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A 5-Point Action Plan to Build an Environmentally Friendly Supply Chain for Your Business in 2022

There is no doubt that customers value convenience over sustainability, which is why same-day shipping remains a popular delivery option along with the increasing rate of returns in ecommerce. Sustainability is not only about the resilience of business but also of the planet. Serving customers with what they want, protecting the planet and keeping everyone thriving, including your bottom line, is the goal of net-zero targets. At least 65% of world economies have committed to achieve net zero by 2050. Since supply chains consume resources on a large scale, they are also responsible for a disproportionately large share of the world’s carbon emissions.

Developing a sustainable supply chain strategy begins with ethical sourcing and creating a circular economy with healthy business practices. The road to achieving net zero is long and starts with technology adoption and a five-point action plan.

Step 1: Big Data and Predictive Analytics for Supply Chain Sustainability

Smart manufacturing means a demand-driven supply chain model that involves using facts and metrics to guide decision-making. Data-driven supply chains hardwire predictive analytics and automate decision-making to minimize human errors. Making informed decisions on what to produce, how much to produce and where to sell is the basis of responsible manufacturing. Reducing silos and increasing availability of a single, centralized view of all relevant data creates end-to-end visibility to understand the full environmental impact of business decisions across the value chain. Companies leveraging cloud-based supply chain systems conduct detailed analytics on true customer demand and monitor strategies to become more sustainable.

Step 2: Demand-Based Inventory Distribution and Shorter Supply Chains

Distributed warehousing and demand-based inventory distribution builds agility, increases drop shipment efficiency and reduces carbon footprint by minimizing air shipments. It helps address the need for one-day or same-day deliveries. Reducing carbon emissions by remapping the sourcing mix closer to where the demand lies increases flexibility in the business and minimizes the risk of supply chain disruptions.

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Making sustainability an integral part of supply chain management involves building stronger supplier partnerships, boosting nearshoring and regional supply chain development. Shorter, more secure supply chains allow easier end-to-end process improvement and the discovery of new investment models, and can lead to industrywide progress toward social and environmental sustainability. 

Step 3: Digitization and Automation to Increase Transparency in the Supply Chain

Simplifying warehousing with automation and inventory serialization to optimize merchandise management prevents misplacement or loss. RFID tags improve precision and efficiency, which is critical in managing carbon footprints and ensuring the inventory ends up at the right place.

Intelligent warehousing and use of smart AI algorithms connect warehouses to stores and distribution centers, thus providing 100% traceability of goods and zero wastage. Smart IoT technology optimizes machine performance, automates maintenance to reduce energy usage and eliminates redundancies in workflows by optimizing route planning, leading to a significant drop in fuel consumption. Digitization reduces paper consumption, automates labor-intensive processes to enable easy scalability and boosts energy efficiency with optimum resource management and maximum space utilization.

Step 4: Omnichannel Commerce for a Single View of Network-wide Inventory, in Real Time

Following digitization and automation, building an integrated business strategy that connects all channels of commerce can drive sustainable business growth. Creating a unified customer experience across multiple sales channels (B2B and B2C) ensures greater visibility and increases sales opportunities.

Omnichannel commerce builds capabilities to fulfill orders from stores or nearby fulfillment centers, thereby addressing the need for faster local deliveries to reduce your carbon footprint. Exposing 100% of inventory reduces stockpiles by increasing sales opportunities and reduces the chance of unsold inventory ending in landfills. Real-time inventory visibility makes it possible to optimize replenishments and prevent order cancellations.

Step 5: Returns Analysis and Recommerce

Efficient returns management lowers transportation and labor costs. Repairing old products, as well as reusing and reselling in secondary markets, can help reduce landfill waste and fossil consumption. Accurate returns analysis helps build an understanding of product lifecycles and can lead to more informed merchandising decisions related to product quality, customer preferences, store, product and vendor performance, all of which ties back to Step 1 — Big Data analysis.

Using a circular model approach by designing reusable packing and allowing customers to return multiple items together at a designated nearby store can also significantly reduce environmental impact. For example, H&M and Levi’s have partnered with I:CO to collect clothing and footwear for reuse and recycling. Patagonia not only collects used clothing in its stores and through the mail, but also offers repair services so its customers can extend the life of their garments.

Digitization is reshaping the supply chain industry by building transparency in business and authenticity in service. Consumers are quick to call out “greenwashing” when brands portray a false image of being environmentally friendly that doesn’t reflect their practices behind closed doors. Retailers need to ensure that sustainable products are not just “add-ons,” but that they provide distinct benefits and have a pricing strategy that is comparable with other options.

As we work hard to spread brand awareness and enhance sales, let’s be mindful of the impact we create on our planet. Let’s work a little harder to reduce our carbon footprint and increase transparency within the organization and across the value chain.


Anshuman Agarwal is a seasoned leader in the ecommerce and retail technology industry. With more than 17 years of experience as a thought leader, advisor and mentor, Agarwal brings a unique perspective to multiple segments, including merchandise planning, distribution, warehousing, decision analysis, risk analysis and strategy development. He is the Co-founder of inventory optimization solution Increff and spent the earlier part of his career at marquee companies like Boston Consulting Group, ITC, Myntra and Inductis.

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