By Lalit Das
Since the pandemic, India has emerged as a worldwide leader in supply chain management thanks to its extensive deep trade distribution network, varied business environment, skilled and affordable labor, rising customer base, and closeness to critical industrial facilities and suppliers. However, studies have shown that supply chains are responsible for 50% to 70% of an organization’s operational expenditures and more than 90% of its greenhouse gas emissions. Sustainability is becoming a crucial component of an efficient supply chain network due to the rising significance of environmental preservation and lowering carbon emissions.
When sustainable systems are in use, there is more to gain than just achieving higher good objectives and adopting environmentally friendly methods. There is actual money and time to be made back. However, implementing supply chain sustainability is a significant task that necessitates changing procedures that have been in place for decades. Most businesses are at some point in this process, and each stage involves overcoming one of the following five major obstacles to developing sustainable supply chains.
Higher costs
Quantifying the costs of implementing sustainable operations and processes can be a challenging task that involves many different steps, such as hiring specialists to provide advice on new systems, policies, and protocols, adding checkpoints and procedural measures to the workflow, vetting suppliers or sourcing products sustainably, and monitoring new metrics along the supply chain. However, there is also a significant cost associated with not applying sustainable practices in the supply chain. The gap between low-cost procurement and achieving sustainability has been rapidly shrinking in recent years.
Ambiguity and complexity
Identifying and measuring sustainability features or operational consequences for businesses continues to be a complicated process. Furthermore, various internal and external procedures, frequently systemic ones, that are handled at the highest level of governance are typically necessary for supply chain sustainability. Global organizations must thus create frameworks that satisfy all legal obligations and enable the maintenance of new, sustainability-focused policies and practices.
Operational predicaments
Any change should become instinctual and routine, an integral part of the organization’s core operations, so it doesn’t require thought or decision-making. Only when sustainable practices are successfully implemented can this be done. To achieve supply chain sustainability, many stakeholders must be prepared. This dilemma is extremely pressing, with no simple or fast answer, due to the nature of economic interconnections, government activities, and a range of other aspects. While researchers, analysts, and industry leaders are today working to enable sustainability and ecological integrity as a supply chain norm, it is probable that — at least globally — this will require more time.
Approach and mindsets
Changing organizational cultures and mindsets is a significant obstacle to developing sustainable supply chains. People like the familiar and gravitate toward their comfort zones, and there may always be opposition to new ideas, and a learning curve is involved. Making consumers, decision-makers, and workers aware of the benefits of sustainability and influencing their behavior patterns are imperative for changing mindsets on an international, national, and corporate level, which is a complex and intricate undertaking for most firms.
Many firms today struggle to even start their supply chain sustainability journey due to a lack of resources, technical or operational skills, knowledge, and experience, as well as the absence of established environmental control policies or ways to quantify carbon emissions. However, a rising generation of individuals has chosen to specialize in supply chain sustainability, making up for these deficiencies. Numerous essential practices, such as freight audit and payment systems, which help streamline operations, optimize logistics networks, and reinforce sustainability efforts with actionable high-quality, reliable data, also play a crucial role in supply chain efficiency.
Infrastructure and support
Value chains have grown longer and more complicated in the modern era to fulfill market demands for sustainability, making them more vulnerable to risks and disruptions. A wide variety of stakeholders must contribute their ideas and collaborate to find effective and practical solutions to overcome these difficulties. Future-oriented companies have already begun this path, and cultural messaging stresses the value of sustainability. Most customers and companies today prefer to engage with companies that are looking ahead, and supply chain sustainability is a crucial component of that future.
(Lalit Das, Founder of 3SC Analytics. The views expressed in the article are of the author and do not reflect the official position or policy of FinancialExpress.com.)