According to Gartner, CSCOs must adopt resource conservation strategies to mitigate inflation and supply shortages. Learn more: GartnerSC SupplyChain CSCO
of 983 supply chain professionals from August 2021 through October of 2021, 67% of respondents said they were investing in including environmental and social sustainability metrics as KPIs for supply chain leaders.
Resource conservation is a key factor in mitigating these challenges. Gartner suggests three strategies, CSCOs can deploy.So far, economic progress has been based on linear consumption - take, make, dispose. However, there’s a slow, but steady shift towards circular economy models. “The circular economy provides an opportunity to decouple raw materials from growth. Circular economy activities range from as-a-service models to incentivized return and collaborative consumption,” Watt said.
Another important aspect is the ownership of end-of-life materials, especially if they contain valuable raw material. If companies manage to close the loop, they can become more resilient against supply shortages. “Essentially some suppliers are using “end-of-life” materials as a hedge against inflation and availability concerns,” Watt said.
Before embarking on a circular economy strategy, Watt recommends that both environmental, financial, and societal impacts are assessed at a product and service level. “The circular economy choice may also come with unintended consequences. CSCOs need to define the best candidates for circularity, or they may end up creating increased environmental burden rather than reducing it.”In an environment of constrained supply, CSCOs must capitalize on the potential value of waste and see it as an asset.
CSCOs must shift their relationships with natural capital and focus on activities such as reducing biodiversity loss, fighting deforestation, or exploring regenerative agriculture. “The risk today is that CSCOs are spending the feedstocks more quickly than they can regenerate, and supply chains must make sure that they don’t destroy the very base of their business,” Watt concluded.
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