Sustainable Supply Chains: Strategies for reducing environmental footprint in retail

The dire state of the environment today has made it imperative for businesses to think consciously and implement practices to develop sustainable solutions to lessen the harmful influence on the climate.

Every industry is focusing on how to reduce its carbon footprint, improve its environmental, social, and governance (ESG) scores, and move toward a circular economy—and the retail sector is no exception.

According to Deloitte, the retail supply chain is responsible for 25% of worldwide greenhouse gas (GHG) emissions.

In light of this, the need for retailers to integrate sustainability initiatives into their supply chain operations become all the more essential. Other important sustainability initiatives in the retail sector can be removing waste from the value chain, ensuring product traceability, fulfilling their energy requirements using renewable sources, and incorporating sustainable packaging.

In this article, we will take a look at some key strategies that can help reduce the environmental footprints for retail companies, and how these strategies are powering those initiatives and building sustainable supply chains for retail clients.

But first, let’s talk about the importance of sustainability in retail chains.

Understanding sustainability in retail chains

Research shows that the production of new materials has increased by more than 60% since the 1980s. This is not surprising, considering the rising human population worldwide. However, we cannot ignore the fact that it has adversely affected the environment.

To give you an idea of the scale at which consumer shopping habits impact the ecosystem, here are some statistics:

●     The fashion industry accounts for more than 10% of annual global carbon emissions, according to The World Bank.

●     The amount of plastic recycled each year only makes up about 9% of the total plastic produced.

●     About 40% of the food produced yearly in the US goes uneaten.

●     More than 82.2 million tonnes of packaging material is thrown out yearly.

●     It takes 998 gallons of water to make one pair of jeans

The purpose of the studies conducted to discover these facts and figures is to give industrialists and consumers a reality check about how their actions are deteriorating the ecological conditions of the planet we live on—and it has worked wonders!

Customers in many nations are willing to shift away from brands that do not prioritise ESG goals, indicating that consumer behaviour worldwide is also undergoing a transformative shift. In fact, in a 2020 McKinsey US consumer sentiment survey, more than 60% of respondents said they’d pay more for a product with sustainable packaging, while 78% of consumers were found to consider sustainability an important part of their lifestyle in a recent NielsenIQ study.

This has led to retail businesses looking into alternative ways to enhance and diversify their supply chains in an effort to lessen waste and its negative effects on the environment. Retail companies that diversify also reduce their exposure to reputational risk, reduce the expense of unplanned downtime, and lessen their risk of natural disasters.

So, what are some sustainable supply chain strategies emerging in the retail industry? Here are the top examples:

Supply chain tech innovations

The digital revolution has fundamentally changed the way retailers manage their supply chains. Businesses are increasingly investing in supply chain management software to improve efficiency and sustainability. These solutions provide thorough insights into all facets of the supply chain, empowering businesses to make well-informed decisions that save costs and enhance environmental outcomes. Additionally, managing inventory levels, cutting down on excess stock, and avoiding the environmental impact of warehousing operations can help retailers create more environmentally friendly supply chains with lower carbon emissions.

Green logistics and transportation

Green initiatives in logistics and transportation are another rising sustainability trend. But why? The transportation industry contributes significantly to global carbon emissions. Retailers are seeking creative solutions to lessen the environmental impact of their logistical operations, such as using eco-friendly transportation methods like electric or hybrid trucks and containers to reduce carbon emissions. Promoting biofuels or hydrogen as alternative fuels for logistics partners also empowers a green impact on the environment.

Data analytics in sustainable retail

Data analytics is emerging as a powerful tool for monitoring and successfully enforcing sustainable retail practices. Businesses can use the massive amounts of data generated by retail operations to find insights that lead to more tailored eco-friendly practices. Retailers can use data analytics to better understand consumer behavior, forecast trends, optimize inventory levels, reduce waste, and ensure efficient product distribution.

Data analytics functionalities can include inventory savings summaries, inventory forecasting to determine reorder points and economic order quantities, and procurement operations-related information to evaluate real-time demand, plant-wise supply, stock movement, and market pricing for actionable cost reduction insights. This quantification of sustainability programs provides retailers with proof of their commitment to environmental stewardship.

Other sustainable strategies for reducing environmental footprints in retail include choosing suppliers with green sourcing policies, using recyclable or biodegradable materials for packaging, and implementing waste reduction initiatives, especially plastic.

Final thoughts

As the retail sector continues to evolve, embedding sustainability across the value chain is essential for companies to lower costs and minimise risk in their supply chains while also demonstrating to customers that they are committed to taking ESG issues seriously.

Implementing strategies such as incorporating modern tech innovations, green logistics and transportation, and data analytics into your retail supply chain can help you develop a comprehensive roadmap for lowering your company’s negative impact on the environment, improving operational effectiveness, and satisfying customer demands for sustainable practices.

The future of retail depends on striking a balance between environmental responsibility and technological innovation. Retailers that embrace and use these emerging technologies can not only help the environment but also create a long-lasting business model that is based on effectiveness, transparency, and a dedication to the welfare of the earth.

(Anish Popli is the Founder and CEO, ProcMart)