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Greening Small Business Supply Chains through Technology

Sustainability is really good for small businesses, not just large ones. Karen Reddington, President, Asia Pacific, FedEx Express shares how SMEs can create growth through sustainable business practices.

Customers today increasingly question the green credentials of companies, large and small. [1]

Before doing business with a particular firm or brand, socially-conscious consumers and companies want to know:

  • Are the goods produced based on sustainable business practices?
  • Is the supply chain green from top to bottom?
  • Is the business meeting environmental and emissions targets?

The answer behind all of these questions is technology.

Technological transformation is now the key driver of sustainability, especially for small business, because it is readily accessible and cost-effective.

With the right digital tools and connections, SMEs can be more agile, more dynamic, and more responsive to growing demands for greener supply chains.

The dilemma for SMEs is just how they can fully utilize technology to create growth based on sustainable business practices.

There are four key areas innovative SMEs can focus on:

See-through supply chains

First, build full accountability through technology-driven see-through supply chains.

Adoption of new systems by SMEs hasn’t always been easy due to lack of resources[2], but that’s been transformed in the Industry 4.0 era.

AI, machine learning, the Internet of Things, sensor tracking of important shipments, and higher levels of automation – offer SMEs end-to-end visibility in supply chains they’ve never had before.

Visibility is changing supply chains in an unprecedented way. The multiplying effect of greater efficiencies and technological innovations means SMEs can thrive and deliver more, but with fewer resources and environmental impacts.[3]

In many cases, SMEs already have a supply-chain advantage over bigger companies, especially those in the growth and start-up phases. With greater agility in reacting to changes in the market and, in some cases, having inherited none of the legacy supplier relationships that encumber big business, they often have more control over, and choice of, suppliers and business partners.

That’s where visibility of a different kind kicks in.

As customers look to spend their money with responsible companies, SMEs face scrutiny on sustainability and transparency,[4] as well as who they are partnering with.

In addition to their own sustainable supply policy and guidelines, SMEs can screen suppliers about sustainable products and services[5] in order to verify and strengthen green supply chains.

Digitally-Driven Empowerment

Knowledge empowers, and that empowerment comes from digital investment in the small business supply chain, especially in the growing e-commerce market.

With today’s cloud computing and intelligent databases, the ability to create a digital dashboard integrating metrics, including environmentally relevant data and business tools, helps drive maximum efficiency.

For example, smart use of technology gives SMEs access to find the best, the fastest and the most efficient and sustainable way to reach customers.

Digitized delivery routes, whether using more sophisticated internal route optimisation software, or general user apps such as Waze, vastly improve the customer experience. Right down to the last mile, consumers not only want something delivered, they want to know “how” it is delivered.

For FedEx, just eliminating the “last mile driven” – the difference between delivering packages to multiple addresses compared to a central location – helps us avoid thousands of metric tons of CO2 emissions each year.[6]

Scale Up to Create Sustainable Solutions

Green supply chains integrate a company’s business, social and environmental needs as one – so SMEs should look to scaling solutions and investing in new ideas to improve mobility, reduce congestion, and decrease pollution in communities around the world.[7]

Often that means scaling up and forging global connections utilizing larger suppliers and logistics partners.

Nurdle in the Rough is a small business which transforms ocean plastic pollution into beautiful jewelry. FedEx delivers its pieces around the world and broadens the company’s participation in global trade. [8]

Small businesses such as Nurdle in the Rough grow when they can leverage the vast networks of their large-scale supply chain counterpart to scale up and connect to the world,[9] taking their sustainability mission global.

Going paperless, recycling and using the cloud are obvious and easy changes for SMEs to make.

One such example is switching to paperless digital trade documents to smooth cross-border business and avoid waste.

Recycle wherever possible – at FedEx, 91 percent of our branded packaging is recyclable, and more than half is made from recycled content.[10]

Reassess your packaging, because simply getting the right package size and design for products can reduce costs, maximize space, optimize loads,[11] and minimize environmental impacts.[12]

Rethink reverse logistics in this world of online shopping and numerous product returns – so customers can restore, refurbish, or reuse returned products.[13]

Minimize energy consumption and reduce emissions

As governments prioritize the need for cleaner air and creation of less toxic city environments, environmental targets of reducing emissions and energy consumption are in sharp focus too.

Approximately 7 million people worldwide die prematurely each year from air pollution, with about 4 million of these deaths occurring in Asia-Pacific. [14]

SMEs must re-think supply chains of the future in an energy-constrained world[15], since cleaner technology will play a central role in minimizing energy consumption.

For example, SMEs can identify energy-saving alternatives in company buildings, then set more ambitious fuel efficiency and emission reduction targets[16] for their own company and that of their suppliers and logistics providers.

Operational improvements to routing, automation and other procedures, lower emissions delivery alternatives, alternative fuels, and electric and hybrid vehicles,[17] all contribute to more sustainable supply chains of the future.

And for businesses that still need to convince internal stakeholders to push sustainability further up the agenda, people power can be one of the most powerful persuasion tools. Buy-in from employees at a grassroots level helps demonstrate to stakeholders that change will be driven from the inside out, and is aligned with employee satisfaction and company loyalty. A lot of environmental initiatives occur at community level, the heart of small business.

 Sustainability is Good for Business

There is also a genuine business objective behind sustainability. The UN estimates there is $5 to $7 trillion in economic opportunities to be unlocked by achieving the Sustainable Development Goals by 2030, so there’s a clear financial incentive for companies big and small to explore the possibilities that sustainability can engender.[18]

So a push to prioritize a sustainability agenda is not only good for the environment, it can be essential for businesses to continue to compete in a fast-changing world. Greater visibility can help reduce costs as well as attracting more clients seeking sustainable goods or services, especially millennials whose purchase power will only continue to rise.

In some cases, growing business responsibly and resourcefully can be directly traced back to a businesses’ bottom line. FedEx recorded $7.3 billion in revenue from customers requesting emissions data from us in the past financial year alone.[19]

As for SMEs, they might be small but they are mighty.[20] They are not weighed down by past practices and legacy infrastructure. With modern digital infrastructure, they can change, adapt, and evolve quickly.

Technology allows small business to think big, and committing to sustainability as an ascending priority that’s here for the long-term is a clear strategic differentiator. This is especially true across Asia Pacific, as the region has been identified as lagging behind Europe and the US in placing sustainability on the core business agenda.[21] That means that those who invest early will stand out.

By thinking green and continuing to innovate; by using technology to power greener supply chains, small businesses can evolve into established brands and safeguard future success. [22]

***

[1] https://www.nielsen.com/au/en/insights/news/2018/global-consumers-seek-companies-that-care-about-environmental-issues.html
[2] https://www.mdpi.com/2076-0760/8/5/154?utm_source=TrendMD&utm_medium=cpc&utm_campaign=Soc_Sci_TrendMD_0
[3] Mirrored messaging, FedEx Global Citizenship Report, 2018
[4] FedEx Global Citizenship Report 2019, p.22
[5] https://www.environment.nsw.gov.au/questions/making-small-business-more-sustainable
[6] FedEx Global Citizenship Report,2018, p.20
[7] http://csr.fedex.com/pdf/FedEx_GCR_FINAL_4.17.19_144dpi.pdf   p23, 2019 FedEx Global Citizenship Report
[8] FedEx Global Citizenship Report, 2018, p. 9
[9] FedEx Global Citizenship Report, 2018, p. 9
[10] FedEx Global Citizenship Report, 2018, p41
[11] FedEx Global Citizenship Report, 2018, p.32
[12] FedEx Global Citizenship Report, 2018, p.40
[13] FedEx Global Citizenship Report 2019, Chairman’s letter.
[14] http://www.greeningtheblue.org/event/world-environment-day
[15] https://www.pwc.com/gx/en/transportation-logistics/tl2030/assets/pwc-tl2030-pub.pdf
[16] FedEx Global Citizenship Report, 2018, p.32
[17] FedEx Global Citizenship Report, 2018, p.32
[18] https://www.andrews-partnership.com/insights/sustainability-in-asia-trends-for-investor-relations-and-corporate-communications.html
[19] http://csr.fedex.com/pdf/FedEx_GCR_FINAL_4.17.19_144dpi.pdf   p18, 2019 FedEx Global Citizenship Report
[20] https://www.fedex.com/en-us/small-business/peer-insights/scaling-up-and-business-trends/surviving-your-first-5-years.html
[21] https://www.andrews-partnership.com/insights/sustainability-in-asia-trends-for-investor-relations-and-corporate-communications.html
[22] https://www.fedex.com/en-us/small-business/peer-insights/scaling-up-and-business-trends/surviving-your-first-5-years.html

 

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