Estimated reading time: 4 minutes

The manufacturing and shipping industries tally up some of the highest, more impactful numbers to the atmosphere’s degradation, adding to an already-intense climate crisis. Sustainable sourcing and procurement is a framework for the manufacturing industry that prioritises obtaining eco-friendly materials with a mission to reduce carbon emissions and promote environmental wellness. 

Reframing procurement and logistics with greener perspectives can fix the industry’s most pressing issues — supplier accountability, costs and poor infrastructure. Analysing these influences with granular attention will allow companies, shipping managers and procurement teams to peel each case apart and create productive, sustainable change.

The rising demand for sustainable sourcing and procurement

Worldwide, governments are pushing legislation to increase citizen and corporate commitments to reduce adverse environmental impact. The Inflation Reduction Act in the U.S. is an example of governments regulating investments in green strategy. There’s a higher sense of urgency to be transparent about one’s promises and goals and to swiftly adapt to new benchmarks in order to maintain relevance and competitive advantage. 

With the advent of social media and environmental awareness, democratised eco-conscious education is holding companies more accountable than ever to keep their promises. Otherwise, they will lose customers and market value. Exposing a company to greenwashing could ruin stocks, shareholder commitment, employee dedication and customer loyalty.

Transparency matters in supply chains where one company and numerous third parties amount to a massive carbon count. From Scope 1 to Scope 3 emissions, sustainable sourcing with the proper logistics and procurement could mitigate footprints — metric companies are under pressure to minimise.

Here are some of the best ways companies can work on these goals together to overcome any challenge:

  • Focusing on circular economics.
  • Transitioning to a closed-loop supply chain.
  • Making relationships with ethical suppliers.
  • Experimenting with reverse supply chains.

Critical challenges in sustainable Sourcing and Procurement

The first step towards eco-friendly operations is understanding the importance of transitioning to sustainable sourcing and eco-friendly procurement methods. This knowledge will contextualise how much weight to give to each of the significant obstacles in the industry because each barrier has practical solutions that can be overcome with determination and strategy.

Lack of supplier engagement

Procurement departments must contact suppliers to inform them of their sustainability objectives — this doesn’t mean third parties must abide by them. Companies may move suppliers as company resilience and supplier diversity become more commonplace for successful enterprises. 

Many suppliers are hard-to-abate, meaning getting everyone to abide by sustainability takes a lot of work. International companies will have an even more difficult time attempting to wrangle multiple nations’ legislation worth, especially with lower tiers of supply chains. Every spot will have varying climate-related standards for sustainable procurement, and finding a way for them to mesh could mess with technological automation or measuring and allocating carbon impact with different severities.

Inadequate infrastructure and technology

Promising to be more sustainable isn’t enough if sourcing departments don’t have a way to prove their progress. Few regulations force companies to track their carbon emissions or environmental impact from the transport of material extraction. Additionally, there isn’t a standard for infrastructure or technology to perform these tasks to accurately measure, store and transfer that data for sustainable transparency.

Only some locations worldwide have access to these technologies or the funds to purchase, ship and install peripherals like IoT sensors and software like centralised supplier communications. That means it could be long before every company is on equal footing. While this factor shouldn’t stop companies with enough resources from incorporating any technology at all into their operations, it could be a while before the full impact of streamlining is noticed by the industry.

Cost and financial considerations

The technology and infrastructure that do exist for sustainable sourcing are a luxury. IoT-connected devices and artificial intelligence data mining are expensive installations requiring costs, such as cybersecurity measures and staffing. These tools, alongside the gradual benefits from sustainable sourcing, prove difficult to justify when the return on investment is hard to measure and takes a reasonable amount of time to manifest.

In addition to higher expenses, making these shifts can also be time-consuming and somewhat difficult to find. Some regulations offer grants and encourage investments in greener sourcing, but companies have limited options to procure additional funding to make these changes. Similarly, few incentives in varying degrees of worthiness aren’t enough to convince manufacturing to make sustainable sourcing an easy trend.

Achieving eco-friendly procurement methods

Despite supplier resistance, high costs and lacking infrastructure, there are ways to move toward sustainable logistics and material sourcing until these challenges are solved. Procurement departments, shipping managers and third parties must collaborate and communicate to find novel solutions and commit to research and development to advance the sector.

Every industry must find creative outlets to become greener, even if they rely on fossil fuels for success — there are plenty of options available.