How A Sustainable Sourcing Strategy Can Increase Revenue


Sustainable sourcing is not just the right thing to do, it can also be a powerful business strategy. Companies that commit to sustainable, ethical procurement can benefit from greater brand loyalty and improved procurement planning practices that reduce waste, all of which can boost the bottom line.

A Nielsen survey found that 66 percent of global consumers say they would pay more for sustainable brands, while for millennials that number rises to 73 percent.

Consumers are looking for companies they can trust with an authentic interest in environmental stewardship. A lack of sustainable procurement could slow a company's growth, according to the "Sustainability in Supply Chains" report from McKinsey.

"Consumer companies will have to greatly reduce the natural and social costs of their products and services in order to capitalize on rising demand for them without taxing the environment or human welfare," the report said.

One of the main goals of a sustainable supply chain is to reduce waste in all forms. Waste represents sunk costs and generates an environmental impact from consumption and disposal.

Route Optimization

Route optimization is one of the biggest challenges in the supply chain industry, as well as the one with the biggest potential rewards. By working toward trucking lanes that take the most direct route and utilizing technologies to help avoid traffic slowdowns, trucks will spend less time on the road thus decreasing waste and increasing revenues.

Customers get their deliveries faster, trucks use less fuel and emit fewer pollutants, and drivers can move more loads in less time. These solutions can add last-minute pickups to a driver's schedule and ensure the route balances service and valuable time.

As an example, an Asian logistics company struggled to match fleet supply and customer demands along with a complex operating environment due to local regulations. Using an algorithmic fleet optimization plan, the company reduced line-haul network costs by 3.8 percent and improved profits by 16 percent with no compromise in quality, according to a McKinsey report.

Aligning Supply vs. Demand

The arrival of big data across industries provides new levels of visibility for supply chain planning. Now manufacturers and suppliers can better align supply and demand, leading to leaner inventories to reduce waste and save money.

This means that the supply chain uses fewer raw materials in manufacturing, thus creating less waste from products that don't sell. Procurement solutions using artificial intelligence and predictive analytics will help close the gap between forecast and actual demand.

For example, Ikea is using this technology to measure discarded food at its cafeterias to analyze how much of each menu item customers throw away. The goal is to match products of Swedish meatballs and salmon to customer demands at different parts of the day.


To ensure information about sourcing is attached to raw materials, blockchain technology will help verify sources. The source of products will be transparent to all suppliers and consumers in some cases. Data collected from our suppliers can follow products all the way to the end user, and IoT devices can track and update the products along the journey.

By utilizing this tech, the supply chain is less likely to waste money on poor or contaminated products, and better able to streamline processes in general.

These sustainable procurement trends and more will be front and center at ProcureCon Indirect West 2019, taking place at the JW Camelback Inn Resort & Spa in Scottsdale, Arizona, this September. Download the Agenda today for more information and insights.

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