesses can benefit from building more sustainable and resilient supply chains.

After massive challenges such as the COVID-19 pandemic, bushfires, floods, and geopolitical tensions in Europe and the Middle East, supply chain disruptions are arguably the biggest challenge facing businesses this decade. As Australia grapples with these issues, the need to develop more sustainable and resilient supply chains has never been more urgent.

Understanding the Need for Sustainability and Resilience in Supply Chains

Sustainability in supply chains refers to practices that minimise environmental impact, promote social responsibility, and ensure economic viability over the long term. In Australia, sustainability is particularly relevant given the country’s unique environmental challenges, such as water scarcity, extreme weather events, and the pressing need to reduce carbon emissions.

Resilience, on the other hand, is about the supply chain’s ability to withstand shocks, adapt to changing conditions, and recover swiftly. Recent events — like the 2020 bushfires that disrupted road transport — exposed the fragility of global supply lines and underscored the importance of these qualities in the Australian context.

Assessing the Current State of Your Supply Chain

The first step towards building a more sustainable and resilient supply chain is to assess your current operations. This involves conducting a thorough audit to identify vulnerabilities and inefficiencies.

For example, many Australian supply chains are heavily reliant on a limited number of suppliers, often located in regions prone to natural disasters or political instability.

Evaluating the environmental and social impact of current practices is also crucial. This might include assessing the carbon footprint of logistics operations, understanding the sustainability of materials used, or examining the ethical practices of suppliers.

5 Strategies for Building More Sustainable and Resilient Supply Chains

1. Supplier Collaboration and Partnerships: Companies should collaborate closely with their suppliers to ensure sustainable sourcing and ethical practices. This could involve working with local suppliers to reduce transportation emissions or partnering with suppliers committed to sustainable practices. Transparency and accountability are key; companies can look for verified suppliers that can provide clear information about their environmental and social impact.
2. Supplier Diversification: Reducing dependency on a single supplier or region is critical for enhancing supply chain resilience. Companies can achieve this by diversifying their supplier base across different regions or by sourcing from multiple suppliers. This approach can mitigate risks associated with geopolitical tensions, natural disasters, or other disruptions.
3. Implementing Green Logistics: Adopting green logistics practices can significantly reduce the carbon footprint of supply chains. In Australia, this might involve using rail over road transport where feasible, as rail is generally more energy-efficient. Reducing packaging waste and optimising routes to minimise emissions are other practical steps. Companies like Woolworths have already begun to reduce their carbon footprint through such initiatives, including investing in electric delivery vehicles and optimising delivery routes.
4. Using Sustainable Materials and Products: Another strategy is to use sustainable materials and products. For example, businesses can prioritise the use of recycled materials or products made from renewable resources. This not only reduces the environmental impact but also aligns with growing consumer demand for sustainable products. A 2022 survey found that 83% of Australian consumers consider sustainability in their purchase decisions.
5. Building Flexible and Agile Operations: Flexibility and agility are key to a resilient supply chain. Businesses should consider flexible manufacturing processes that can quickly adapt to changing demand and supply conditions. Developing robust contingency plans and establishing emergency response protocols are also essential. The 2022 floods in Queensland and New South Wales severely impacted logistics and supply chains, demonstrating the need for such preparedness.

Building sustainable and resilient supply chains is not just a strategic advantage for businesses; it is a necessity in today’s volatile environment. By assessing current practices, implementing sustainability and resilience strategies, and fostering a culture of continuous improvement, Australian businesses can better navigate the challenges ahead. As the world continues evolving, those prioritising sustainability and resilience will be best positioned to thrive.

About the Author:
Alex Minett is the Head of Product & Markets at Veriforce CHAS, a leading provider of health and safety assessment, risk mitigation, compliance, and supply chain management services. With a working history in the audit and management consulting industry, Alex is experienced in implementing visions and strategies. Skilled in negotiation, management, and business development, he is passionate about driving CHAS in its mission to safeguard organisations from risk.

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