How To Green Small Business Supply Chains

               
By Kawal Preet | First published: December 5, 2019    Updated: June 24, 2021

Sustainability is essential for businesses of all sizes. We share how SMEs can use technology to create growth through sustainable business practices.

Customers today increasingly question the green credentials of companies, large and small. Before doing business with a particular firm or brand, 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 to all of these questions lies in technology.

Technological transformation is now the key driver of sustainability, especially for small businesses, because it is readily accessible and cost-effective. With the right digital tools and connections, SMEs can be more agile, dynamic, and responsive to growing demands for greener supply chains.

But how can small businesses go about fully utilizing technology to create growth based on sustainable business practices?

There are four key areas innovative SMEs can focus on:

See-through supply chains

First, you need to 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, but this changed in the post-Industry 4.0 era. AI, machine learning, the Internet of Things, sensor tracking of shipments, and higher levels of automation offer SMEs end-to-end visibility in supply chains that they’ve never had before.

In many cases, SMEs already have a supply-chain advantage over bigger companies, especially those in the growth and start-up phases. SMEs can often react to change quicker, and don’t inherit as many legacy supplier relationships that big businesses do. This means more control and choice when it comes to suppliers and business partners.

As customers look to spend their money with responsible companies, SMEs face scrutiny on sustainability and transparency, 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 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 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. Smart use of technology gives SMEs access to the best, fastest and most efficient and sustainable way to reach customers.

Digitized delivery routes, whether using sophisticated internal route optimization software, or general route mapping 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, simply 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.

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. Often, that means forging global connections utilizing larger logistics partners.

Going paperless, recycling and using the cloud are obvious and easy changes for SMEs to make. Switching to paperless digital trade documents allows for smoother cross-border business and helps avoid waste.

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

Minimize energy consumption and reduce emissions

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

Approximately 8.8 million people worldwide die prematurely each year from air pollution, with about 6.5 million of these deaths occurring in Asia-Pacific. That’s a larger health crisis than COVID-19 or cigarette smoking. SMEs must re-think supply chains of the future in an energy-constrained world, 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 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, 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.

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.

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 attract more clients seeking sustainable goods and services, especially millennials and Gen Z, whose purchase power will only continue to rise.

With modern digital infrastructure, SMEs 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 previously identified as lagging behind Europe and the US in making sustainability a core business agenda. This is now changing, and those who continue to invest early will stand out. At FedEx, for example, we recently announced an ambitious goal to achieve carbon–neutral operations globally by 2040; designating more than $2 billion of initial investment in three key areas: vehicle electrification, sustainable energy, and carbon sequestration.

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. For real-life stories about sustainable small businesses, visit us here. For more information on the steps we are taking towards a more sustainable future, check out our latest ESG report.
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About the Author
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Kawal Preet

President,
Asia Pacific, Middle East and Africa, FedEx Express

Kawal started out as a FedEx engineer in Singapore over 20 years ago, and she’s now the President of FedEx Express AMEA. Kawal is based in Hong Kong.

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