SC&B Blog Q2 2024

We all know what the supply chain does. Starting from raw materials sourcing to delivering the finished products, a value chain process involves multiple stakeholders, applications, and calls from leadership whose ultimate goal is to meet the consumer demands and drive their revenue. In all, making a framework that is responsive, scalable, and, yes, profitable. A sustainable supply chain does all of that but by adding a layer of ethical and environmentally responsible practices too.

To keep things light and simple, let’s set the context for the question above in the superhero realm. Let’s imagine our planet Earth fighting a battle against GHG emissions and slightly finding itself on the losing side of it. And at that moment, the quest for restoring balance lies solely on the superhero who everyone vouches to save the world just before it gets out of hand. In the realm of the value chain, sustainable operations are that key figure that restores parity for all the virtues it has. To help the cause, the stats do show that the sustainability methods are indeed making a difference.

Though legalization impact, new guidelines, and reformed government code for pro-environmental operations are non-negotiable terms for an organization to carry out their supply chain functioning, from a practical point of view, each process needs its time, considering enterprise nuances of working, the infrastructure they have, the skill level the workforce inherent, and of course, the finance that needs to be funneled in to make it work. To take in the bigger picture, consumer's new buying patterns favor more ethically sourced products whose manufacturing process till the delivery of products life cycle is not only environment conscious but also contributes to the betterment of our planet earth. For instance, a company that is more transparent in its supply chain sustainability statistics gets higher consumer retention rates compared to those who are slightly more abstained.

As and when there's ascendancy in how technology can translate both the meaning and the impact of sustainability, the components that are associated with sustainable supply chain  operations widen, too. Let's look at the key elements that are part of the eco-friendly value chain.

1. Environmentally Friendly Operation: The first component involves sustainable operation from manufacturing to delivery and covers proper benchmarking of supply chain processes. This also includes green product design, production, raw material sourcing, logistics, and last-mile delivery; in short, complete product life cycle stages that are eco-conscious. These operations are more plausible owing to the inculcation of artificial intelligence and machine learning that keep an astute check on the operational parameters, potential risks, and usage of data to help aid the end-to-end sustainable value chain.
2. Visible Processes: Every process needs to be completely transparent in terms of the actual stage of its working. Businesses have to share the working information of their processes to gauge whether the action plan or those who are accountable for it are indeed getting the desired result or not. This also helps in adapting the processes to maximum effect, thus building up reliability towards building sustainable supply chains. Not to mention, the facts always provide more focus on whether the whole framework is akin to the ethics that a company stands for, including meeting the standards laid down by the regulatory authorities.
3. Waste Management: A sustainable supply chain's core competence factor is how well-rounded the product life cycle is. This means apart from being very much relatable to the ecosystem during its production, it is also equally smooth in its transition from being a used product to being broken down and remade into a new offering for the market. The product's reusability goes beyond its original life cycle and offers more longevity owing to its renewable material usage.

Each strategy needs a fully functional action plan. But more importantly, these executions require a few pointers to bring out the best efficiency and maximum impact. Here are the best practices for supply chain sustainability.

1. Technology: The best leverage for any idea is how well it is complemented through the foundation of its technologies. An idea will see its fruition to its maximum potential on account of how relevant technology is. Both AI and machine learning have opened immense avenues for the people who are directly involved with a sustainable supply chain process, the data that is being processed, and the execution. The marquee technology has also made it easier for enterprises to easily streamline with the already existent framework, making the transition easy from traditional methods to new-age ones.
2. Collaboration: Yes, you read that right. Every function involves people. And to judge the efficacy of a process, its success encapsulates how well the people or process's stakeholders have aligned themselves internally. Faster assignment of roles and keeping tabs with those accountable can become the recipe for success for any organization. This especially proves to be more fruitful in the face of uninvited disruptions when quick resolution can be attained through faster collaboration.
3. Setting Consistent Standards: Once a sustainable value chain model is adopted, it is essential for every key personnel or group in the system to adhere to the regulations that the management has finalized. Stakeholders, external and internal, have to comply with the rules and regulations that benefit the end objective of both the organization and the environment. This also facilitates the ESG guidelines that also need to be incorporated by an organization as a part of the comprehensive brand they aim to build.
4. Market your Success: The world needs to know the excellent work that you have been doing. From customers to competitors, your operational trends in supply chain sustainability will surely bring the attention the subject deserves. A success story not only catalyzes the cause in the spotlight to the global stage but pushes the tech to even out the impact the carbon footprint has had on the planet. All the positive chain reactions add to the value of supply chain sustainability.

There's a flip side to every coin. And the challenges are on the other end. Let's cover the key shortcomings when bringing the value chain world to the necessity of sustainability.

1. Finance: For all the plans finalized in the boardrooms, their execution is determined through the value signed on the cheques. The infrastructure requires a complete overhaul, which generally means getting away with the usual methods, applications, and even existent framework sometimes. Also, the company's scale is considered to measure how effectively it can incorporate its sustainable principles and subsequent operations.
2. Workforce Skillset: A new way is a change for some, and sometimes, changes need a transition phase to achieve full potency. From a company point of view, the workforce, in some cases, needs an upgrade on their current skillset. Management needs to invest in the required upgradation program to help the people directly overseeing the value chain platform to get the most out of it.
3. Integration: You bought new software, but it fails to be compatible with your enterprise's existing systems. It'll simply mean a bad investment. Before funneling a good chunk of cost into sustainable software, organizations need to vet whether the application will yield desirable objectives or not considering your scope of work.

1. Lack of Transparency: One of the key bottlenecks in the chemical industry is transparency. Not knowing the exact amount of inventory leads to delays in subsequent deliveries and inflated costs. In some cases, it also leads to quality degradation when mismanagement of demands is at the helm, too. Such shortcomings are usually tackled best with the adoption of analytics, which gives accurate insights into the actual customer demands while managing market fluctuations. This bodes well on the cost front as well, as stakeholders will duly know the exact amount of production quantity required, both for the current timeline and the foreseeable future.
2. Manufacturing Process: Chemicals are susceptible products. Which means their production plans or recipe need a very considerate approach. From choosing the right proportion of materials, solvent, reactants, or catalyst to maintaining the right production temperature to knowing which preservation fluid will keep the final product in its truest sense, even during hectic transportation, forms the essential requirement of manufacturing process challenges of the chemical industry.
3. Quality Checks: A non-negotiable aspect of the chemical industry is that of regular checks that must be carried out to maintain efficacy and, most importantly, its state to ensure that it does not bode any health hazard. This step is a comprehensive one that includes material mapping, evaluation of the composition and quality, or equipment that is directly involved in manufacturing. Additionally, being transparent with the quality assurance practices with the customers keeps a brand in sound check. Failure to keep a tab on the regular checks might lead to untimely disruptions in the form of device failures, malfunction, and subpar production (which can also be owing to lack of QC done on raw material).
4. Transportation: A herculean task for almost every industry, the timely delivery of a finished commodity carries the flag for an organization's reputation, too. A delivery made in time is synonymous with how well the enterprise’s customer gratification metrics are. With many parties involved, from transportation to suppliers, any hiccup or delay may lead to a subsequent slowed process at the recipient's end. Not to mention, documented disruptions like the Red Sea Crisis have shown that untimely disruption on a global scale does impact the global supply chain. In some cases, a failed delivery consignment, which is time-critical, can also create a case of handling chemical waste.
5. Inventory Optimization: With the pointers mentioned up until now, it’s underlined how chemicals are time-critical commodities. Their handling is of utmost importance and diligence. Inventory optimization plays a critical role in staying true to these parameters. With an AI-powered platform, SCM can make decisions with forecasts in mind while optimizing resources and costs. When the stock figures are finalized, stakeholders know the exact amount of raw material required to match the market demand. This holds more true for a conglomerate whose business network spans countries and needs more astute inventory requirement insights to avoid the collapse of balance sheets.
6. Environmental Regulations: Chemical manufacturing, storage, transportation, and waste management pose a particular ecological challenge. With increased government regulations pushing conglomerates towards a more sustainable value chain process, the equipment and the whole operational framework need to be in line with the neutral carbon footprint policy. Lack of it can result in heavy penalties being imposed on the enterprise and, in some cases, a complete cease-of-operation.
7. Fluctuating Economy: It goes without saying that management’s critical decisions are made based on the current economic situation and how it will act. Any fluctuation in fiscal standing directly impacts demand, which sets a direct chain reaction toward production levels and inventory management. Companies that are late to read the market scenarios find themselves confronted with excess or shortage of stocks.
8. Market Competition: Each industry has many players. In a globalized market, a chemical supply chain organization needs to be updated with the latest tech to solidify its presence. Investment in the GenAI platform has been proven helpful, providing timely insights that can help management plan better for their quarterly, half-yearly, or yearly timelines.
9. Cybersecurity Issues: Perhaps a flipside to technological advancements with all data being online is that owing to a lack of security protocols, it stands to get breached, too. With cyberattacks and malware exercises for ransom being very prominent, companies have to be proactive and install the latest protocols that do not allow unauthorized access to databases.
10. Global Supply Chain Shortcomings: A more prominent challenge for an MNC with operations spanning multiple countries, global disruptions (Ukraine-Russia War, Houthi Rebel Attacks) can impact the whole value chain process. For instance, a local disruption in a country from where an organization procures its raw material will affect its manufacturing hub, which is situated in a different country. Natural disruption, too, sometimes can alter the course of SCM, leaving them adapting at the last moment.

The inculcation of tech has rectified the bottlenecks with data-driven insights, preparing SCM to handle last-minute disruptions. The same holds true for the titular value chain. With new-age platforms powered by artificial intelligence and machine learning churning out insights for informed decision-making, the leadership can adeptly subside the chemical industry supply chain challenges.

What is Corporate Sustainability?

At its core, a company covers the basics of manufacturing a product and ensuring its availability to the masses. In some cases, after a commodity launch, services are rendered to the user base, too. This is where a sustainable corporate approach is vital to ensure eco-consciousness. If a leadership team adopts a carbon-neutral strategy throughout its process, then stages from raw material procurement to manufacturing to final delivery to post-sales services are designed and executed with a low to zero carbon footprint in mind. This strategy prioritizes nature and long-term economic growth. In this approach, short-term financial gains are sidelined for a better future that is renewable and responsible and treats resource utilization with the future in mind. This sustainable development procedure highlights an enterprise's proactivity towards nature and its assets.

And to form a corporate sustainability plan, the leadership has to adhere to the three pillars.

• The Environmental Pillar: As the term suggests, the environmental pillars encompass strategies that nullify GHG emissions, adopt renewable sources of energy, focus on recycling and toxic waste management, and reduce the carbon impression throughout the value chain process.
• The Social Pillar: The social pillar covers the aspects of the organization’s impact on the planet and the people in it. This highlights the need to make the well-being of employees the top priority. From promoting the health and safety of their workforce to keeping access to essential resources intact and ensuring that the organization’s operations have no ill impact on the communities, including that a product’s usage will have no bearing on user health, the social pillar covers it all.
• The Economic Pillar: For the principle of sustainability to survive, it is imperative that businesses encompass themselves with economic feasibility. This can cover reducing dependencies on plastic-based material packaging to creating green jobs that focuses on efficiency and renewability.

The research papers on the impact of carbon emissions on climate have long underlined the necessity of reversing the toll the planet has had. So, why sustainability is a must for corporate strategy stands to answer on its own. However, when it comes to strategizing a comprehensive environmental-first plan, a lot of thought processes go into it. This subsequently decides the importance of the objective an organization’s leadership has and the boost its presence will receive.

• Improves Reputation: When an enterprise is more forthcoming in nullifying carbon emissions, it gets backed through public support. And as we all know, nothing beats a good marketing strategy than word of mouth.
• Market Standing: Corporate sustainability transpires into a solidified presence in the market. Compared to your competition, if your workflow is more aware of its GHG emissions and has corrective measures in place, you are bound to receive more financial aid and regulatory support, which translates into a top-tier presence.
• Cost Optimization: Sustainable corporate measures prioritize green energy usage and lawful waste management, thus promoting resource efficiency. This positively impacts the whole process, from sourcing natural raw materials to improving logistics services with more informed decision-making that benefits the environment.
• Increased Sales: Customers love to back a product that is one hundred percent naturally sourced. In case of sustainable offerings, the impact is multiple folds resulting in increased sales benefitting the company.
• Innovation: With inventions promoting a carbon-neutral lifestyle being the need of the hour, the scope of innovation is more timely than ever. This serves as a perfect platform for R&D and an opportunity for employees to push the envelope of innovation in a product’s sustainable metrics.
• Attracts Talent: Establishments with strong ESG principles offer excellent opportunities for those looking to make a mark with their work. If an enterprise is vocal about the environmental-first approach, chances are many professionals will be submitting applications to it.

Often, people tend to confuse the two terms. While this blog has spotlighted the former, let’s highlight what gets covered under corporate social responsibility. As CSR initiatives, management keeps the objectives that directly benefit social and environmental causes. It reflects a more voluntary approach towards carbon-neutral lifestyle and the general well-being of society. A CSR activity puts spotlight on coming true to the obligations towards the environment and be rightful to its stakeholders (employee, customer, environment). This can also include philanthropic acts like charity drives, voicing ethical sourcing, and labor practices among them. With much of the meaning adjacent for both terms, it is fair to say the CSR initiatives, with their subsequent impact, contribute to the corporate sustainability goals.

Being more accountable for your actions bodes well for the betterment of this planet. In this long route to achieve carbon neutrality, smart applications powered by GenAI and data intelligence help with decision-making. From smarter planning to more astute execution, insights based on the company’s workflow help the management make smart tactical calls that drive sustainable growth. Another facet to achieving a nature-first thought process is to impart the urgency of the topic to the employees. From providing them resources to achieve eco-consciousness to starting an incentive-driven program to get an idea popular, your corporate sustainability plan will find takers aiding you in a carbon-free setup.