There are plenty of reasons for companies to continue pushing for efficiency in every aspect of their supply chain. From reduced costs to greater clarity, the benefits for businesses are tangible. However, new analysis from one of the leading organizations related to climate change suggests more efficient supply chains can also be a boon for the entire planet.
Indeed, companies across the supply chain were able to increase efficiency significantly in 2019 alone, reducing 563 metric tons of carbon dioxide in pollution that would have previously been there, according to the new study "Changing the Chain" from CDP Worldwide, a global non-profit for emissions disclosures. This is important because, right now, the average supply chain generates 5.5 times more emissions than the operations needed to produce goods.
The reduced emissions added up to the equivalent of removing more than 119 million vehicles from the road for an entire year, and as a benefit to the companies involved, it saved them some $20 billion in costs they would have otherwise faced, the report said. However, fewer than 1 in 3 suppliers actually cut emissions over the course of the year, so there is still a long way for the industry as a whole to go. This all comes at a time when global climate change poses the risk of worldwide industry amounting to some $1 trillion in potential losses.
What those in the supply chain sector may find interesting is how much companies have been buying into these efforts over the last year, and what's changing about their operations. The 2018 version of the Changing the Chain report, for instance, showed more than half of suppliers have been making business plans with issues around climate change in mind, but more than three-quarters identified some risk from these concerns.
However, despite the advances, the average supply chain emissions have increased to 5.5 times what production generates, from last year's 4 times, the report said. Meanwhile, the number of companies cutting emissions has grown to about 30% from the previous 23%, so that represents significant proportional progress.
An idea in action
One major U.S.-based company trying to significantly cut carbon emissions is the retail titan Target, which plans to make itself 25% more efficient than it was in 2017 over the next five years, and 30% by 2030, according to Supply Chain Dive. That makes it one of just seven companies in the U.S. that have made such goals for itself, and its efforts are by far the most comprehensive.
Simply put, Target is uniquely positioned to achieve these goals because its partnerships with other companies in the supply chain is so vital to their bottom lines, the report said. As such, what Target says about everything from pricing to emissions goals is often taken as gospel.
With all this in mind, it shouldn't just be industry giants that set and follow through on these goals. Companies of all sizes should at least try to reduce some of their emissions, which may in turn reduce costs.