Sustainable Supply Chain Transformation

Supply chains were traditionally set up for cost and time efficiency, but now increasing environmental and social responsibilities demand a redesign as stakeholder expectations and legislation are changing.

While consumers demand climate friendly-solutions, companies take on greater social responsibilities and legislation continuously promote sustainable transformations. These changes are forcing supply chain management to adapt to a new normal. Businesses and organisations are challenged to consider new operating blueprints for their supply chains as their responsibilities now extend further upstream beyond their own operations. Furthermore, waste is no longer only considered a cost driver, it is also a reputation risk and may in parallel represent a value if reused or recycled correct.

”We prioritize circularity to a much larger
degree than beforehand .”

Kristian Fribo, Head of Sustainability, STARK Danmark A/S

1. Leveraging sustainable supply chain to win in the market, grow revenue and increase shareholders returns

We experience that clients are at very different maturity levels depending on industry and attitude towards sustainability. Some just view sustainability as a regulatory driven compliance agenda and try to minimize the cost impact by staying compliant, not being penalised nor losing too many customers. Others are more offensive in their approach and view sustainability as a key competitive edge that puts them to tap into premium markets, build customer loyalty, and support long-term profitability. This has implications on product design, supply chain design and operations, circular business models and positioning in the market leveraging sustainable supply chain capabilities.

Client maturity – where do you fit?

Level 1. Compliance & reporting – do minimum
Primarily compliance-driven needs (e.g., in response to CSRD, EU taxonomy)
Level 2. Operations – integrate
Compliance drives functional integration of Sustainable Supply Chain across finance, supply chain, and systems
Level 3. Ubiquity – be a leader
Sustainability is a natural part of all Supply Chain projects and used to drive competitiveness in the market

Level 1: If you want to do the minimum and not invest, focus is typically on cost savings and an urgency in getting compliant to the new regulatory requirements for your company or set by customers. You need to understand what you have to do, in which order to secure compliance, and how to mature further on the journey to move from being cost and compliance focused to being more value driven.

Level 2: Once beyond the bare minimum you want to respond by being more proactive. Capabilities are built in pockets, and you are already developing a more integrated way of working where functions are integrated via governance, processes, data and systems. You think beyond yourself (scope 1 and 2) and want to prevent challenges upstream as well as downstream (scope 3). Maybe you are even considering how to become more circular and potentially redesign your product and service portfolio to fit the purpose.

Level 3: First-mover companies (grounded in a more mature state) see the value of being at the forefront leveraging sustainability across the entire value chain to be a leader in their market or even industry. At this level you want to grow your competitiveness, revenue and margins by leveraging sustainability in your extended supply chain. You work proactive with customers, suppliers, and partners to maximize the impact of ESG and want to implement and operate solutions in scope 3. Sustainability is used as a catalyst for being future proof, efficient and innovative.

At Deloitte we bundle our various capabilities and services across the Deloitte world, your partners and other key players to target exactly that level of maturity and appetite you may have towards improving your sustainable supply chain.

2. How can we help?

As a client you do not need to aim for wonderland when leveraging Deloitte as your advisor, operator, or partner. We help you identify the areas of maximum impact depending on what level of maturity you find most suitable given your industry and position in the market. Whether you already have a mature approach, or if you are just getting started, most owners and leaders need to step up and transform towards a much more sustainable business and value chain in the future.

Deloitte can help you to get maximum impact at minimum investment given you level of ambition. Obviously, we would love to help you change the world for the better, but we are also realists that recognize that not all can nor want to be #1 in everything. We help you find your niche in being sustainable in your end-to-end supply chain, while minimizing cost, boosting competitiveness, and growing your business.

Deloitte uses the 12 sustainable supply chain value propositions to help you focus and make maximum impact, see graphics:

In some cases, our clients want to go beyond sustainable supply chain and work truly integrated across the business to win. E.g. across business strategy, sales & marketing, product development, supply chain management, risk & regulatory areas, and tax to secure a competitive, innovative, and efficient future business model. Deloitte helps you get there.

Want to know more? Find contact information below.