Supply Chain Sustainability: The Myth That Needs to be Made Real

Editor’s Note: Diego Pantoja-Navajas is vice president of WMS Product Development, Oracle

As a businessman, I believe in the easy and unimpeded movement of goods, services, and capital; I believe that optimized, highly efficient supply chains keep products on local shelves, keep people employed, and keep consumers happy.

As an engineer, I take processes apart, examine them, and improve them at massive scale.

But perhaps most importantly, as a father, I love to take my daughter to the beach where she laughs and splashes in the ocean.

Every once in a while, it happens that my different states of being crash into one other and leave me scratching my head.

Such is the case when it comes to the topic of supply chain's role in environmental sustainability. Supply chain sustainability – as the ultimate engineering goal – to help sustain our planet is a great idea and a worthy endeavor; but supply chain sustainability as a means of changing behavior and increasing consumption in order to increase profit is much less appealing. And I'd like to illustrate the distinction:

This past October, I was in Brazil for a conference when the story broke about the oil spill along 1,400 miles of the Brazilian coast. Like everyone else, I was shocked by the mystery surrounding its origin. As I write this, the origin of this spill is still unknown and thousands of barrels of oil are estimated to be involved. The Brazilian navy contacted 30 tankers that had passed by the country around the time the spill was first noticed. Nobody knew a thing about it.

Put another way – in late-2019 thousands of barrels of mystery oil spilled into the Atlantic and washed up onto the Brazilian shoreline. Nobody is claiming this oil. Nobody has claimed the revenue loss. It's as if barrels of oil fell from the sky. Actual barrels have been recovered.

In this day and age, it should be impossible for anybody to lose thousands of barrels of oil – even if they wanted to or didn't care.

Cloud-based traceability would have mitigated this problem. Cloud-based fleet management might have prevented this problem and sent an alert that something in the supply chain might go horribly wrong.

As a supply chain professional, I want to solve problems like this. Furthermore, I think all supply chain professionals should be working on solving these problems – lessening the impact of their business on the environment.

Another environmentally impactful thing happened in October. Amazon announced it was offering another free service to customers – free grocery delivery – within 2 hours.

Amazon now offers its Prime members free two-day delivery, free next day deliver, free same day delivery, and now free grocery delivery within hours.

It also offers Prime subscriptions in 17 countries and makes up roughly 13% of ecommerce retail sales. Over half of the US population subscribes to Amazon Prime.

The businessman in me says, good for Amazon for figuring out how to win capitalism.

On the other hand, I say – Wait a minute. Is this sustainable? Is this facilitated instant gratification sustainable for life on the planet?

Experience tells us that shorter delivery times require less environmentally friendly logistics options – air cargo and/or local ground transportation. Instead of batching deliveries to improve efficiency, multiple one-off deliveries each week to the same household or business burn more fossil fuels, create more carbon emissions and deliver more packaging waste.

What happens when Wal-Mart starts its own version? What about Ali Baba? If all the big retailers decide to follow in Amazon's wake, will the planet be able to handle it? There are roughly 8 billion people on this planet. If they have all been trained to have what they want whenever they like, how will we ever survive?

How will the world manage when Amazon or its equivalent changes the behavior of half of China or half of India or half of Africa? Because that is what comes next.

Whether the problem is how to increase throughputs at a distribution center or how to ensure traceability in a food supply, complex problems are made more complex by their sheer size and the number of people they impact.

Environmental sustainability is now one of those complex problems. In fact, one could argue that it's the problem.

And if we truly want to move supply chain sustainability from myth to reality we need to look at what we're offering consumers and figure out how to throttle it back. Maybe we need to train different behaviors.

You want that sweater overnight? Pay extra. You want those eggs in two hours? Pay extra. You want to place 4 separate orders with Amazon? Consolidate fulfillment and have them delivered in one box instead of four. If it's not urgent, select a longer delivery time to capitalize on less harmful shipping methods.

Of course, there will be times when you need something urgently. The convenience of two-day or same-day shipping might be necessary. But making rapid delivery the default option creates a dangerous habit that will adversely impact our planet.

There are not many situations where a business will advocate for slower service. But many consumers (particularly younger consumers) are starting to prioritize sustainability above convenience. The business case for sustainability will only get stronger as companies realize the business benefits of efficient and traceable operations.

As we head into the holiday shopping season, think about the impact of last-minute purchasing and rushed delivery, and encourage your customers to do the same. As in many aspects of life, solid planning leads to efficiency. When it comes to the future of the planet, the stakes couldn't be higher.

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