Supply chain News and trends

The auto industry's drive to a greener and cleaner future is a treacherous road for companies in its beleaguered supply chain. Only the strong and the shrewd may survive.

Many auto suppliers, already squeezed by rampant inflation and energy prices, say they have little choice but to shoulder the extra costs of making their components sustainable to meet automakers' environmental targets.

"If you do not, you are not going to have a business in five or six years supplying major carmakers," said Shane Kirrane, commercial director at Autins Group, which has plants in Britain, Sweden and Germany that make acoustic and thermal insulation for cars.

All major automakers have committed to green targets, seeking to purge dirtier materials from their supply chains to satisfy regulators and investors as they transition to electric vehicles.

BMW, for instance, expects all of its battery and many of its steel and aluminum providers to produce materials made using renewable energy, while Volvo is targeting 25 percent recyclable plastic in its cars by 2025.

Many suppliers are consequently making large investments to green up their acts, from developing recyclable parts to hooking up their businesses to renewable energy, according to interviews with more than a dozen industry players.

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Mountain bike tyres from the Continental Gravity range have become the first products to feature responsibly sourced natural rubber from a project aimed at establishing sustainable natural rubber supply chains. Continental aims to achieve 100 per cent sustainable supply chains by 2050 at the latest, but is going one step further when it comes to natural rubber and intends to cover its entire demand exclusively through responsible sources by as soon as 2030.

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The global supply chain during the pandemic has remained unpredictable with disruptions showing no end in sight. The Cushman & Wakefield report, The Role of Asia Pacific in Global Supply Chains, noted that with the growing importance of intraregional trade in Asia, corporations are having to reconfigure and build out their logistics and industrial networks in the region.

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The turn of the new decade saw the rise of ambitious sustainability goals. Products with sustainability labels received increased traction. Around the same time, social media influencers were voicing their support for ethical work practices and security for frontline supply chain workers. As a result, sustainable procurement became a priority in enterprise strategic agendas. But in 2020, when Covid-19 rocked the world economy, new challenges emerged.

The impact of the pandemic on supply chains was disruptive. Many feared that the crisis would dampen growing enthusiasm to invest in sustainable procurement practices. But it did the just the opposite.

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Each partner is targeting a specific part of the automotive supply chain for carbon-emissions neutrality over the Polestar 0’s expected lifecycle.

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Amid “the Great Resignation” and a volatile economic period, companies can’t afford to lose talent or customers. They must reinvent their business models to be both profitable and sustainable.

Establish a Sustainable Business Strategy Embed Sustainable Data into Business Processes and Networks Manage Carbon and Climate Exposure Throughout the Business Embrace Circularity and Become Regenerative Prioritize People Across the Supply Chain
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With the increasing concern on environmental issues globally, businesses are under so much pressure to help protect the earth. It’s now more than just about corporate social responsibility. It’s also about meeting the demands of consumers. Because many of them now understand the importance of making more sustainable and eco-friendly decisions, the focus on environmentalism became strong. For businesses, this starts right at the beginning of the supply chain.
1. Map Out Your Supply Chain

2. Use Recyclable Materials

3. Simplify Supply Chain Process

4. Recruit Supply Chain Professionals

5. Train Current Supply Chain Team

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Dirk Holbach, chief supply-chain officer for Henkel’s Laundry & Home Care business unit, shares lessons from his seven-year journey in the role and what leaders should be prepared for in the future.
While current headlines about product shortages and empty shelves have highlighted the importance of the supply chain, that process began in early 2020. Companies that had labored to create a lean global supply chain needed to scramble to adjust to the effects of the pandemic. Beyond that, sustainability has also become a top priority on the CEO agenda, making the supply chain an integral part of managing an organization’s carbon footprint. Consider, finally, the imperative to incorporate digital technologies, and one could argue that managing the supply chain in the current landscape is one of the most complex roles in an organization.

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The country’s most sustainably minded retailers are placing more of an emphasis on sourcing — by both boosting locally and sustainably produced food and by requiring stricter environmental standards from their suppliers. This ranges from sourcing more sustainable seafood, including canned tuna, to ensuring that beef is being produced with no deforestation. Palm oil, coffee, eggs, soy and pulp are other commodities that are being more closely watched by grocers to ensure sustainable production.

In fact, the 2022 Sustainability Barometer released by London-based Mintel finds that from a global consumer perspective, concerns about water and food shortages are now being prioritized ahead of previous preoccupations with waste and plastic. Therefore, it makes sense for grocers to include messaging about their efforts in more sustainable sourcing and in combating climate change.

Several retailers, including Batavia, Ill.-based Aldi US, are committing that all of the fresh, frozen and farmed seafood they purchase will be third-party certified as sustainable or from fishery improvement projects by the end of 2025. Meanwhile, expect to see more of these grocers ramp up tracing efforts so that customers will also recognize their efforts in sustainability.

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Gen Z population wants brands to prove their sustainability claims, while global regulators now require transparency across all supply chain practice
It’s no secret that supply chain delays and issues have been in the news over the last few months. Supply chains are complicated, and many recent complexities have arisen from a lack of visibility in a highly complex process that involves many stages and stakeholders. 

Brands across the globe have already come to realize that increasing visibility into their supply chains reduces said complexities, in addition to offering major business benefits. Namely, a visible supply chain appeals to a host of new customers in Generation Z (Gen Z) that are putting their wallet where their passions are and investing in brands that represent change. 

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If we want to save the planet, we must change the way we move goods around it. We must create more sustainable supply chains. 

In their 2021 study The Sustainable Supply Chain Paradox: Balancing the Bottom Line with the Green Line, researchers from Oxford Economics and SAP wrote, “The moment for setting small-scale sustainability goals has passed. For companies across sectors and around the world, creating and maintaining greener supply chains is an increasingly urgent priority.”

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Sustainable Fisheries Partnership (SFP) has announced a new partnership with the Thai Union Group, one of the world’s leading seafood producers.

“Our partnership with Thai Union continues SFP’s tradition of innovation and creating fisheries improvement at scale and globally by working with major seafood buyers to leverage change in their sourcing and supply chains,” SFP Founder and CEO Jim Cannon said in a press release. “Lasting conservation and environmental improvement can only be achieved with industry leadership by companies like Thai Union, who can advance widespread adoption of best sustainability practices.”

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A study on how stakeholders can influence sustainability in the supply chain shared interesting insights.

-Pressure from stakeholders on sustainability can result in greater awareness. 

-Stakeholders have a critical role to play in the adoption of sustainable goals. 

-The impact of stakeholders is dissimilar in key decision areas. 

-The sustainability issue influences the weight of what the stakeholders have to say. It could, for instance, have more impact depending on whether the issue is social or environmental. 

Without a doubt, stakeholders have a crucial role to play in sustainability. After all, the organizations depend on them for business success. 

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Theppadungporn Coconut Company (TCC) — a third-generation, family-owned company that, over the past half-century, has grown into one of Thailand’s leading exporters of popular coconut products including coconut milk, coconut water and more to the United States and dozens of other countries — was confident that its suppliers weren’t using monkey labor. As it turned out, just stating that was not enough — the company had to be able to prove it.

“When we were accused of using monkey labor, we realized that we have to be more transparent — to ensure and show that there is no monkey labor in our supply chain,” Teetiphun Theppadungporn, International Marketing and Sales Manager at TCC, told Sustainable Brands™. He’s referring to a 2019 investigation from PETA Asia, which alleged that one farm producing coconut milk for TCC’s Chaokoh brand was using monkey labor.

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Investment in supply chain technology and risk management is rapidly increasing as efficiency and sustainability becomes more of a priority across business operations, and two artificial intelligence platform providers announced receiving funding for their systems this week.

Those concerns helped supply chain tech companies raise $24.3 billion in venture funding over the first three quarters of 2021, according to PitchBook, which was 58% more than all of 2020. AI-software providers o9 Solutions and Supply Wisdom are taking part in the growth with investments in their platforms.

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As the UK emerges from the shadow of the Covid-19 pandemic, the need for competitive supply chains has never been more pivotal. Coupled with Brexit and the requirement to forge new trading relationships, as a nation, we face a raft of challenges going forward. 

But where there is challenge, there is also opportunity, and this is especially true when it comes to future supply chain competitiveness. Fortunately, there is a raft of technology available that can play a huge role in helping the UK organisations create more competitive supply chains. 

1. The green agenda has never been more prominent
2. Cross-industry collaboration crucial to success
3. Digitally ready supply chains
4. Building the case and setting standards for sustainability

 

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