Sustainable Supply Chain in eCommerce: Importance, Components and Green Supply Chain Management Best Practices in 2023
Traditionally, the supply chain was just about logistics and tracking when and where goods were moving. However, with the rise of the digital supply chain and related visibility and analytics tools, businesses can now collect information about how well each supply chain link demonstrates corporate social responsibility. In addition to encouraging supply chain partners to create and communicate best practices for environmentally friendly operations and logistics, this transparency has helped to advance the idea of responsible sourcing. Additionally, it has made it possible for potential players to show that they adhere to the highest industry standards for worker safety, environmental protection, and ethical business practices.
The quantity of trash created, carbon footprint and emissions, air pollution, labour violations, deforestation, and worker health and safety are some factors that impact the sustainable supply chains in eCommerce. The sustainability of supply chains is founded on the idea that ethical behaviour benefits the environment and the people who inhabit it and the company’s ability to increase long-term profitability, enhance brand recognition, and minimise adverse environmental effects.
- What is a Sustainable Supply Chain in eCommerce?
- What Distinguishes Green Supply Chain Management From Sustainable Supply Chain Management?
- What Makes Sustainable Supply Chain in eCommerce Crucial for Online Retailers?
- 5 Important Components of Green Supply Chain Management
- Adopt These 8 Supply Chain Sustainability Best Practises For Your eCommerce Business
- Sustainable Supply Chain Management With WareIQ
- Frequently Asked Questions
What is a Sustainable Supply Chain in eCommerce?
A sustainable supply chain in eCommerce entails monitoring social, economic, and environmental effects over the lifecycles of goods and services and promoting good governance practices. For all parties involved in bringing goods and services to market, the goal is to produce, safeguard, and expand long-term economic, social, and environmental value. Companies may decrease risk premiums, control costs, and maintain their market share by reducing and responding to sustainability risks throughout the supply chain. In addition, companies can increase supply chain efficiency and lower sourcing costs by engaging in various sustainability initiatives.
The sustainability of the supply chain is a broad subject. It comprises all the players involved in the manufacturing (manufacturers), procurement, buying from suppliers, transportation & logistics, warehousing, wholesalers, and retailing operations.
WareIQ, an eCommerce fulfillment company, empowers online brands with a superior-tech platform to compete with Amazon like service levels by bringing their average delivery timelines from 5-10 days to 1-2 days.
What Distinguishes Green Supply Chain Management From Sustainable Supply Chain Management?
There are numerous similarities between sustainable and green supply chain management, but they are not the same. Sustainable supply networks prioritise minimising their influence across many facets of life to ensure that businesses can continue to function well into the future, as opposed to green supply chain strategies, which aim to improve environmental health. Sustainability naturally takes into account environmental issues. However, businesses must also consider their social responsibilities, such as fair trade, moral labour standards, and how the industry impacts the neighbourhoods in which it operates. In addition, they must consider economic concerns like maintaining sustainable growth.
Sustainable green supply chain methods include actively pursuing the switch to biofuels, incorporating recycled materials into production, and using less energy. However, not all green supply chain practices are explicitly sustainable. For instance, implementing tighter labour laws and paying employees fairly generally contributes to a greater standard of living. However, these actions don’t directly affect the environment.
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What Makes Sustainable Supply Chain in eCommerce Crucial for Online Retailers?
Creating a more sustainable supply chain in eCommerce is advantageous for the organization doing it as well as the environment, as well as its stakeholders, suppliers, and clients.
Here are some explanations of why it’s crucial to prioritise sustainability.
Enhance Supply Chain Efficiency
Sustainable supply chain management seeks to reduce waste, time, and expenses to increase supply chain efficiency.
Implementing green technologies, streamlining the order fulfilment procedure, and looking for energy-saving measures like better lighting can enhance internal operations while reducing resource use, energy use, and waste.
Constructive Effect On The Environment
Since a typical supply chain is responsible for more than 90% of the environmental effects of eCommerce, there is an urgent need for action.
Due to weather disturbances and resource shortages, climate control not only endangers our lives and the lives of future generations but also poses a significant risk to businesses.
Concentrating on sustainable supply chain management best practices can significantly minimize risk and safeguard a company’s future and the environment (e.g., sourcing items created with recyclable and organic components).
Focus On Making Smart Investments
Sustainable supply chains in eCommerce may be more expensive up front, and in many cases, they may raise the cost of goods.
But investing in sustainability pays off in the long run since it is more economical. Production will be cheaper and generate less waste if fewer materials are used.
For eCommerce companies, packaging represents a significant cost, but by lowering the dimensional weight and total cost of a package, you also reduce waste. As a result, there are numerous more instances of economies of scale regarding sustainable supply chain management investments, such as reducing waste and increasing resource efficiency.
Facilitates The Transformation In The Supply Chain
The biggest ally of sustainability in the supply chain is technology.
According to Forbes, the international manufacturing behemoth Honeywell intends to change from a product-oriented corporation to one that offers software and industrial technology to reach net-zero carbon emissions by 2035. Therefore, the supply chain must be digitalized to accomplish these challenging goals.
The general goal is to move from a transactional approach toward a more strategic, forward-looking structure to shorten cycle times and build regional distribution hubs. As a result, the supply chain should become more stable and efficient, which is excellent for the environment, with fewer kilometres travelled. Honeywell has cut expenses as a result of its ongoing supply chain restructuring. Since 2004, Honeywell has reduced its greenhouse gas emissions by 90% due to its endless supply chain transformation.
Major R&D investments are being made in “digital efficiency,” focusing on the environment and economic growth and promoting a much-needed supply chain revolution.
Furthermore, applying artificial intelligence (AI) for sustainability can boost the global economy by up to $5.2 trillion in 2030, or 4.4% more than under business.
Fulfills Client Expectations
Personal values influence consumer purchasing decisions, and more people are considering a brand’s sustainability policies when shopping online.
The value of the worldwide supply chain market is $15.85 billion. From 2020 to 2027, the worldwide supply chain market is anticipated to grow at a CAGR of 11.2%.
Customers today want more sustainable options and solutions from online retailers than ever before. The more clients a business may draw in by engaging in eco-friendly initiatives (and doing them).
Enhance Brand Reputation and Social Responsibility
By focusing on sustainability, expectations can be exceeded while enhancing social responsibility and brand awareness.
You must be accountable for your output and make an effort to employ sustainable supply chain management methods as your company expands if you want to be recognised as a sustainable brand. This may also serve as a competitive advantage.
This covers the kinds of raw materials your manufacturer or supplier employs, how labour is handled (such as through safe working environments and conditions), and even the shipment’s packaging.
5 Important Components of Green Supply Chain Management
Businesses must ensure that sustainable supply chain management practices are used at every stage, from production to distribution, as customers are starting to inquire about the supply chain process and check that it adheres to sustainability principles. A typical consumer company’s supply chain process accounts for about 80% of its total greenhouse gas emissions. Therefore, a loss of around $500M occurs annually due to a lack of supply chain sustainability.
We at WareIQ believe that–Sustainable supply chain management comprises five components.
Green manufacturing primarily involves changing business and production methods and stakeholders’ mindsets to reduce the industrial influence on climate change and other environmental issues. We can guarantee that the appropriate resources are used from a sustainability standpoint when the materials are initially made. For instance, we can utilise environmentally friendly materials like organic and recycled cotton and polyester, which reduces waste and water usage throughout most of its supply chain and lowers off-cuts in several manufacturing processes. By 2025, it can cut carbon emissions by more than 50%.
The possibility of replacing carbon-intensive materials with less carbon-intensive ones is substantial. For instance, it is possible to reduce pollution in the construction industry by using concrete made of pozzolan or wood instead of Portland cement. In addition, energy savings are the main benefit of a green manufacturing strategy.
An Ecosystem of Sustainable Suppliers
To meet (or generate) market demand, working with suppliers on sustainability issues can also encourage product innovation. Before buying a product, consumers want to know its origins, manufacturing processes, and transportation routes. Therefore, officers in charge of central procurement must be made aware of the sustainability of the sources.
They must ensure that the suppliers follow procedures and checklists, comply with environmental regulations, and have a sustainable supply chain plan. In response, businesses are working with suppliers to enhance the functionality of current products and even create entirely new ones.
For instance, sustainable products can be made with less natural resource inputs, such as those that are more environmentally and socially sustainable, and through procedures that are less damaging to workers, such as growing food with organic pesticides. Sustainable items can offer better alternatives for end-of-life collection and disposal or have fewer adverse environmental effects throughout use than conventional products. By moving toward sustainable supply chain practices, businesses can meet consumer desires for more recently harvested agricultural products and locally sourced consumer goods while reducing the environmental effect of product transportation.
Businesses maintain their market share, including existing customer loyalty and pricing power, and gain access to new markets by working with suppliers to improve the sustainability of the inputs and processes used to generate goods. Gaining access to new markets can be accomplished by developing sustainable supply chains for eCommerce products.
The EPA estimates that transportation was the primary source of 28.2 per cent of greenhouse gas emissions in 2018. Fortunately, there are techniques to reduce the amount of air freight shipments and truck journeys you make by combining your goods. Trucks that run on alternate fuels or electric power can also be purchased. These choices have substantially improved recently, making them an attractive option even for lengthy trips—additionally, considering rail transit, which provides an effective and sustainable supply chain solution. Compared to trucks, trains carry far more freight and typically cost less. They also consume less fuel per ton-mile. Finally, pick a 3PL partner like WareIQ that strongly emphasises environmentally friendly fulfilment and shipping.
Green Industrial Warehouses
By using less plastic materials, warehouse facilities can improve their environmental performance. Plastic environmentally benign substitutes can increase recycling rates and lead to efficient waste management. Green warehouses can improve productivity while reducing operating expenses and environmental impact. The warehouse needs to have adequate insulation. If not, the expense of heating and cooling would go up. Solar panels and LED lighting are more environmentally and energy-efficient than incandescent lights.
Sustainable Retail Commerce
Going paperless, switching to sustainable packaging, making bags and receipts optional, buying energy-efficient equipment, and switching to energy-efficient stores can help businesses become more efficient while improving customer security. The Products must have clear labels and third-party certification. Label information about sustainability raises the brand’s value. In addition, it is necessary to investigate renewable energy choices, strategies to replace toxic materials during manufacturing, and ways to recycle used items.
Adopt These 8 Supply Chain Sustainability Best Practises For Your eCommerce Business
The key to integrating sustainability into your supply chain is to be mindful of your actions and decisions—from the manufacturers you work with to how you prepare and ship orders—at every step of the process.
Here is a summary of some sustainable best practices you can use in your online store.
Utilize Recyclable Resources
Many businesses use plastic, which is not biodegradable. Businesses must consider using recyclable alternatives instead, including cardboard, paper, or bubble wrap, as these materials are biodegradable and can be utilised for the majority, if not all, types of products.
Utilize Different Packaging Materials
Why not investigate plant-based packaging when so many businesses are currently exploring the possibilities of plant-based products? Instead of using Styrofoam packaging peanuts, consider using air pillows made of recyclable materials. These are less expensive to buy and ship and better for the environment because they can be recycled again.
Why not use packaging that the client may reuse? As all business owners are aware, packaging can be pricey. However, the packaging will be more helpful and have a beneficial environmental impact as fewer single-use materials end up in landfills. Instead of ending up in landfills and harming the environment, consumers can reuse organic fabric bags instead of plastic ones.
Send Goods In Bulk
Selling more of your goods will help reduce packaging waste because everything can be wrapped in one biodegradable package. In addition, shipping these things in bulk rather than breaking them into smaller shipments will help reduce the amount of packaging waste and the carbon emissions produced by the logistics process’s vehicles.
The concept of “one size fits all” does not apply to packaging; instead of using the same size package for all things, pack carefully and use the right-sized box to prevent needless wastage of materials and/or space.
Use Carrier Packaging
Although having your personalised packaging can be significant and provide the customer with a more individualised experience, is it worth the environmental impact of the customer looking at it and throwing it away? Consider using the packaging given by couriers instead of this customised packaging. They offer essential cardboard boxes in recycling programmes, making it more straightforward for associated businesses to be sustainable.
Select An Alternative Delivery Method
Although ground transportation is less hazardous to the environment than overnight air delivery, it is handy and could deliver the product to the client more quickly. Although you might only sometimes be able to employ ground transportation, examine and analyse your shipping history to determine when and where you might use each delivery mode to reduce emissions and costs to your company.
Offset Waste With Green Benefits
Your company should consider offsetting the emissions caused by non-sustainable packaging and air delivery if you cannot change your packaging or investigate alternative shipping options. If possible for your business, consider planting a tree for every transaction you make, as many businesses do. This will assist in reducing your emissions and allow your customers to see that you are actively addressing the climate catastrophe, which will increase brand recognition.
Creating a sustainable supply chain in eCommerce is a comprehensive endeavour. A supply chain must be adaptable to changing demands for packaging and carbon emissions to fulfil the needs of a changing and complicated environment.
Sustainable supply chains in eCommerce are established at the organizational level. Therefore, continuous optimization efforts targeted at enhancing sustainability are beneficial for businesses. Even better, participants can establish performance-based goals to monitor their development.
Top brands today are committing to using materials sourced more ethically—promoting supply chain management professionals to higher leadership roles. In the end, they prioritize sustainable supply chains in the eCommerce sector.
Sustainable Supply Chain Management With WareIQ
A sustainable supply chain in eCommerce is widely discussed. At WareIQ, we take accountability for how we affect the environment. Our professionals are implementing innovative, environmentally friendly procedures that are considered during shipping and fulfilment services.
Being as environmentally friendly as feasible is crucial to WareIQ’s success as a third-party logistics provider (3PL). As a result, our order fulfilment procedures frequently include environmental initiatives. Some examples are reducing the carbon footprint of transportation, optimising warehouse waste, using recycled and sustainable packaging materials, preserving warehouse energy, and many other things.
Minimizing The Carbon Footprint
When fuel is used to transport goods, carbon dioxide discharged into the atmosphere is calculated as the carbon footprint. Research indicates that the global movement of goods contributes significantly to the rise in atmospheric carbon dioxide, which raises temperatures worldwide. This includes all types of vehicles, including cars and aeroplanes.
As a 3PL, WareIQ collaborates with clients to create a reliable carbon impact estimate and offers support for reducing carbon emissions. For example, we can help firms deploy larger capacity vehicles, plan maintenance of transport vehicles, use greener fuels for vehicles, and increase the fill rate per transport unit to convey more items per tank of fuel.
Implementing sustainable transportation practices is another strategy that contributes to the development of a supply chain that is more environmentally friendly. As a 3PL company, WareIQ has extensive knowledge and can offer strategic transportation operations. Transferring merchandise to more optimal places and using the most effective transportation routes, we help our clients cut down on superfluous transportation legs with the help of WareIQ’s extensive eCommerce fulfilment network.
We collaborate with environmentally friendly carriers that continually develop solutions for sustainable transportation. These measures frequently result in cost savings and support your objective of creating a sustainable supply chain in eCommerce.
We can help your brand by employing the best, greenest, recyclable, and sustainably sourced packaging materials because we are experts in 3PL fulfilment services.
As eCommerce shipping increases, it’s critical to follow environmental rules to reduce packing and disposal costs and operate sustainably.
- Pan India Fulfillment & Darkstore Network: Plug-and-play fulfillment infrastructure with no minimums, which is compliant with Amazon Seller Flex, Flipkart Assured, Myntra and other marketplaces
- Inventory & Network Planning Excellence: Best-in-class AI models for sales forecasting, product segmentation, and inventory management to reduce inventory by 40% and increase revenue by 10%.
- Vertically Integrated Fulfillment Tech Stack: Our Fulfillment Tech Solution supports integrations with 20+ top marketplaces & D2C platforms, and prominent national, regional and hyperlocal couriers, enhancing reach by covering deliveries for 27,000+ pin codes
- Supply Chain Productivity Applications: Integrate a host of supply chain productivity apps with a single-click to your existing CRMs, ERPs & accounting software to manage your logistics workflows from one command center. Use Apps like RTO Shield to get 100% RTO protection, Branded Tracking to turn your order tracking page into a profitable marketing channel, and many more.
Trusted by 300+ top Indian brands, we are helping them accelerate online sales and expedite their growth through a synergistic combination of advanced technology, robust fulfillment infrastructure & seller enablement services!WareIQ is backed by leading global investors including Y Combinator, Funders Club, Flexport, Pioneer Fund, Soma Capital, and Emles Venture Partner.