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The New Supply Chain Normal: Balancing Sustainability, Risk Management and Resiliency

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The New Supply Chain Normal: Balancing Sustainability, Risk Management and Resiliency

It’s hard to believe the COVID-19 pandemic began four years ago. It seems like it was only yesterday when factories shut down, key ports were jammed up and international trade ground to a crawl. Without question, COVID dealt global supply chain networks a devastating blow.

Emerging from the darkest days of the pandemic, the global supply chain landscape has undergone a fundamental transformation fueled by a confluence of megatrends like geopolitical instability, climate change and technological advancements. In this “new normal,” overall production numbers and delivery schedules seem to be nearing pre-COVID levels. However, disruption to supply chains will likely become a permanent fixture. 

Moving forward, businesses must reevaluate their supply chain strategy and adopt one that minimizes disruption by placing equal focus on sustainability, risk management, and resiliency.

SUSTAINABILITY

Supply chain sustainability is a strategic decision a business makes to achieve its current needs without negatively impacting the needs of future generations. This includes the sustainable sourcing, production, packaging and optimized delivery of products with the goal of creating a more responsible and future-proof supply chain that benefits all stakeholders. A truly sustainable supply chain will balance environmental, social, and economic considerations.

Environmental Responsibility

Geared toward protecting the environment from potential harm caused by supply chain activities such as production, storage, packaging and transportation, environmental responsibility considers the ecological aspect of supply chain operations.

Do you or your suppliers have the ability to measure and monitor carbon emissions? Is there a greenhouse gas emissions reduction plan in place? Does the energy you use come from renewable sources? These are the questions that should be asked. Environmental responsibility begins with minimizing resource consumption—including the reduction of energy use and the conservation of water throughout the supply chain—while combating climate change through the use of green energy sources and carbon offsetting initiatives. 

Social Responsibility

A business that practices social responsibility treats every person in the supply chain with respect, dignity and equality. This includes employees, customers and vendors. Doing so means following ethical labor practices such as ensuring fair wages and safe working conditions while promoting diversity and equal opportunities within the workforce and throughout the entire supplier network. 

Additionally, there should be strong consideration for how a business contributes to the community in which it operates. In recent years, there has been an increasing expectation that companies support local communities beyond the scope of traditional community outreach initiatives.

Economic Responsibility

The economic component of supply chain sustainability refers to the financial impact a business has on its employees, suppliers, customers and shareholders. It involves the development of safeguards to secure profits to serve all stakeholders without compromising the environment and the community.

It’s important if not essential for businesses to maintain financial stability. For example, investing in unstable ventures can be costly and detrimental—not just to the business, but also to all entities across the entire supply chain.

Businesses that practice economic responsibility will utilize resources efficiently to minimize costs and waste while building strong, collaborative partnerships with suppliers and other stakeholders for mutual benefit and shared success.

RISK MANAGEMENT

For today’s supply chain, risk management has never been more important. A single disruption, such as the Suez Canal bottleneck, can cost millions if not billions of dollars. Another example is the semiconductor shortage. One warehouse fire caused a cascading disruption that affected the production of everything from computers and cars to phones, gaming systems and household appliances, just to name a few. 

Risk management in this context is a means of developing a strategy to identify, assess and mitigate risk across an entire supply chain. The goal is to create a consistent framework for businesses to become more resilient to disruption and uncertainty. 

Identify

It’s important to recognize potential internal and external risks that can impact the supply chain. Start by focusing on those risks that are known, which can be identified, measured and managed. For example, what is the likelihood of a supplier going bankrupt? You can determine this by looking at its financial history. With this information, it’s possible to quantify the impact it would have on the business. Additional risks to consider include geopolitical issues, demand fluctuations, technical disruptions and regulatory changes. 

Ensure that supply chain teams constantly address risk, whether generated internally or externally. Additionally, organizational risk experts such as corporate enterprise risk teams can provide risk reporting insights.

Assess

The assessment phase involves estimating the potential impacts of an identified risk. This allows businesses to identify the products and supply chain nodes with the greatest failure potential and prioritize resources to minimize the likelihood of an event. 

Assessment is vitally important to focus the supply chain risk management strategy and mitigation efforts and on what’s most important and what will have the largest impact. To make this determination, consider the following: number of customers that will be affected, damage to brand and reputation, total time to recover from disruption and the number of qualified alternate suppliers available (if relevant).

Mitigate

Risk mitigation involves the development of strategies and actions to reduce or eliminate the potential impact of an identified and assessed risk. Consider developing continuity plans, implementing flexible sourcing and logistics strategies and creating buffers such as excess capacity and inventory. These proven measures have been crucial for helping businesses mitigate risks and ensure their supply chain can overcome disruptions.

Monitor

Supply chain risk management is a 24/7 process. Risk monitoring ensures that the supply chain is continuously checked for changes in risk factors and external conditions, enabling the business to review the effectiveness of risk mitigation strategies and update mitigation plans as needed.

By implementing these risk management initiatives, businesses can proactively minimize supply chain disruptions—and realize the full potential of their supply chain strategies.

RESILIENCY

In the new normal, a lot of businesses will need to rewrite their supply chain playbook, with special attention to the section on supply chain resiliency. The reason being that prior to the COVID pandemic, businesses experienced maybe a one- or two-month disruption every three to four years or so. During and since the pandemic, however, disruptions have occurred at an increased rate due to a number of factors including changing consumer behaviors, geopolitical instability and global supply chains that have become more complex. 

Supply change resiliency is a company’s ability to anticipate, adapt to and quickly recover from supply change disruptions while maintaining continuous business operations. Much easier said than done, this involves having a flexible contingency plan in place. But even better, a supply chain in the new normal will have the ability to forecast and anticipate disruptions with the ultimate goal of complete avoidance altogether. Businesses working to reach this level of resiliency may want to consider the following strategies: 

Embrace Big Data and Advanced Technology

Businesses can achieve substantial improvements in supply chain resiliency by understanding and leveraging large amounts of data from both internal and external sources. A growing number of businesses use control towers to organize this data into easy-to-understand formats, helping them monitor and identify potential threats to the supply chain. Similarly, supply chain managers that employ digital supply chain technologies such as machine learning and artificial intelligence can gain real-time insights that help them respond rapidly to potential disruptions. 

Optimize Production and Increase Resiliency Through Supply Chain Planning

Essential to achieving resiliency, strategic supply chain planning coordinates all elements of the supply chain and enhances visibility and agility. This helps businesses improve their understanding of supply and demand requirements while promoting production efficiency and minimizing the potential damage of supply chain disruptions.

Diversify Suppliers

“Don’t place all your eggs in one basket” is basically the logic behind this strategy. For example, a supply chain is vulnerable to disruption when it relies on a single source for raw materials. What if the supplier shuts down operations? Another potentially disruptive event can occur when a business has an abundance of suppliers in one geographic region. A single weather event or a natural disaster can wreak havoc on its supply chain. The obvious alternative is to diversify suppliers so that one slowdown doesn’t interrupt operations.

Supply Chain Optimism for 2024 and Beyond

Today’s global supply chain business is more exciting and challenging than ever. Even the most well-managed and stable supply chains are subject to game-changing volatility and disruption without notice. Looking on the bright side, supply chain professionals have faced mighty challenges in the past and persevered. There’s good reason to believe we’ll experience the same result when the next major disruption hits. Moving forward in 2024, we have the knowledge, the strategies and the sheer determination to achieve the highest possible levels of success in the new normal. 

Author Bio

Jagan Reddy brings 25+ years of supply chain solution strategy, business transformation and P&L management experience to his position as co-founder partner and managing partner of Netlogistik USA. Recognized across the supply chain solutions industry for customer value creation and thought leadership, he takes pride in helping businesses understand the key influencing factors driving the latest industry trends while delivering crucial insight and guidance to help them stay ahead of the curve. www.netlogistik.com

 

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Revolutionizing Supply Chain Sustainability: Trax’s Role in Emissions Reduction

In today’s rapidly evolving industrial landscape, the imperative to mitigate carbon emissions has never been more urgent. Manufacturing supply chains, responsible for a staggering one-fifth of global carbon emissions and consuming over half of the world’s energy sources, stand at the forefront of this environmental challenge. Amidst this backdrop, Trax Technologies emerges as a pioneering force, committed to spearheading sustainability initiatives within the manufacturing sector.

Addressing the complex task of emissions tracking, Trax is dedicated to raising awareness about the pressing need for global manufacturers to optimize their supply chains’ environmental footprint. The benefits of such optimization extend far beyond ecological considerations, encompassing cost reduction, waste minimization, climate reporting preparedness, and enhanced stakeholder engagement.

Steve Beda, Executive Vice President of Customer Success at Trax, underscores the immediate benefits that manufacturers witness upon embarking on emissions reduction efforts. Beyond driving positive environmental impact, these initiatives lead to overall performance enhancement and garner attention from discerning investors, customers, and employees who prioritize climate-friendly businesses. By streamlining processes and reducing waste, manufacturers not only contribute to a cleaner environment but also realize tangible cost savings.

Recognizing the pivotal role of transportation in emissions reduction, Trax advocates for strategic shipping decisions that prioritize energy efficiency. This includes leveraging maritime transportation and barges, which stand out as some of the most fuel-efficient freight transportation methods available. Trax, leveraging its extensive expertise as a freight audit and payment provider, offers industry leaders data-driven tools like its Carbon Emissions Manager. By analyzing comprehensive data on emissions factors, travel distances, and fuel combustion, Trax empowers manufacturers to make informed decisions that align with sustainability goals.

In its commitment to sustainability, Trax emphasizes the importance of gathering and analyzing reliable data from every aspect of the manufacturing supply chain. This meticulous approach enables benchmarking, reporting, and reduction processes essential for meaningful emissions reduction. By consolidating cost and emissions data, Trax equips global enterprises with the insights needed to integrate environmentally friendly practices seamlessly into their operations.

Trax’s eBook, “Unlocking Environmental Sustainability in Supply Chains,” serves as a comprehensive guide to sustainability trends and outlooks. It underscores the multifaceted nature of sustainable ventures, highlighting how initial investments in emissions reduction yield long-term benefits for both the environment and business revenue.

As the world navigates the imperative of reducing carbon emissions, Trax Technologies emerges as a trailblazer in revolutionizing supply chain sustainability. Through its data-driven solutions and unwavering commitment to environmental stewardship, Trax paves the way for a greener, more sustainable future in manufacturing.

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MODE Global Attains EcoVadis Silver Rating, Recognizing ESG Excellence

MODE Global, a prominent third-party logistics firm, proudly announces that it has achieved the esteemed “Silver” rating from EcoVadis, a leading provider of business sustainability ratings and performance improvement tools for global supply chains.

EcoVadis evaluates companies based on international sustainability standards, including the Global Reporting Initiative, the United Nations Global Compact, and ISO 26000. The sustainability scorecard assesses performance across 21 indicators categorized into four themes: environment, labor and human rights, ethics, and sustainable procurement. The “Silver” rating reflects MODE’s position among the top 25 percent of companies assessed.

Lance Malesh, President, and CEO of MODE Global expressed, “2023 has proven to be a landmark year in MODE’s ESG journey.” He emphasized the company’s enhanced focus on environmental, social, and governance pillars, attributing the success to the efforts of the ESG committee.

As a global shipping and logistics provider, MODE is an EPA Certified SmartWay® Logistics Company Partner. In 2023, MODE invested significantly in technology tools aimed at helping customers reduce their carbon footprint. This includes carbon calculators to analyze transitioning over-the-road shipments to more environmentally friendly transportation modes, contributing to reduced fuel usage and costs through tools like consolidation, smart routing, and asset optimization.

In the realm of governance, MODE received the 2023 NAVEX Excellence in Ethics and Compliance Award, highlighting the company’s commitment to maintaining a culture of compliance, protecting stakeholders’ interests, and aligning with its brand and values.

Sharon Johnson, Chief Legal Officer, and ESG committee executive sponsor remarked, “The transformative strides we’ve accomplished company-wide in support of our ESG and sustainability goals are phenomenal.” She emphasized the significance of securing the Silver rating for both MODE Transportation and MODE Global, underscoring the commitment to driving ESG importance across the family of brands.

The recognition from EcoVadis reaffirms MODE Global’s dedication to environmental responsibility, ethical practices, and governance excellence, setting a strong foundation for continued progress in 2024.

Green Logistics: Strategies for Sustainable Shipping via Eco-Friendly Ports

Nowadays, environmental awareness rightfully takes center stage. It’s imperative, considering that Earth is our only home. Consequently, industries worldwide are actively finding ways to be more sustainable and to minimize their carbon emissions.

The logistics sector, often referred to as the lifeblood of global trade and commerce, is no outlier when it comes to sustainability. This article delves into the world of green logistics and the innovative strategies that enable eco-friendly ports to facilitate sustainable shipping.

What is Green Logistics? 

Green logistics, alternatively known as eco-logistics or sustainable logistics, adopts a comprehensive approach to efficiently manage the flow of goods while minimizing environmental impact. 

This involves a wide range of strategies, technologies, and practices geared toward diminishing greenhouse gas emissions, energy usage, and environmental harm associated with the transportation and logistics sectors.

The Importance of Sustainable Shipping

Sustainable shipping is far from a trend; it’s an absolute necessity. Below, we outline the most compelling reasons why:

  • Environmental Preservation: Sustainable shipping is a crucial tool in the fight against greenhouse gas emissions, air pollution, and water contamination, ultimately preserving our planet’s delicate ecosystems.
  • Regulatory Compliance: Adhering to sustainable shipping practices ensures compliance with increasingly stringent environmental regulations, avoiding fines and penalties.
  • Cost Savings: Energy-efficient and eco-friendly shipping methods often lead to lower operational costs, contributing to long-term savings for businesses.
  • Consumer Preference: Eco-conscious consumers favor products and companies that prioritize sustainability, leading to enhanced brand reputation and customer loyalty.
  • Global Reputation: Participating in sustainable shipping elevates a company’s international reputation, making it more attractive to partners and customers worldwide.
  • Resource Efficiency: Sustainable shipping encourages responsible resource management, such as reduced fuel consumption and minimized waste generation.
  • Climate Change Mitigation: By reducing emissions, sustainable shipping contributes to mitigating the effects of climate change, a global concern.
  • Innovation and Competitiveness: Embracing sustainable practices sparks innovation and enhances competitiveness in the logistics sector, positioning companies for future success.
  • Long-Term Viability: Sustainable shipping strategies play a crucial role in ensuring the industry’s long-term viability by mitigating its impact on the environment and society.

Eco-Friendly Ports: A Key Element

Eco-friendly ports are central to the world of green logistics. These ports are equipped with cutting-edge infrastructure crafted to minimize the ecological footprint of shipping operations.

Sustainable shipping partners in port management harness renewable energy sources and employ efficient waste management practices, further enhancing the eco-friendliness of these vital transportation hubs.

Strategies for Sustainable Shipping via Eco-Friendly Ports

Here are the strategic approaches for achieving sustainable shipping through eco-friendly ports: 

1. Optimization of Shipping Routes

Optimizing shipping routes is a fundamental strategy for reducing emissions and fuel consumption. Advanced logistics software and real-time data analysis allow companies to choose the most efficient and eco-friendly paths for their shipments.

2. Energy-Efficient Shipping Vessels

Investing in energy-efficient shipping vessels can significantly decrease fuel consumption. These vessels are designed with advanced propulsion systems, aerodynamics, and energy recovery technologies to minimize their carbon footprint.

3. Renewable Energy Sources at Ports

Eco-friendly ports rely on renewable energy sources like solar and wind power to fulfill their energy requirements. This not only cuts costs but also guarantees a consistent and sustainable energy supply.

4. Green Packaging Solutions

Reducing the environmental impact of shipping involves reconsidering packaging materials. Sustainable packaging options, such as biodegradable materials, can lessen the carbon footprint associated with product transport.

5. Sustainable Supply Chain Management

Sustainable supply chain management involves reducing waste, optimizing inventory, and collaborating with partners to create a more sustainable and efficient logistics network.

Challenges and Solutions

Transitioning to green logistics may seem daunting, but with the right approach, it becomes more manageable. Here’s a breakdown of the challenges and some potential solutions:

Challenges

  • Initial Investment: Upgrading to eco-friendly practices involves costs for technology, equipment, and certifications.
  • Operational Changes: Adapting to sustainable logistics may require adjustments in the supply chain, employee training, and transportation routes.
  • Resistance to Change: Employees and stakeholders may be hesitant about shifting to eco-conscious methods.

Solutions

  • Investment Payoff: Recognize that the upfront investment pays off with long-term savings and environmental benefits.
  • Efficiency Gains: Sustainable logistics often lead to cost reductions through fuel-efficient practices and optimized routes.
  • Reputation and Loyalty: Embracing eco-friendly initiatives can boost your company’s reputation and attract loyal customers.
  • Collaboration: Partner with organizations that share your commitment to sustainability.
  • Government Support: Explore potential government incentives and subsidies for green initiatives.
  • Technological Advances: Leverage evolving technology to streamline the transition to sustainable logistics.

In essence, by addressing these challenges with these solutions in mind, businesses can navigate the path to greener logistics more smoothly and reap the benefits of reduced costs, an enhanced reputation, and a brighter environmental future.

Conclusion

Sustainable shipping through eco-friendly ports doesn’t just sound good in theory; they are being implemented right now in the logistics industry. With the strategies discussed in this article, companies can reduce their environmental impact and thrive in a market that values sustainability. 

Remember, choosing eco-friendly logistics is a smart step towards a greener and more successful future! 

Blueprint for a Green Chain: 8 Steps for Fostering Sustainability

The supply chain and sustainability have become interconnected in the past few years, with companies worldwide emphasizing environmental consciousness for themselves and their supplies. 

It’s crucial for reputation, and going green benefits businesses by lowering costs, driving innovation and improving employee satisfaction. 

How can company leaders improve sustainability? Here’s how supply chain professionals can transform their organizations.

How Can Supply Chains Become More Sustainable?

Talking about sustainability is easy, but incorporating new policies is challenging. These five reasonable changes demonstrate what supply chain professionals can do today to improve their organizations. 

  • Mapping the Supply Chain

Before implementing new policies, company leaders must visualize the supply chain to find liabilities. The flow of goods and materials provides the necessary insights into what aspects of the business require changes. 

For example, a manufacturer may review its suppliers and find other options closer to its facility. Oil and gas account for 15% of energy emissions worldwide, so shortening the supply chain reduces fuel costs and improves a company’s carbon footprint. 

Managers can also use their supply chain map to identify waste. E-commerce companies may use more packaging materials than needed, leading to misuse. A business can improve operations by using more sustainable materials and increasing focus on recycling.  

  • Setting Sustainability KPIs

After mapping the supply chain, logistics professionals can develop policies to strengthen their weak spots. However, these actions are only worthwhile if leadership monitors progress and continues to find improvement. Supply chain managers should set sustainability key performance indicators (KPIs) to ensure the company follows its promise to be more environmentally conscious. 

KPIs are integral for sustainability goals because they provide a clear benchmark for employees to strive for. Company leaders can measure progress over time and adjust their strategies when necessary. If something isn’t working, it’s better to know early rather than later. KPIs are also beneficial because they’re effective communication with stakeholders. Leadership can use them to demonstrate progress and build credibility with the board.

  • Communicating With Suppliers

The supply chain starts with an individual company but involves all suppliers, manufacturers, distributors, retailers and consumers. Professionals should communicate with suppliers and other entities to ensure they employ sustainable practices. Some companies offer discounts, favorable contracts and other financial incentives to go green and reduce their carbon footprint.

Logistics professionals can share sustainability knowledge to improve the supply chain for all organizations involved. Companies can also collaborate on benchmarks to benefit both entities. For example, two businesses could pledge to use greener packaging or reduce energy consumption. Communicating with suppliers builds trust through transparency. 

  • Reviewing Supplier Performance

After communicating with suppliers, reviewing their performance over time is essential. Companies must be willing to identify and improve their sustainability weaknesses. If they don’t, they become liable and harm the supply chain’s environmental consciousness. A business’s suppliers reflect on it, so checks are crucial. 

Suppliers improving their practices can remain partners in the supply chain, but companies that don’t risk replacement. For example, a manufacturer may request its distributors to increase the use of electric vehicles (EVs). EVs improve sustainability with zero tailpipe emissions and less energy consumption than gas-powered cars. Partners that don’t comply risk losing an integral part of their supply chain. 

  • Implementing Sustainable Sourcing

Supply chain managers reviewing their flow of goods should scrutinize material sourcing. Some sustainable practices sound environmentally friendly, but a closer look shows a different story. For example, a manufacturer may produce EV batteries. These devices don’t rely on fossil fuels for power, but they require mining lithium, cobalt, nickel and other items harmful to the environment.

Environmental impact is something companies should consider because of its long-term ramifications. One practice may seem profitable now, but how will it affect the bottom line 30 years later? Supply chain professionals should ensure their suppliers enforce sustainable methods.

For example, fishing companies use trawling, unreported fishing and other unsustainable strategies to capture seafood. These practices may bring short-term profits, but they harm the environment. The United Nations says 3 billion people worldwide rely on seafood for their daily diets, so unsustainable methods impact a significant percentage of the planet’s population. Harming this many people affects long-term profits and expansion opportunities negatively.

How Can Professionals Aim High With Sustainability?

Some goals take longer than others, often requiring decades to implement. While they need more time, these three ambitious targets significantly improve the supply chain’s sustainability.  

  • Becoming Carbon-Neutral

Greenhouse gas (GHG) emissions are difficult for companies to avoid entirely. However, organizations can offset their emissions by becoming carbon neutral. This transition is challenging for multinational corporations, but it’s a worthwhile long-term venture. 

Numerous prominent companies worldwide have committed to carbon neutrality this century to demonstrate sustainability. This goal is central among automakers. General Motors has pledged carbon neutrality by 2040 by eliminating tailpipe emissions and using renewable energy in all manufacturing facilities worldwide. 

Increasing renewable energy and reducing waste are terrific ways to reach carbon neutrality, but supply chain professionals can also use carbon offsets. Companies can participate in tree-planting projects, environmental cleanups and other projects to limit carbon liability. 

  • Investing in Advanced Technology

Some companies face financial roadblocks when improving their supply chain’s eco-friendliness. Advanced technologies are often expensive due to high demand and the required materials. Many devices are also new and have limited competition on the market to drive down the price. While it may be costly, it significantly improves sustainability. 

For example, some companies are turning to blockchain to track their goods. This technology improves supply chain visibility and traceability by allowing businesses to monitor their products throughout the process. However, blockchain costs more than traditional databases and requires employees with expertise to implement it properly. Otherwise, it could be wasted money. 

The last few years have seen construction companies use 3D printers to build houses and offices. These machines lower costs but have a high upfront price. These printers start at around $180,000 but can eclipse $1 million for top-of-the-line devices. 

  • Creating a Circular Economy

Many companies create products for their suppliers and customers without considering what happens afterward. However, these leaders are doing themselves and their employees a disservice by not considering the entire life of their items. Professionals can enhance their sustainability by creating a circular economy for what they manufacture. Allowing consumers to upcycle and recycle improves the supply chain. 

Companies can create a circular economy by intentionally designing their products for reuse and recycling. For example, sustainable EV battery producers allow consumers to recycle them at the end of their life. Recycling facilities extract lithium and cobalt from the battery and repurpose the metals for other uses — thus reducing demand for consuming virgin materials.

Creating a circular economy comes with added costs, making it a lofty goal for some businesses. For example, some areas may lack recycling facilities to incentivize companies. Additionally, producing recyclable materials costs more because of complicated manufacturing processes or high expenses.

Fostering Sustainability in the Supply Chain

The global supply chain has come under the microscope in recent years. Various disruptions have challenged companies worldwide to become more sustainable and resilient in an ever-changing world. Professionals can improve sustainability and go green by implementing reasonable and ambitious solutions.