163 billion wasted every year: the upstream supply chain, a blind spot in decarbonisation

When discussing the ecological footprint of Supply Chains, discussions often focus on logistics – primarily warehouses and transportation – whereas the carbon footprint of a supply chain encompasses all greenhouse gas emissions associated with sourcing, production, transport, storage, and distribution of goods, including indirect emissions related to the energy used throughout the supply chain. In short, one must reason at the scale of the value chain, particularly the crucial upstream phase – from sourcing raw materials from initial suppliers through the production of semi-finished and finished products to storage, before distribution to customers (downstream supply chain) – the optimization of which conditions part of the ecological footprint of the downstream chain.

$ 163 billion of wasted inventory each year*

Prioritizing eco-design, selecting suppliers based on stringent environmental criteria, optimizing production processes, relocating supply chains… these are just a few keys to a sustainable and competitive Supply Chain.

But in line with the logic that the best waste is the one that is not produced, building a supply chain that is both economically and ecologically efficient starts with only producing what is needed. This is obvious; however, even the most advanced organizations struggle to meet this challenge, particularly in the current turbulent period. Thus, knowing that nearly 10% of the inventory produced each year worldwide ends up as waste due to overproduction or expiration, generating immense additional costs, emissions, and pollution, highlights the urgency for organizations to refine their management of sourcing and inventory – the famous upstream supply chain !

* “The Missing Billions : the real cost of Supply Chain waste ” by Avery Dennison is a detailed report (2022) of over 300 companies and more than 7,500 consumers, assessing the state of global supply chains and the waste issue in the United States, United Kingdom, France, China, and Japan. The report focuses on five sectors — food ; beauty; clothing; automotive; healthcare and pharmaceuticals.

Reducing inventory while improving supply availability : when performance serves sustainability

In 2023, it is less the desire to reduce their carbon footprint than the quest for better operational performance that drives organizations to equip themselves with stock and sourcing optimization solutions. However, one can bet that in a context of increasing regulatory obligations – at the forefront of which is the CSRD (Corporate Sustainability Reporting Directive) – environmental criteria will soon become crucial, as all companies will need to, directly or indirectly, initiate sustainability reporting across their entire value chain.

A perspective that delights solution providers like BEVOLTA, as upstream Supply Chain management tools have a proven impact on reducing carbon footprints, since their deployment involves better anticipation of needs, increased traceability of operations, and almost automatically a reduction in inventory… All while improving the operational performance of the company.

Yet another proof, if it needed to be shown, that “ sustainability ” often goes hand in hand with progress.