Future of Business 2030: Your ideal ESG-led supply chain

Over time, more consumers will not only desire but expect the companies they work with to demonstrate brand values similar to their own. For organizations, this means needing to operationalize environmental issues, social, and governance (ESG) plans as soon as possible. In particular, the supply chain of the future is going to rely heavily on ESG principles. In earlier blogs in “The Future of Business 2030” series, we explained what these principles are, how they affect consumers, and how businesses need to make them the core of their planning processes.  

Now, for supply chain leaders, this is the right opportunity to build your ideal supply chain, led by ESG. How to do that will vary by business, but the key components of success are the same. 

Drive positive change 

Supply chains are a long, complex, and critical function in our world. Supply chain leaders and their companies have the ability to drive positive change globally by setting the pace within their industry. Here are a few ways to use a supply chain to model first-class, ESG-conscience practices:

• Lower emissions down to zero (ideally). Analyze each step of the supply chain and find areas where emissions can be positively impacted. This should also include negotiating environmentally friendly requirements for all suppliers, manufacturers, distributors, not only the company’s own operations. 
• Increase lean productivity. Review capabilities of established partners. Can they be consolidated into one location or one partner? This will use fewer resources across different factories or warehouses and will not only advance ESG strategies, but likely also positively influence cost margins.  
• Demand ethical labor practices. Unethical practices are no longer ignored by consumers and they increasingly demand corporate responsibility. Issues like fast fashion’s reliance on low-paid, young workers are not being ignored. Demand fair labor standards from all suppliers to ensure ESG principles are upheld and consumers will be less likely to turn to competitors with better salaries, better working conditions, and better treatment of their workers. 

• Use only sustainable sourcing. Climate change isn’t the only issue facing the planet. Unsustainable sourcing is unbalancing natural resources and threatening native wildlife and fauna. For instance, the palm oil industry is feeling the heat of consumers’ outrage over its destruction of orangutans’ habitats. Consider the environmental impacts of each sourcing decision to lessen the risk of earning a reputation as detrimental to wildlife.  
• Model ideal scenarios. To begin, understand the operational and financial impact of a sustainable supply chain. Envision complete compliance with the ESG plan and what that would mean for the supply chain’s productivity and impact on the environment. When the positive impact it can have on the business is clear, even if it appears after a few years in operation, stakeholder buy-in will be much easier.

Create and enforce strict ESG policies 

Once it’s understood where strengths, weaknesses, and opportunities exist, supply chain leaders need to establish an environmentally driven roadmap. To do this, it’s critical to identify sustainability goals and non-negotiable ESG-related conditions. These will be the core of all further negotiations and decision-making both internally and externally. Work these into contracts, communicate the plans to all parties, and ensure all departments and partners are on board. Sometimes it’s valuable to let the public know the supply chain is being revamped to be more sustainable and ethical, especially when sourcing or manufacturing historically unsustainable goods. 

To that end, being a part of every process along the supply chain is absolutely necessary. Consider this another quality control check. Never rely on large partners to hold their own suppliers or manufacturers accountable to the agreed-upon ESG expectations. Ensure each party in the supply chain adheres to emission standards, appropriate workplace conditions, and overall ethical sourcing. Beyond this, they’ll also need to provide proof of compliance with the organization’s own ESG expectations. 

Use technology to put the plan into action 

None of these tasks are simple to do without the advanced technology designed to align and connect data from various streams along the supply chain. Centralizing all supply chain data is critical to allowing data from both internal and external parties to be entered into one platform. Keeping all parties aligned creates more opportunities for collaboration, keeps partners honest and on track, and allows for agile, proactive decisions to optimize energy-efficient choices. This is one of Anaplan’s best use cases and can fast-track the shift to a more revolutionary supply chain. 

Using Anaplan, supply chain leaders can manage supply and demand more closely. By doing so, the production of goods can be toggled to reduce product and energy waste. That cross-functional effort is made infinitely easier with technology like Anaplan, facilitating real-time collaboration across all business units to understand demand, and allows supply chain to make informed and strategic choices. Additionally, technology can provide AI projections and, at the same time, scenario modeling can illuminate situations for more ESG-driven processes. Technology can be, and truly is, the supply chain leader’s best friend in the effort to build the ESG-lead supply chain of the future.  

Conclusion 

A dedicated and operationalized ESG strategy enables supply chain leaders to build their ideal supply chain, embracing sustainable and green practices. By identifying opportunities and risks using real-time data from partners, supply chain leaders are empowered to make proactive and ESG-guided decisions to prepare them for success in the future of business 2030.