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Supply chain management (SCM) entails the planning and management of every activity involving sourcing and procurement, conversion and all logistics management activity (Rajeev et al. 299). SCM encompasses a broader scope within the organization, which also looks at the coordination and collaboration with other stakeholders within the supply chain (Rajeev et al. 305). Some of the partners are suppliers, intermediaries, and customers who may be considered suitable. Importantly, the process puts into consideration both supply and management concepts. As most businesses are working to ensure a stable flow of goods within the supply chain, most of them consider sustainability a vital component to SCM. A new concept of supply chain sustainability has been introduced, which involves the business focusing on regenerative activities. Its goal is to make sure that the environment in which business organizations are interacting with is safe. The following paper aims to identify the five major sustainable issues, such as the desire to go green and be a thought leader for sustainability, cost of energy, competitive advantage, government regulations, and transportation costs.
Going Green
The rationale for choosing this particular issue is that there has been an increased need to keep the environment surrounding the business organizations safe. As much as businesses consider their profit-making motives, they should also target making sure that the environment is sustainable. Most of the companies within the business environment have considered sustainability, where most of them have the goal of enhancing an environment for business. For instance, largest retailers such as Walmart have the goals of becoming a regenerative company. According to the CEO of Walmart McMillon, the company aims to change the world through regenerative supply chain, an effort that is contributing positively to the environment (Rajeev et al. 307). The brand has seriously considered the issue of sustainability in the supply chain and is making efforts to make sure the environment is being conducive for carrying out business.
Most of the companies have started making different forms of green purchasing concerning their raw materials and supplies. They establish policies that suppliers should meet; for instance, as for Walmart, while purchasing supplies, there is a requirement for a product to be pure, such as in case of low embedded energy. Such green or sustainability goal is an essential component for supply chain management because it will lower any negative impacts to the environment and operating costs.
Cost of Energy
Cost of energy is a very crucial sustainability issue that any organization must undertake. Reducing energy costs is an important goal that companies consider especially in the supply chain. The reason why this is an issue to the sustainability of an organization is because of the costs which are associated with energy. For instance, using the emissive sources of energy has many impacts on the environment, which may result in greenhouse effects. It is understood that businesses depend on the physical environment to get supplies of raw materials. Organizations that rely on agriculture for example, require adequate rain.
When the climate is not conducive, it will be challenging to get the required resources for industrial activities. Therefore, most organizations have taken measures to ensure that they have addressed the issue of costs of energy. For instance, PepsiCo is one of the companies that have made sure that it is achieving its sustainability goals by 2040 (Rajeev et al. 309). It has mainly focused on the supply chain to ensure that it has achieved neutrality in such a sector. Furthermore, it has put forth various goals to make sure that the supply chain and the whole company is reducing the costs associated with energy. The company has planned to emphasize more on using renewable energy and hitting net-zero emissions technology. These are some of the plans that will enhance sustainability and reduce energy costs within the supply chain department. The cost of energy is essential because as much as businesses will be protecting the environment, they will still be making profits. There will be no adverse environmental impacts affecting their activities.
Competitive Advantage
Competition in the contemporary business environment has been a common issue for most businesses. Many organizations are carrying out the same type of business activities. To attract more customers or suppliers, they rely on how they have structured their activities. Most of the leading organizations are successful because they have a robust supply chain management system. By applying technology and reducing emissions, such companies can compete in the environment effectively. Competition is an essential component of sustainability in SCM because it improves the organizations performance. They also help improve compliance, forcing organizations to focus on how they can access quality service. The companies that use renewable energy sources in their supply chain, support regenerative agriculture and eliminate zero emissions to the environment are more likely to perform well.
Government Compliance
In most circumstances, businesses encounter regulations from the government, especially in supply chain management. Every government must protect customers, thus putting forth various regulations to be taken into consideration by companies. To provide quality services or products, the companies should monitor the supply chains quality to ensure that they are getting the required materials. Complying with the set regulations by the government is important to the organizations. There are various reasons as to why compliance is necessary for the supply chain. , with the primary one being cost reduction. When an organization is not complying with the laws that the government has set to regulate the supply chain, it may result in lawsuits. In most circumstances, such fines are high, since organizations should always observe consumer protection rights. The other reason for compliance is the necessity to attract customers. When the organizations activities do not conflict with the government and/or related authorities, more clients will join the organization. Effective delivery of goods and raw materials enhances customer satisfaction.
Transportation Costs
The movement of supplies from suppliers to the organizations entails transportation costs. Supply chain management should work to ensure that such expenses are being reduced. When there are high costs in transportation of supplies, the goods price may increase driving away existing and potential customers who may wish to join the organization. The cost of transportation is a sustainability issue in supply chain management because decreasing the costs of producing goods and services is among the organizations primary goals. Similarly, the low cost of transportation will reveal the effectiveness of the supply chain management system. Hence, focusing on the reduction of such costs is crucial to the organization.
In summary, supply chain management is crucial to organizations. It involves sourcing and procurement, conversion and every logistic activity that takes place within a company. It is also concerned with suppliers and how they can be connected. Sustainability is one of the concepts that should be included in the supply chain management to ensure that organizations are performing to their required standards. Various sustainability issues should be put into consideration in supply chain management. The first one is going green or being a leader in sustainability, where SCM should always focus on programs that are beneficial to the organizations. To this end, companies are focusing on regenerative activities that are purchasing chemical-free products. Another sustainable issue is the cost of energy, which necessitates the use of the renewable sources of energy. The companies apply technology to reduce the emissions to the environment, which will make organizations improve their profits. Additionally, competitive advantage entails how well an organization can compete with others. Being sustainable increases the competitive level of the companies. Another factor to consider in this regard is government compliance, which concerns the regulations that the authority has put in place. Lastly, reducing the transportation costs can enhance the effectiveness of SCM in the organization.
Reference
Rajeev A. et al. Evolution of Sustainability in Supply Chain Management: A Literature Review. Journal of Cleaner Production, vol. 162, 2017, pp. 299-314. Web.
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