Sustainable business practice is no longer a USP; it has become a business imperative. Many small businesses have already recognised its importance; sourcing from sustainable manufacturers was identified as a top priority for SMEs in 2021 [1]. A simple step to take to improve your environmental credentials is to look at your supply chain management. This has two important benefits for SMEs. Not only can it improve your business reputation, it can help you to reduce spending in areas such as energy, packaging, and logistics.
What is a sustainable supply chain?
Simply put, building a sustainable supply chain involves working with partners to ensure materials and processes used to manufacture and distribute products are as sustainable as possible. This typically involves looking at:
- Energy and water efficiency
- Reducing carbon emissions
- Sourcing sustainable materials
- Sustainability of human and social practices, such as increasing workforce diversity, promoting employee wellbeing, and supporting the local community
What are the benefits of a sustainable supply chain?
Winning more business
Companies with green credentials are more likely to win business, particularly from younger customers, says Sir Shaun McCarthy, chair of the Sustainable Supply Chain School. “Whatever business you’re in these days, your clients are asking for this,” he says, adding that the impacts are two-fold: “you’re winning more business and possibly mitigating the risk of losing business,” he says.
A more sustainable supply chain has allowed sofa manufacturer Snug to differentiate itself in a competitive market. Snug has made changes like using certified timber and vegan, sustainable fabrics in its sofas, along with offering zero-carbon delivery options. “We’ve had research done that tells us this matters a great deal to our customers,” says Rob Bridgman, the company’s chief executive.
There can sometimes be costs involved in switching suppliers, but Bridgman is confident the benefits to the business are greater over time, especially if the costs are absorbed by the business. “Of course, what you hope is that, by investing in new suppliers and choosing not to pass on that additional cost to the customer, you will make that back in the longer term,” he says.
If you need to take on additional short-term costs to switch to a more sustainable supplier, remember that the American Express® Business Gold Card has a payment period of up to 54 days¹ , giving you the flexibility to invest in greener manufacturing without affecting your cash flow.
Increased Profitability
While adopting sustainable practices in the short term can involve cost, it can also be a powerful way to drive profits. “In many ways, becoming more sustainable reduces costs by decreasing your energy, water and resource consumption,” says McCarthy.
Kinrise is a property company that specialises in acquiring and renovating old buildings and turning them into commercial office space. Sustainability is at the heart of the company’s mission, says founder Samual Taylor-Lawton. “It takes 60 years to offset the energy used in knocking a building down, so restoring existing buildings reduces carbon emissions massively.”
Once the company has acquired a new building, it’s redeveloped using reclaimed and vintage fittings as far as possible, using 100% green energy, eco-friendly light and air-conditioning, and certified sustainable timber. The goal is to source local, existing materials and minimise the need to manufacture new things in order to get as close as possible to carbon-neutral, says Taylor-Lawton.
“Our Canada House [Manchester] development had been half-empty for 30 years, but after our renovation, we reached 100% occupancy in record time and set a record for rents in that area,” says Taylor-Lawton.
By making its supply chain strategy more sustainable, Kinrise has reduced the development cost per square foot, ultimately helping the business grow and drive higher profits.
Access to Funding
McCarthy also points out that businesses looking for funding will benefit from building in sustainable practice. “The investment community is looking very hard at these issues now, and a lot of grant funding is predicated on sustainability criteria. Not to mention that if you want to supply the public sector, whether directly or indirectly, you need to remember that procurement decisions have to consider social value, including sustainability.”
Many local authorities across the UK are responsible for distributing grants for businesses to help them invest in things like renewable energy, energy efficiency, sustainable innovation, and ‘green’ jobs. For example, the Low Carbon Workspaces grant can provide up to £5,000 in match-funding to help businesses invest in green initiatives such as double glazing, LED lighting, and smart heating [2].
5 quick ways to make your supply chain greener
Transforming your supply chain to be sustainable takes time and shouldn’t be rushed, says McCarthy. But you need to start somewhere, and there are small steps that can make a difference. Here are some quick and easy ideas to improve the sustainability of your supply chain:
Assess the current impact of your supply chain: A great first step is using a carbon calculator to understand the role that different parts of the supply chain play in your overall environmental and social impact. This practice provides a great foundation for identifying – and prioritising – changes you should make to become more sustainable.
Switch up your packaging: It might take a little research, but there are alternatives to single-use plastics. Could you work with suppliers that offer more sustainable packaging products? These items could include recycled packaging, paper tape, plant-based insulation, and loose-fill.
Reduce your water use: Kinrise developments uses rainwater harvesting to capture and store water that runs off the roof of buildings. This water can then be used to flush toilets in office buildings, and to clean and cool in commercial settings.
Swap to sustainable logistics: Snug works with a delivery company that offers net-zero deliveries to customers who are prepared to wait 2-3 days for their product to arrive. You can also look for logistics partners that use electric vehicles or carbon-neutral delivery options.
Look at your partners’ energy use: Heating and lighting costs associated with warehouses and manufacturing sites can be reduced by switching to LED and more efficient systems. Look for partners that use measures such as timer switches and thermostatic radiator valves, and who perform regular checks on insulation and hot/cold pipework.
Reduce waste: The Sustainability Supply Chain School recently worked with a decorating contractor that cut its paper waste by 50% by moving regularly-used forms such as employee inductions, holiday requests, and timesheets to electronic forms that could be completed on iPads.
When you use an American Express Business Gold Card for your business expenses, each £1 you spend earns you 1 Membership Rewards® point³ that you can redeem with hundreds of retailers on items such as office supplies and IT equipment.
Building a more sustainable supply chain isn’t a ‘once and done’ sort of project and shouldn’t be rushed, says McCarthy. “It’s really about understanding what your supply chain elements are, what you would like to achieve, and what parts of the supply chain can be improved to meet those goals.”
1. The maximum payment period on purchases is 54 calendar days and is obtained only if you spend on the first day of the new statement period and repay the balance in full on the due date.
2. If you'd prefer a Card with no annual fee, rewards or other features, an alternative option is available – the Business Basic Card
3. Rewards shown are examples that are subject to availability and may change. Examples valid as of February 2022. Membership Rewards points are earned on every full £1 spent and charged, per transaction. Terms and conditions apply. Enrolment is required.
Sources
[1] Software Advice, How SMBs are creating sustainability in supply chains
