The Role of Supply Chain Management in Environmental Compliance

JUNE 23, 2014

The Environmental Compliance Mantra

While retailers have always been challenged to maintain profitability and grow the business, they are now under increasing pressure to achieve these goals in the most environmentally friendly way possible. This pressure isn’t just from internal stakeholders — consumers are more conscious of sustainable business practices at the corporate level and have demonstrated their spending can be impacted by a company’s environmental record.

Retailers’ strategies and their development of sustainable practices are now reaching all aspects of the business, from products and services that touch consumers to internal practices that are less visible. The supply chain falls in the latter category, but is a critical business function that impacts consumers indirectly. Companies cannot grow without getting products and services to their locations and customers, and the supply chain can be a source of significant environmental challenges if it is not properly managed.

Here are a few ways that poor supply chain management can negatively impact the environment:

Over buying: This is the result of an inefficient supply chain and can result in excess waste in the form of unused or unsold products, leading to more products in landfills and the potential for improper disposal of waste.

Under buying: This can cause lack of inventory and excess transportation causing a larger carbon footprint.

Poor vendor verification: If supply chain partners are poorly vetted, there’s a chance that materials used in a product may not be approved in the country of sale, causing a recall and complex reverse logistics.

Lack of data from the supply chain: If a company doesn't have technology in place to track what’s happening in its supply chain, it is likely to adversely impact overall sustainability efforts and the company’s bottom line.

Retailers that partner with an expert in waste management can have the added benefit of the data and tracking provided by the waste management partner. For example, as part of the implementation of a waste management program, retailers can analyze waste production to identify ways to optimize inventory. Knowing what to order, how much and when is key to cutting down on greenhouse emissions and overabundance of unused or unsold product in the supply chain.

As companies evolve to meet growing customer demands for sustainable business practices in an omni-channel buying environment, more organizations will awaken to the environmental and financial benefits of analyzing their waste streams.