Sustainability is a modern business imperative. Companies globally are pledging to adhere to stringent social and environmental standards. However, the reality is far from ideal.
Even multinational corporations considered leaders in sustainability often find that their suppliers fail to comply with their high standards. This non-compliance poses significant financial, social, and environmental risks.
While most are aware of the obvious challenges like reducing carbon footprints and ethical sourcing, there are lesser-known hurdles that businesses face in achieving true sustainability.
The global push for sustainability
What’s driving the need to do business more sustainably?
Environmental degradation, consumer activism, and stricter government regulations are converging to make sustainability a global imperative. Legislative bodies around the world are setting new standards for sustainable business practices.
The EU's Ecodesign for Sustainable Products Regulation is one such mandate set to improve the circularity and energy efficiency of different product groups.
The New York Fashion Sustainability and Social Accountability Act (i.e. the Fashion Act) pushes for ethical labor practices and environmental responsibility - factors that strongly resonate with today's conscious consumer.
These are just a few examples of a governmental trend that doesn’t seem to be slowing down.
The business case for sustainability
Sustainability isn't just good for the planet; it's good for business. Companies that invest in sustainable practices often see economic benefits, enhanced brand reputation, and a competitive edge.
The Clean200 list shows a diverse range of global brands that generate the most income from “effectively balancing people, planet and profit” – and the figures are impressive. Apple, for instance, earned $259 billion in sustainable revenue, with 71% of the company’s total income coming from a ‘green’ supply chain.
This area of business offers significant potential for increased revenue – but it’s not always easy to make happen.
The challenge of sustainability in supply chains
Achieving sustainability in supply chains can be a complex task. Let’s take a look at some typical (and lesser-known) challenges:
Non-compliant suppliers: Many players in the supply chain don’t always comply with sustainability standards or have the most up-to-date certifications. This poses financial, social, and environmental risks to customers downstream.
Embedded complexity: Tweaking just one moving part can affect multiple downstream components, which makes changes hard to plan for. Introducing new initiatives, standards, and processes can take up a lot of time, money, and labor.
Risk management: Suppliers can burden other members of a supply network with risk. If they have poor or dubious sustainability performance, then a large firm that does business with them can endanger its reputation and suffer profound repercussions – losing customers, being forced to find new suppliers, or having its supply chain disrupted.
Rules and regulations: Various countries are implementing regulations on the risks associated with environmental, social, and governance (ESG). These regulations are still evolving and are subject to changes. Keeping up with them isn’t always easy.
To overcome these challenges, businesses need to engage with suppliers and identify their obstacles to sustainability. They also need to develop new processes and strategies with a keen eye for detail.
Traditional methods of introducing sustainability (like third-party audits, certifications, and manual tracking) have their merits but are often limited in scope and scalability. These methods can be resource-intensive and may not provide the real-time data needed for effective decision-making.
This calls for an innovative solution that can address these limitations.
Item-level traceability: a sustainable solution
What is item-level traceability?
Brands and factories have typically relied on traditional SKU (stock keeping unit)/GTIN (Global Trade Item Number) traceability for tracking products. Where this falls short is in providing information about individual products that are usually manufactured in multiple factories, therefore making it difficult to support sustainability goals. Item-level traceability on the other hand enables brands to track individual items through their lifecycle, from production to the end-user, and beyond. This granular data can be used for various sustainability initiatives - something Avery Dennison’s digital identification solutions powered by atma.io connected product cloud provide.
Improved transparency With item-level traceability, businesses can offer unprecedented transparency by tracing products from origin to their end of life. This is crucial for verifying ethical sourcing and responsible production methods. For example, atma.io provides brands with a ‘Supply Chain Map’ that visualizes all supply chain events, giving a bird's-eye view of the flow of products in an interactive, concise, and easy-to-understand way. It shows an overview of all the links in the chain including the manufacturers and suppliers, along with the certificates and assessments, and highlights any potential problems or risks.
Waste reduction Precise inventory management becomes possible with item-level traceability, significantly reducing waste related to overproduction, delays, or spoilage. The atma.io real-time waste elimination tool uses artificial intelligence (AI) and machine learning (ML) to analyze and alert on anomalies and inefficiencies across the supply chain. For example, by identifying items such as food or pharmaceutical products that have been held longer in a distribution center (DC), are nearing expiry, or have a temperature variance, alerts can be made by the platform to help mitigate those risks, including minimizing spoilage, reducing loss, waste and greenhouse gas emissions.
Resource efficiency By understanding exactly how materials are used and where inefficiencies occur, businesses can optimize resource usage throughout manufacturing and distribution. For instance, accurate outbound shipments through item-level traceability help reduce waste and eliminate chargeback costs for factories. Whereas for DCs and brands, it significantly reduces the time and resources spent on manual effort downstream to fix handling errors. In a scenario where a factory sends shipments to multiple DCs for various brands, and these DCs ship to numerous stores across the globe, the scale of wasted resources due to inaccurate shipment and labeling errors is even bigger downstream.
Ethical sourcing and responsibility Item-level traceability ensures that products meet sustainability standards at every stage of the supply chain, from raw material to retailer. With the atma.io connected product cloud, using the certificate management feature, this information including sustainability certificates can be captured at source and linked to individual items to ensure credibility, transparency, and trust in the data.
Enhanced consumer trust When consumers can verify the sustainability credentials of individual products, it fosters greater trust and loyalty, further driving the business case for sustainability. atma.io enables brands to capture all product, material, and sustainability data at source and throughout the supply chain, and selectively share product journeys with the consumers to build loyalty and trust. One example of that is the recent Mara Hoffman dress that features a Digital Care Label, powered by atma.io connected product cloud. It contains a QR code that consumers can scan to learn about the making of the dress, including its waste footprint.
Make your supply chain sustainable with atma.io
Sustainability is not just an ethical choice but a business imperative in today's world. Item-level traceability emerges as a powerful tool in achieving sustainability goals, offering benefits that range from improved transparency and waste reduction to resource efficiency and ethical sourcing.
As we look towards the future, traceability will undoubtedly play an integral role in shaping sustainable business practices.
Ready to make your supply chain more sustainable and transparent? Book a free atma.io demo now to explore how item-level traceability can revolutionize your approach to sustainability.