How Sustainable Supply Chain Management Improves Ecommerce Stores
August 9, 2021
A typical ecommerce supply chain starts with sourcing raw materials to produce finished goods, which are then transported to a warehouse or fulfillment center before they end up with their end consumer.
Once orders are placed, items are packaged using dunnage and other materials to keep items safe during transit. Packages are then shipped to their destination via ground, air, or sea. Once they reach their destination, the packing materials are discarded.
By the end of 2021, ecommerce sales are expected to make up 18.1% of global retail sales.
So that’s a lot of packages — and a lot of resources.
With the rise of ecommerce, it’s clear that sustainability is no longer an option when it comes to supply chain management.
Fortunately, more and more solutions and resources are being introduced, making it easier for ecommerce businesses to implement sustainability into their supply chain.
This article covers how sustainability impacts the supply chain, and how you can implement sustainable best practices.
What is a sustainable supply chain?
A sustainable supply chain refers to the effort(s) made in planning and executing policies, processes, materials, and technologies across all logistics systems and operations that are geared towards making a more positive impact environmentally, socially, and economically.
Ranging from how products are made, to the type of packaging used for shipments, to reducing carbon offsets during last-mile delivery, there are several steps an ecommerce business owner can take to improve supply chain sustainability.
Supply chain sustainability: what’s the situation?
Supply chain sustainability is becoming a primary focus in supply chain management. Due to the major impact ecommerce has on our environment, society continues to shift towards a more sustainable future.
The objective of supply chain sustainability is to limit environmental harm while keeping the supply chain running.
Supply chain sustainability in numbers:
- By 2025, it is expected that 1.8 billion people are going to join the global consuming class which is a 75% increase over 2010.
- Global supply chains account for more than 80% of greenhouse gas emissions.
- Global supply chains account for more than 90% of the impact on air, land, water, biodiversity, and geological resources.
Why is supply chain sustainability important for ecommerce retailers?
Establishing a more sustainable supply chain benefits not only the company doing it (and the Earth) but also its stakeholders, suppliers, and customers.
Here is a breakdown on why it’s important to make sustainability a priority.
Makes a positive environmental impact
Since a typical supply chain accounts for more than 90% of most ecommerce environmental impact, there is a critical call for action.
Climate control doesn’t just jeopardize our lives and future generations but also puts a high risk on businesses, due to weather disruptions and resource scarcities.
Fortunately, focusing on sustainable best practices (e.g., sourcing products made with organic and recyclable materials) can significantly lower risk and protect not only a business’s future but the environment as a whole.
Promotes supply chain revolution
Supply chain technology is sustainability’s number one ally.
For example, Philips, one of the largest electronic companies, has long shown its commitment to sustainability by reducing waste, using digital technology to capture more information on its product lifecycle.
Additionally, the implementation of artificial intelligence (AI) for sustainability has the potential to add up to $5.2 trillion to the global economy in the year 2030, a 4.4% increase relative to business as usual.
There are major R&D investments being made on what’s known as “digital efficiency” with an emphasis on environmental impact, while also fostering economic growth and promoting a much-needed supply chain revolution.
Meets customer expectations
Personal values drive buying behavior, and more consumers are now putting a brand’s sustainability practices into consideration when shopping online.
In the US alone, the sustainability product market is projected to reach $150 billion in sales by 2021.
Today’s customers are now expecting online stores to implement more sustainable solutions and options than ever before. If a company is participating in eco-friendly practices (and can walk the talk), the more customers it can attract.
Improves social responsibility and brand reputation
Along with meeting expectations, social responsibility and brand reputation (and awareness) can be improved by placing an emphasis on sustainability.
To be considered a sustainable brand, you’re responsible for your output and your effort to use sustainable resources and processes as your business grows. This can also be a competitive differentiator.
This includes the type of raw materials your manufacturer or supplier uses, how labor is treated (e.g., safe work environment and working conditions), and even the type of packaging used for shipments.
Prioritizes wise investments
Up front, it might cost more to implement sustainable supply chain solutions, and in many ways, sustainability can put a higher price on goods.
However, sustainability is an investment that eventually becomes more cost-efficient. The fewer materials used, the less it will cost to produce goods and the less waste it will accumulate.
For example, when’s the last time you received a package only to find that the box it came in was 3x bigger than the item(s)? Therefore, bigger boxes and more packing materials had to be used to keep items in place.
Packaging is a major costs for ecommerce businesses, but by reducing a shipment’s dimensional weight and overall costs, you also cut back on waste. There are many other examples of economies of scale when it comes to sustainable supply chain investments, from eliminating waste to repurposing more resources.
Boosts supply chain efficiency
Sustainable supply chains aim to reduce waste, time, and money and therefore boost supply chain efficiency.
Implementing sustainable technology, optimizing the order fulfillment process, and finding ways to reduce energy like better lighting, can help not only improve internal processes but also cut back on resources, energy, and waste.
8 supply chain sustainability best practices to implement for your ecommerce business
Implementing sustainability into your supply chain is about being conscious of your efforts and the choices you make, from the type of manufacturers you partner with, to the way you prepare packages and ship orders.
Here is an overview of sustainability best practices you can implement into your ecommerce business.
1. Create sustainable supply chain goals
Kick off your sustainable supply chain journey by listing out the goals you and your team would like to achieve, and how you will track those goals.
Make sure when you are making decisions on optimizing your supply chain that you put sustainability into consideration.
Once you set goals, put systems in place that help you measure the effectiveness of your initiatives and strengthen any related efforts by communicating them to customers, supply chain partners, and other stakeholders.
2. Map out your supply chain to identify waste
By setting goals, the more conscious you will be on how your supply chain runs, from manufacturing to delivery management.
As you start to identify ways your supply chain accumulates waste and energy, highlight the key areas that need to be improved.
Once you identify areas that are negatively impacting the environment, you can work with your team to establish programs, processes, and other ways to promote sustainability while making your supply chain leaner.
For example, Ireland-based food brand Juspy established a “waste not, want not” product in an effort to reduce food waste and works with ShipBob to deliver on it.
“We launched a “waste not, want not” product in our efforts against food waste. It is inventory that is completely safe to consume but doesn’t look as visually pleasing because it looks vacuum packed (which could be jarring for first-time customers).
People can opt in, knowing it’s an imperfect-looking product in exchange for a discount. Rather than waste products that look less-than-ideal during the manufacturing process, we have a more sustainable solution without compromising the customer experience.
ShipBob completes a spot check for us to identify and locate such products and store them in a separate bin, so we can treat it as a separate SKU when shipping out those orders. That also saves me the time in having to deal with the return of those products to me.”
Leonie Lynch, Founder & CEO of Juspy
3. Implement an inventory management system
It comes as no surprise that apparel can result in a lot of waste. For example, fashion brand H&M has struggled with inventory that has resulted in $4.3 billion in unsold clothing.
Unsold inventory can result in an accumulation of what’s known as “dead stock,” which results from items stored being expired, obsolete, low quality, or out of season.
Dead stock is bad for business. It cuts into profit margins and the unwanted inventory eventually becomes waste (and/or inventory writeoffs).
To optimize inventory, it’s always important to implement an inventory management system that can help you track inventory in real time, identify slow-selling vs. fast-selling items, and give you a better sense of when it will be time to reorder more inventory.
Not only does an inventory management solution help you track inventory but it also gives you the data and tools you need to forecast demand, so you can become more proactive in reducing inventory waste.
Since forecasting demand is never 100% accurate, accumulating dead stock at times may be inevitable. Another option is to consider donating items to non-profit organizations like GiveNKind that recovers usable goods from businesses that want to donate their products, and makes those goods available at no cost to local nonprofits.
4. Analyze supply chain data
Having systems in place to collect data provides more visibility into your supply chain.
With visibility, you’re given the data you need for supply chain planning, which consists of establishing processes for various operational stages, from tracking inventory to efficiently shipping orders to customers.
For instance, you can use data to determine an ideal inventory allocation plan. You can look at historical order data, identify where your customers are located, and store inventory closer to customers. This way, orders can be shipped faster using the shortest, more cost-effective route while using less fuel.
By implementing an inventory distribution model, not only do you meet customer expectations around fast, affordable shipping, but you also maintain a more sustainable shipping solution.
5. Create a sustainable supply chain policy
Together with your team, you can create a sustainable supply chain policy, which includes rules and regulations that your business will adhere to.
Your policy should reflect your sustainability goals and can be used to attract the right suppliers and logistics partners.
A sustainability policy can also also be used to provide transparency into logistics operations, so you can attract customers that value sustainability.
6. Communicate expectations with suppliers
Once you establish a policy, it’s important to choose manufacturers and suppliers that meet your standards around sustainability.
Your supplier’s responsibility is to deliver high-quality products that meet your sustainable standards. Consider how and where your products are being sourced and produced. When choosing suppliers, communicate your expectations around factors such as:
- Health and safety
- Labor conditions
- Fair wages
- Energy use
- Carbon emissions
- Water use and treatment
7. Evaluate eco-friendly delivery options
In addition to manufacturing best practices, think about the other partners and third-parties that make up your supply chain — especially when it comes to shipping and transportation.
For instance, ShipBob is a 3PL that offers global fulfillment services, so merchants can distribute inventory nearest to their customers to reduce overall transportation routes.
ShipBob also partners up with Pachama, a technology company on a mission to restore nature to solve climate change. ShipBob merchants can harness the power of AI to easily offset carbon emissions from deliveries fulfilled from ShipBob’s locations.
You can also reduce your carbon footprint by offering a more sustainable returns process for your products. For example, returns management solution Happy Returns (a partner of ShipBob’s that has a direct integration) allows brands to utilize 700 Return Bars across the US, without the need for any new packaging.
8. Train your employees in sustainability
Lastly, it is crucial to educate your employees on how to maintain and improve sustainability across the entire supply chain.
Sustainability can only be done correctly if everyone has an understanding of what is trying to be done. For example, your fulfillment team should know how to optimize packaging to reduce packing materials without compromising safety during transit.
Being aware of the impact of how the retail fulfillment process can impact the environment shows how important it is to try to have a sustainable supply chain, ultimately creating more dedication and commitment to the cause.
Sustainable supply chain management with ShipBob
ShipBob strives to provide sustainable 3PL services across the supply chain and partners with sustainable companies to optimize our fulfillment capabilities.
From eco-friendly best practices to reducing and offsetting carbon emissions, ShipBob continues to make improvements on sustainability to meet the needs of our customers, as well as our merchants’ customers.
“Since the day we started Open Water, every decision has been made with sustainability in mind, from our 100% recyclable aluminum packaging to our most recent initiative: climate neutral certification.
It’s incredibly important to us to work with partners who share our values, so we couldn’t be more excited that ShipBob is making this critical climate commitment.”
Jess Page, Co-founder & Chief Brand Officer of Open Water
Offers eco-friendly shipping options
Eco-friendly shipping includes the use of biodegradable material that can easily be recycled, used for other purposes, and doesn’t take as long to decompose for packaging and shipping products.
ShipBob not only offers the use of custom branded eco-friendly packing, but also optimizes the shipping process with a distributed network of warehouses across the country.
ShipBob delivers orders faster and also reduces emissions since inventory is shipped from closer to your customers.
“Our business is built on sustainability and we aim to provide our customers with carbon-neutral products from our natural sources to their front door. That is why we work with ShipBob to offset carbon emissions from our ecommerce supply chain.
Minimize upfront investment and maximize positive impact on the planet by utilizing the simplest way to incorporate sustainability into your brand’s operations, carbon offsetting.”
Fannar Jonsson, Quality and Environment Manager at Blue Lagoon Skincare
Offsets carbon emissions from deliveries
Carbon-neutral shipping aims to reduce the carbon footprint associated with shipping packages. ShipBob customers can easily offset carbon emissions from the shipments fulfilled from ShipBob’s fulfillment centers.
Through an integration with Pachama, we calculate monthly shipping emissions, enable the quick purchase of carbon credits to fund high-impact forest conservation and restoration projects worldwide, and provide brands with tools to share their commitment to sustainability.
“Our goal was simple: offset carbon emissions. In our search for the right partner, ShipBob was proactive in presenting Pachama, who met all of our criteria in terms of automation, transparency and integrity.
We can now share accurate data with our customers regarding the success of our reforestation initiatives, thanks to ShipBob and Pachama.”
Michael Klein, Co-Founder at Herbaly
Multiple eco-friendly packaging options
Some of the best green commerce shipping options include eco-friendly packing, offering carbon offsets, reducing packaging and more. For example, ShipBob and noissue work together to ensure easier access to sustainable custom packaging.
ShipBob can fulfill customer orders using a brand’s custom eco-friendly packaging. ShipBob can also help you explore other eco-friendly options that are right for your company.
“We use no issue for our eco-friendly mailers that are 100% compostable, and ShipBob ships orders out for us in our custom branded packaging. ShipBob is a fulfillment partner that is truly an extension of our brand.”
Manuel de la Cruz, CEO at Boie
If you do plan to outsource fulfillment, then choosing a 3PL like ShipBob that values sustainability is the way to go.
To learn more about how ShipBob promotes sustainability, click the button below to start a conversation.
Find ecommerce operations jobs
ShipBob launched the Ecommerce Operations Job Board to help people find the best jobs and hire top talent for ecommerce operations, supply chain, logistics, fulfillment, and shipping roles. Post a job here, or browse jobs here.
Sustainable supply chain FAQs
Here are the top frequently asked questions about sustainable supply chains.
How can a supply chain be sustainable?
A supply chain can be sustainable in many ways, from choosing manufacturers and suppliers that use sustainable raw materials to produce finished goods to optimizing delivery to reduce carbon emissions. Other ways to become more sustainable include choosing eco-friendly packaging and implementing an inventory management system to reduce dead stock.
How does sustainability affect the supply chain?
With a focus on sustainability, the supply chain becomes more efficient, reducing cost, waste and energy. Additionally, the more conscious a brand is around sustainable efforts, the more sales a brand can generate by attracting customers that high value sustainable best practices.
What are some benefits to improved supply chain sustainability?
Some of the benefits that come with improving supply chain sustainability include greater efficiency, less waste, lowered operational costs, and a stronger brand reputation.
How do 3PLs work to be more sustainable?
Through eco-friendly fulfillment and shipping, 3PLs like ShipBob are promoting sustainable best practices to reduce waste and carbon emissions. By using eco-friendly packaging and reducing transportation times, merchants are putting sustainability as a priority when sourcing the right 3PL to partner with.