Strategies for a sustainable and smart supply chain

In a business environment characterized by globalization, uncertainty and environmental challenges, the supply chain can no longer be managed from the traditional approach. Organizations must integrate new visions that allow them to adapt, be more transparent and endure over time.

The development of supply chain management goes beyond operational efficiency; it involves building systems that are adaptive, interconnected and aligned with ESG (environmental, social and governance) principles. This article develops the fundamentals for designing supply chains that are sustainable and smart, and proposes practical strategies based on these pillars.

Supply chain and value chain fundamentals

A supply chain represents the set of processes, actors and flows that make it possible for a product or service to reach from its origin to the final consumer. It is closely related to the value chain, which encompasses all the activities that generate added value at each stage.

According to Carrillo’s (2017) interpretation, supply chain management encompasses a comprehensive set of processes that include logistics, strategic planning, information systems and services, marketing, sales and finance. All these components must be articulated with the purpose of implementing sustainable practices throughout the value network.

In this context, a logistics operation is not limited to transportation, but represents the coordinated management of all the activities necessary to move products along the chain, with precise consideration of their associated logistics costs.

Basic principles for efficient supply chain management

• Vertical and horizontal integration: To achieve operational synergies and greater traceability.
• Inter-organizational collaboration: To establish strategic relationships with suppliers, distributors and customers.
• Systemic vision: To understand the links as part of an interdependent whole.
• Data-driven management: Make informed decisions in real time.

A well-structured value chain identifies opportunities for improvement, eliminates activities that do not add value and promotes sustainable practices throughout the product life cycle.

Supply chain sustainability

Sustainability in supply chain management is not an optional trend, but a strategic necessity in the face of growing social, environmental and regulatory pressures. As mentioned by Silva (2017) and Carrillo Herrera (2017), integrating sustainability means designing and implementing logistics, procurement and distribution operations that strike a balance between economic efficiency, social responsibility and environmental protection.

This integrated approach is supported by ESG (Environmental, Social, Governance) criteria, which allow us to measure impact and guide decisions towards more responsible, resilient and competitive business models.

To consolidate a holistic view, it is important to understand how each ESG dimension translates into actions within the supply chain:

• Environmental: Focuses on emissions reduction, efficient energy use, waste minimization and choice of sustainable materials.
• Social: Considers the welfare of workers, working conditions at suppliers, equity in the distribution of benefits and the promotion of local development.
• Governance: Relates to business ethics, regulatory compliance, traceability, transparency in operations and monitoring and control systems.

Key sustainability assumptions

1. Focus on the entire product life cycle: Sustainability must be considered from the origin of raw materials to the final disposal of the product. This implies conscious decisions in design, production, distribution, use and post-consumer recovery.
2. Shared responsibility among key actors in the chain: Suppliers, manufacturers, logistics operators, distributors and consumers must take a proactive role in environmental and social management. This includes fair labor conditions, ethical processes and commitment to sustainable practices.
3. Impact measurement and management through ESG indicators: Sustainability must be quantifiable. Informed decisions are made through indicators such as carbon footprint, energy intensity, labor compliance or social traceability.
4. Transparency and traceability throughout the value chain: Implementing technologies and practices that make it possible to know the origin, conditions and route of products not only improves logistical control, but also strengthens the confidence of customers, regulators and investors.

Adopting these premises allows organizations to comply with environmental and social regulations, in addition to building competitive advantages based on sustainability. Integrating ESG thinking in the supply chain favors in:

• Operational resilience, by reducing risks associated with supply and logistics.
• Economic efficiency, by reducing energy, material and logistics costs.
• Market confidence, by aligning with consumer, investor and regulatory expectations.

Supply chain sustainability strategies

To achieve a sustainable supply chain, it is necessary to implement specific strategies that address current challenges and promote responsible practices. Some of the most effective strategies include:

1. Reverse logistics

It is a key component of sustainability, as it focuses on the process of returning products or materials along the supply chain for reuse, recycling or proper disposal. This strategy not only reduces waste, but also optimizes the use of resources.

• Reuse: Consists of the recovery of used products to be restored, reconditioned or reused in new applications.
• Recycling: Involves the collection of materials to be processed and reincorporated into the production cycle.
• Product recovery: Allows the use of parts of products at the end of their useful life to be reinserted into the productive system, reducing the need for new resources.

Implementing efficient reverse logistics processes can reduce pressure on natural resources, minimize waste and improve long-term operational efficiency.

2. Carbon footprint reduction

This premise within the supply chain is essential to combat climate change and minimize the environmental impact of logistics operations. It can be achieved through various strategies, such as:

• Optimization of transportation by consolidating shipments, using shorter routes and increasing cargo capacity to reduce the number of trips.
• Integration of renewable energy sources in logistics operations, for example, in distribution centers or vehicle fleets.
• Use of environmentally friendly recycled, biodegradable or low environmental impact materials to replace traditional materials.

Combining these tactics can help companies reduce greenhouse gas emissions and make their operations more sustainable in the long term, while helping to preserve a better planet for everyone.

3. Circular economy

The circular economy is a model that seeks to minimize waste and maximize the reuse of resources. Environmental and economic benefits include:

• Achieving extended life cycle for products so that they can be reused, repaired, reconditioned or recycled at the end of their useful life, reducing the need for new resources.
• Reducing waste by implementing processes to recover valuable materials and reduce the environmental impact of end-of-life products.
• Optimizing processes by reusing resources at each stage of the production cycle, generating less waste and maximizing their value.

This model allows companies to operate more efficiently and responsibly, as well as creating a system that is capable of continually regenerating itself.

4. ESG (Environmental, Social and Governance) Indicators

The integration of ESG indicators in the supply chain is necessary to make more sustainable decisions in terms of supplier selection and materials management. ESG criteria make it possible to assess the impact that a company’s activities have on its environment and society, promoting practices that are not only profitable, but also ethical and responsible.

• Environmental criteria (E): Evaluation of suppliers’ environmental practices, such as the use of renewable energy, waste reduction and carbon footprint minimization.
• Social criteria (S): Ensuring that suppliers maintain fair labor standards, respect human rights and promote social welfare.
• Governance criteria (G): Promote transparency and ethics in business management, ensuring that suppliers and associated companies follow good governance practices, free from corruption and mismanagement.

Incorporating these criteria into purchasing and sourcing decisions helps to build supply chains that are more responsible and aligned with sustainability principles.

Don’t miss Dustin Burke’s TED Talk, who explains how to build more resilient, efficient and collaborative supply chains in the face of global crises. Watch the video here.

Fundamentals for an smart supply chain

Digital transformation is revolutionizing supply chain management, pushing organizations towards more interconnected, automated and data-driven decision-making models. In this context, the concept of smart and connected supply chain is born, supported by Industry 4.0 technologies such as the Internet of Things (IoT), Artificial Intelligence (AI), Big Data, Blockchain Technology and Digital Twins.

According to Montoro Osuna, et al. (2019), these chains are characterized by:

• The interconnection of processes, where each link responds to information flows in real time.
• Flexibility and adaptability, necessary to respond to demand variability or environmental disruptions.
• The customer as the central axis, orienting operational decisions towards service improvement and personalization.

A prominent tool is the Internet of Things (IoT), which allows connecting sensors, machines and devices through the network, enabling real-time data collection and analysis. This has a positive impact on:

• Predictive maintenance, reducing unplanned downtime.
• Dynamic inventory management, aligned with market behavior.
• The creation of digital twins, capable of simulating operations before executing them in the physical world.

Among the challenges to consider in the digitization of the supply chain are facing challenges such as:

• Cybersecurity: protecting data integrity in hyper-connected environments.
• Standardization and interoperability: ensuring that all systems communicate effectively.
• Big Data management: transforming data into strategic decisions.
• Investment and digital maturity: assessing whether the organization has the resources, talent and structure to adopt advanced technologies.

To develop this smart digitization, the use of advanced technologies such as:

• IoT allows connecting devices and sensors in real time to monitor assets and products along the supply chain.
• Big Data analyzes large volumes of data from different sources, providing useful insights for predictive and strategic decision making. It is also used for demand analysis, optimal routing and scenario simulation.
• Blockchain ensures the traceability of products and inputs, providing transparency and security in each process and link of the chain.
• Artificial Intelligence (AI) and Machine Learning optimize operational decision making through algorithms that learn and improve over time, predicting demand and adjusting smart logistics accordingly.

Strategies for sustainable and smart supply chains

With the fundamentals in place, organizations can formulate comprehensive strategies to transform their supply chain. These include:

• Design contingency plans together with suppliers and logistics operators.
• Implement decentralized inventories to respond to disruptions.
• Use digital twins to simulate and reconfigure smart logistics networks.
• Apply Lean tools (JIT, Kaizen, VSM) to reduce waste and energy consumption.
• Train teams in continuous improvement and operational sustainability.
• Train internally on ESG principles and digital transformation.
• Continuously evaluate suppliers’ environmental and social performance.
• Implement Cross Docking to avoid intermediate storage, reduce costs and speed up deliveries.
• Consolidate products and ship them in a short time, supporting Just-in-Time strategies.

Conclusions

The transformation to sustainable and smart supply chains enables organizations to remain competitive in dynamic environments, facilitating resource optimization, regulatory compliance and timely adaptation to disruptions.

The integration of sustainability criteria and digital intelligence in logistics management increases operational efficiency and favors the development of collaborative, traceable and resilient systems, aligned with current regulatory and social demands.

Companies that integrate sustainability and digital intelligence into their supply chain management can more effectively optimize operating costs and resource use, comply with increasingly stringent regulations, anticipate and adapt to disruptions, and strengthen trust with customers, investors and society at large. It is not a matter of choosing between one or the other approach, but of understanding how they complement and drive each other. This integration results in a supply chain that is more robust, ethical, transparent and ready to meet future challenges.

References

1. Ardila, W. A., Romero, D. H., & González, F. R. (2014). Estrategias para la gestión de riesgos en la cadena de suministros. En Twelfth LACCEI Latin American and Caribbean Conference for Engineering and Technology (LACCEI’2014): Excellence in Engineering To Enhance a Country’s Productivity, Guayaquil, Ecuador, 22-24 de julio de 2014. https://laccei.org/LACCEI2014-Guayaquil/RefereedPapers/RP233.pdf
2. Carrillo Herrera, K. (2017). Estrategias Sustentables en Logística y Cadenas de Suministro. Revista Loginn, Volumen 1, Número 1. https://revistas.sena.edu.co/index.php/LOG/article/view/1021
3. Montoro Osuna, E; Ávila Gutiérrez, M; Aguayo González, F; Martín Gómez, A;(2019). “Cadena de suministro inteligente y conectada”. 23rd International Congress on Project Management and Engineering, Málaga, 10th–12th July 2019. http://dspace.aeipro.com/xmlui/handle/123456789/2297
4. Silva, J. D. (2017). Gestión de la cadena de suministro: una revisión desde la logística y el medio ambiente. Entre Ciencia e Ingeniería, ISSN 1909-8367. http://www.scielo.org.co/scielo.php?script=sci_arttext&pid=S1909-83672017000200051