‘Supply Chains Prepping for a Greener, More Agile Future’ Explores the Shift Towards Sustainability and Agility
The pressure to align with environmental, social and governance (ESG) principles has become a top concern in global supply chain management, according to a new survey-driven report by DP World and Supply Chain Dive’s studioID.
“Supply Chains Prepping for a Greener, More Agile Future” polled nearly leaders from across the supply chain, logistics, operations and technology sectors to reveal that ESG concerns now rank alongside “demand and supply variability” and “lack of agility in adapting to change” as the top three challenges facing the industry.
DP World, in collaboration with studioID, discovered a reshuffling of priorities and investment strategies as supply chains work to address these top issues. Many organizations are altering course to implement strategies that reduce carbon emissions, enhance efficiency, improve agility, and mitigate risk. This includes optimizing supply chain activities and investments to align with ESG objectives, while also taking a closer look at vendor relationships, with sustainability credentials now playing a significantly larger role in vendor selection than before. Download the report here.
“Over the past few years, we have seen businesses become increasingly proactive when it comes to evaluating their suppliers’ environmental impact, particularly as they seek to lower the carbon footprint of their products,” said Brian Enright, CEO of DP World, Americas. “Service providers that can prove significant carbon reduction – perhaps through the application of renewable energy or operational enhancements that boost efficiency and productivity – can gain an advantage in the selection process.”
Key findings of the survey include:
- Supply chain pain points have shifted. Top concerns for supply chains are now led by demand and supply variability (cited by 41%), followed by inflexibility/inability to adapt quickly to change (34%). ESG and regulatory and compliance challenges tied for third place (28%).
- Confidence in supply chain investments is high. More than 9 in 10 respondents anticipate very or somewhat significant impacts from their chosen supply chain strategies. Top expectations include increasing efficiency (97%), increasing value to business partners and other stakeholders (93%) and making the organization more agile (89%).
- ESG importance has risen considerably — and respondents expect real payoff from investments. Ninety percent of respondents report the priority they place on supply chain sustainability/decarbonization has increased compared with three years ago. Benefits respondents see their ESG investments returning “very or somewhat significant” outcomes, including lowering carbon emissions (89%), lowering supply chain costs (85%) and increasing efficiency (83%).
- Supply chain optimization leads ESG strategies. Three in five respondents are turning to supply chain optimization, such as reducing transportation distances, consolidating shipments, and optimizing inventory levels to support ESG goals. Other strategies include employing fuel-efficient driving practices, such as reducing idling time and optimizing routes (38%) and using more energy-efficient transportation methods like electric or hybrid vehicles (37%).
- ESG is now a key part of vendor strategy. More than a third (37%) of respondents are consolidating their number of product vendors, and 33% are diversifying their transportation and logistics partners. The majority of supply chain executives (84%) report that prospective supply chain partners’ decarbonization and sustainability capabilities are extremely or very influential in their organization’s selection processes.
Quality data and access to the efficiency and scalability of a ready network have become two common reasons organizations outsource supply chain management to an end-to-end service provider, says Morten Johansen, chief operating officer of DP World, Americas.
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“With the increased focus on ESG and emissions reporting, companies would be best served to partner with an end-to-end supply chain service provider, which can generate a more comprehensive dataset for each link in the supply chain,” Johansen said. “This will become increasingly more valuable as companies continue to move their decarbonization and ESG pledges forward.”