Sustainability and the Supply Chain: Making the Connection

Online product configuration tools can help consumers make more informed choices

Published: Wednesday, November 16, 2022 - 13:03

The phrase “supply chain” became part of the everyday vernacular during the pandemic, as supply chain issues seemed to affect everyone's life—from toilet paper to automotive components. Supply chain problems are well known to cause disruptions with product delivery, particularly in the complicated world of global production. While manufacturers have always had to deal with unexpected changes in the supply chain, the past couple of years saw ramped-up problems.

Of course, vulnerabilities in supply chains can’t be completely prevented, but they can be addressed, whether they’re caused by a natural disaster, a lack of raw materials, or a labor shortfall.

Now there’s a sustainability imperative, as well. Purchasing patterns are changing significantly, which will affect B2B markets, even if only because B2C trends eventually influence B2B products. Customers are now actively choosing businesses based on the sustainability of their brands or products. Businesses that are the first to cater to the needs of these ecologically focused customers will benefit commercially from this trend.

How can manufacturers maintain a resilient and yet sustainable supply chain?

The circular economy and resource conservation

External forces, such as a global pandemic and an escalating war, are exacerbating ongoing supply chain disruptions for organizations with complex, global supplier networks. An article by Gartner introduced the idea of a circular economy that can support sustainability goals and initiatives in addition to helping maintain a strong, robust supply chain.

Gartner defines a circular economy as based on three principles:
• Design out waste and toxicity
• Keep products in use
• Positive return to environment

A circular economy, as opposed to the conventional linear one, places special emphasis on the design, usage, and reuse of products while focusing on decoupling resource extraction from economic growth.

Designing for sustainability

Companies can focus on the whole life of the product, rather than just the point of sale, by starting the product design phase with longevity, rather than obsolescence, in mind. It’s an economic model reminiscent of the classic reduce, reuse, and recycle where, from the beginning, you think about repurposing the product as you’re designing it. Built-in obsolescence is no longer a feasible way to design products.

This reduces material costs for companies while preserving raw resources and preventing items from ending up in landfills. This is frequently referred to as “product as a service,” and it is important to the circular economy model by keeping products in use longer and with greater efficiency. By updating and introducing new features, businesses may increase the lifetime of their goods while also lowering the total cost of ownership for their customers—but only if they have the correct technology in place.

Moving toward a circular economy requires time, thought, and planning. But according to the Gartner 2020 Opportunities After Crisis Survey, just 51 percent of supply chain professionals have shifted their focus to circular economy strategies.

A partner in sustainability

The good news is that manufacturing organizations can now leverage technologies to support a sustainable transformation process. Configuration life-cycle management (CLM) is one of those technologies. Manufacturers of complex products use CLM to define and manage the millions of possible product configurations and options available. Many people are aware of tools such as car configurators, which let users customize their own vehicles based on a variety of options including color, climate package, engine size, and sound system. Only legitimate alternatives are provided for selection, in real time, and a CLM system makes sure they are modified in accordance with each choice the customer makes.Customers creating their ideal product online are able to see the financial impact of each choice made.

But CLM’s technology can also provide additional metrics, such as estimated CO₂ contribution, recycling costs, and more. Each of those metrics could change based on the configuration. This enables customers to make decisions based not only on price, but also on their own environmental standards, giving them insight into the sustainability effect of specific product features, combinations, and options.

Sustainability ahead

Manufacturers the world over can gain a great deal by developing smarter, more efficient products, whether the topic is circular economy, sustainability, or digital transformation. The goal of creating supply chain sustainability is to lessen a company's negative effects on the environment. However, the transition of businesses from a narrow focus on cost and profit to a more comprehensive focus on sustainability can be a significant challenge.

Having technologies and solutions that help with this goal make it easier for companies to achieve it—or even begin the process. Manufacturers can use the configuration life-cycle management product model to assess the profitability and popularity of each legitimate product combination, enabling the company to spot opportunities for improvement and waste minimization. Given current consumer sentiment, a sustainable supply chain creates a competitive advantage as well. For all these reasons, the supply chain and sustainability must go together moving forward.

About The Author

Henrik Hulgaard

Henrik Hulgaard is the CTO and co-founder of Configit, the global leader in Configuration Lifecycle Management (CLM) solutions and a supplier of business-critical software for the configuration of complex products. He holds a doctorate in computer science from the University of Washington, is an associate professor of computer science, and has published more than 25 articles internationally.