Analyst Insight: To ensure the success of sustainable supply chain transformation, companies must back their plans with real-life data to quantify the environmental impact, identify improvement areas, set reachable goals, and ultimately run successful initiatives.

The current trends in the supply chain industry are frequently referred to as a “sustainability revolution” for good reason. It is now a question of when, not if, changes must be implemented to safeguard the Earth’s natural resources. The pressure to implement more “green” business practices comes not only from customers but also increasingly from regulators across the globe  — all while rising shipment costs have significantly impacted global transportation systems. In today’s world, every investment must be optimized in the most cost-effective way and, at the same time, deliver tangible environmental benefits. A sustainable transformation process requires commitment from all parts of the business. Therefore, it is essential to have a common understanding of what sustainability means for the company and how it will be implemented across the entire organization. 

The United Nations Global Compact (UNGC) — Accenture CEO Study has found that nearly two-thirds of CEOs say difficulty measuring ESG data across the value chain is a barrier to sustainability. Many businesses pledge their commitment to continuous environmental improvement, such as developing plans for reducing CO2 or equivalent greenhouse gasses (GHGs) and setting reduction targets. It is easier said than done, as according to industry research, out of 75% of organizations that have made such commitments, fewer than 30% are well prepared to meet the requirements. Once the goals and strategy are set in place, the question remains: how to measure, analyze, and report GHG emissions.

Understand the Environmental Footprint of Your Packaging

Understanding where you are and the impact of your packaging and logistics on the environment is critical. The transition requires rethinking and redesigning every single part of supply chain operations, from governance to product design. This holistic approach usually starts with a thorough life cycle analysis (LCA), which provides the input needed to make the right packaging decision.  

LCA tools identify potential GHG emissions and cost savings of a packaging solution throughout its life cycle. In short, the tools look at the material’s entire lifecycle, from cradle to grave, and calculate the environmental impact for the packaging production, transportation, and end-of-life phases. As a result, they promote the ethical redesign of both products and processes, reducing overall environmental impacts and the usage and release of more harmful components. 

What’s more, LCA tools leverage the data and optimize different aspects of the packaging, such as the size, weight, mode of transportation, etc., to find the most resource-friendly solution. It all boils down to quality data, robust methodology and quantitative impact. The latter is particularly important when it comes to non-financial reporting regulations that force companies to provide tangible proof that they are really committed to change.

Opt for Innovative Packaging Design

Once the company understands where it is in terms of current material use, logistics costs and emissions, it is time to embark on the packaging design journey. Using recycled materials in packaging is an excellent place to start because it not only reduces waste but also helps to create circular markets for packaging recovered from households and other sources. In this case, the design process must first incorporate such considerations as product protection, packaging manufacturing process or logistics costs before making the final call of how much recycled content can be used in the packaging, and whether or not it would have an impact on its functionality or product safety, for example. Leveraging post-consumer waste decreases the need for virgin materials, and saves natural resources as manufacturing recycled material often uses less energy and water than raw materials.

There are alternative packaging materials out there that can be reused or recycled multiple times, like natural-fiber-based packaging. Taking advantage of the 100% natural characteristics of the raw materials, fibers create durable packaging solutions while using a minimal amount of natural resources. Moreover, natural fibers can be recycled up to seven times and are an important raw material for new packaging solutions, reaching up to 85% of recyclability. Once the fiber cannot be reused anymore, it will be used as bioenergy.

One of the main concerns stopping companies from switching to more sustainable packaging materials is the question of product protection. However, whether or not a product reaches its destination without any damage or wastage depends more on the packaging design than on the material itself. The key is to create sturdy packaging to protect the shipped goods while reducing material consumption at the same time. Simply shrinking the size of packaging by eliminating unnecessary space and switching to lighter materials can mitigate the environmental impact in the packaging life cycle. Lighter and volume-optimized packaging also increases transport efficiency, especially considering weight or space limitations. Simply replacing one-way packaging with a returnable solution can significantly reduce shipping costs, improve product protection, increase workers’ safety, reduce environmental footprint and boost brand reputation. 

As a principle, packaging that cannot be safely used, reused, and recycled at the end of its life should not be produced or placed on the market in the first place. This is why packaging must be toxic-free, circular by design and contribute to regenerative ecosystems, instead of polluting them. In fact, by switching to a circular design, it is possible to eliminate 75% of the waste currently being created.

Embrace the Idea of Circular Supply Chains 

The circular model promotes a transition from the conventional extract-produce-dispose economy towards a restorative and regenerative approach. This approach focuses on prolonging the lifespan of a product to extract its utmost value. The circular economy turns goods at the end of a life cycle into alternative resources, building on the reuse-recycle-repair model. For example, to avoid thermoformed trays being incinerated or sent to landfills, the plastic can be used multiple times for further thermoforming. 

However, for the closed-loop economy to become a reality, it is imperative to reform packaging and supply chain industries by shifting the mindset from linear to circular. The new approach follows three principles: (1) eliminate waste and pollution, (2) circulate products and materials and (3) regenerate nature. Many products could be easily circulated by being repaired, reused, refurbished and recycled as a last resort. Wooden crates, for instance, can be used multiple times in supply chains until they break, and once they do, the wood waste can be sold to a manufacturer that can further reuse it. 

In the linear economy, once the packaging runs its course and can no longer be utilized, it becomes waste. In circular systems, manufacturers design the packaging to be repurposed within the so-called take-back programs at the end of its life. Such programs keep the packaging in a closed loop. One way to achieve that would be to recycle the packaging material and use the residue to create new products, reducing the need for raw materials. Another way would be to remanufacture the obsolete packaging into a new one.

Bring Connectivity Into Life in Circular Supply Chains 

Gartner predicts that by 2026, over half of the global companies will compete as collaborative digital ecosystems rather than individual firms. This new, connected world will be driven by open-source and technology-neutral solutions that ensure mass personalization and smooth collaboration between all the ecosystem participants. Investing in a technology-agnostic track-and-trace platform can give businesses a competitive advantage while preparing them for future challenges.

A smart supply chain is also more sustainable. Technology improves and speeds up the decision-making process and helps manage the inventory better, which translates into greater economic sustainability. Digital tracing technology offers quicker route optimization and consequently decreases the ecological footprint. Finally, IoT solutions bring accountability and automation to the logistical flows, which maximizes companies’ social impact.

A fully connected supply chain is a network with traceable packaging solutions that tell you exactly where your product is and whether it’s transported in the most optimal condition to ensure its safety. Connectivity enables fully circular and optimized packaging solutions to avoid unnecessary waste, and to lower the overall transportation cost. Cross-industry collaboration is imperative to make this vision a reality. The future should be waste-optimized, where businesses share returnable and reusable solutions to save resources.