As global supply chains account for approximately 80% of global greenhouse gas emissions, sustainable supply chain management is not merely an ethical aspiration; it is a strategic imperative with far-reaching implications for economic, environmental, and social wellbeing. In this article from our publication, On Infrastructure, Dr Arijit De explores what steps policymakers and regulatory bodies play in shaping the trajectory of supply chain sustainability.

• Supply chains are made up of interlinking networks which are susceptible to both human-made and natural disruptions.
• Policymakers and regulatory bodies play a pivotal role in shaping the trajectory of supply chain sustainability – and have to navigate a complex interplay of market dynamics, technological advancements, and regulatory frameworks.
• Failure to address sustainability issues can lead to adverse consequences such as resource depletion, environmental degradation, and compromised resilience in the face of disruptions.

Sustainability, risk mitigation and the importance of AI

Supply chains are made up of interlinking networks – and the ever-increasing interdependencies among organisations have made these supply chain networks susceptible to both human-made and natural disruptions.

Global disruption events such as the Japanese tsunami in 2011, Typhoon Haiyan in the Philippines in 2013 and earthquakes in Chile in 2015 have significantly compromised the performance of goods supply chains in recent decades. On the national scale, disruptive events can also impact supply chains and businesses – such as KFC’s logistics blunder and road accidents at the vicinity of a distribution depot in 2018, leading to two-thirds of their outlets in the UK having to close due to a chicken shortage. The COVID-19 pandemic is also a significant recent example of a disruptive event on both a global and national scale.

Other disruptive events include labour strikes, adverse weather, factory fires, political upheavals, and epidemic outbreaks. Furthermore, supply chain organisations face increasing challenges in meeting the environmental regulations enacted by governmental bodies (for example, international maritime organisations implementing sulphur footprint regulations to reduce global sulphur emissions, due to their harmful effects on human health).

By integrating sustainability metrics into decision-making processes, organisations can meet the dual challenges of mitigating fuel costs and reducing carbon emissions while enhancing operational resilience during disruptions.  As supply chain operations are interrelated, AI models for mapping these relationships (such as advanced machine learning and mathematical optimisation techniques) become increasingly important.

Algorithms and frameworks that capture the perspectives of stakeholders (such as raw material suppliers, manufacturing or production facility businesses, distributors, transport organisations and logistics service providers) can facilitate more informed and effective decision-making processes, particularly in route selection, transportation choice, and product shipment decisions.

Models developed using AI can facilitate early-stage risk mitigation in product manufacturing, enhance time-to-market efficiency and resource allocation and finally, enhance supply chain resilience. For example, grocery and general merchandise retailers in the UK have used AI-driven algorithms to optimise supply chains by dynamically adjusting delivery routes based on real-time data, predicting the best transportation methods, and accurately forecasting demand to manage inventory. This approach enhances efficiency, reduces costs, and mitigates risks, ensuring faster delivery times and a stronger, more flexible supply chain. It is important that the Department for Business and Trade incorporate these models and approaches into UK supply chain strategy.

Carbon emissions containment

Containing carbon emissions is also an important consideration for sustainable freight transportation. University of Manchester research suggests that a move away from road transport to moving goods by sea wherever possible will significantly reduce both total costs and overall carbon footprint.

Moreover, complex challenges arise when reducing carbon emissions for moving products longer distances by road, as decisions need to be made on reducing vehicle trips while  considering bigger vehicles and improving the vehicle capacity utilisation by focussing on economies of scale.

Supply chain infrastructure and resilience

From a supply-chain infrastructure perspective, The University of Manchester research findings emphasise the importance of fortification investment (allocation of resources and capital to strengthen and secure this infrastructure). This helps in making the supply-chain logistics networks more resilient to disruptions, optimising product flow from distribution centres and enhancing better connectivity during disruptive scenarios by adopting goods sharing strategies between facilities.

It is important to adopt strategies to manage disruption within a supply-chain network (such as labour strikes or weather events). Infrastructure policy development should prioritise sustainability criteria, incorporate renewable energy sources, and ensure efficient utilisation of resources. A good example of this is the fact that the adoption of electric vehicles within the supply-chain logistics industry leads to significant reductions in carbon emissions and costs, particularly in urban areas where there are dense networks of customers who live close together.

Research and evidence point towards a move away from traditional road transportation and switching to electric vehicles. Along with electrifying the transport mode, the use of greener fuels like ammonia and hydrogen and adopting greener technologies within maritime transportation is also recommended.

Policy steps for sustainable supply chains

Research at The University of Manchester suggets several policy recommendations imperative for advancing sustainability in supply chains:

• Policymakers and national government departments should prioritise the integration of sustainability criteria into procurement practices and supply chain regulations. This entails incentivising sustainable behaviours among stakeholders and fostering collaboration across industry sectors (such as freight, food and manufacturing). Government could incentivise sustainable supply chain practices by offering tax credits, subsidies for green technologies, and grants and low-interest loans for sustainability projects, as well as by promoting suppliers with strong sustainability credentials and setting regulatory standards for emissions reductions, efficient resource use and waste minimisation.
• Investment in technology and infrastructure is essential for enabling the transition towards sustainable supply chains. Embracing digitalisation, automation, artificial intelligence and renewable energy sources, such as employing electric vehicles, can facilitate resource optimisation and emissions reductions. Here, a step forward for infrastructure investment would be for government to invest in and expand electric vehicle infrastructure/charging points.
• Regulatory frameworks such as the UK’s Climate Change Act should adopt a comprehensive approach that addresses not only environmental concerns but also the social and economic dimensions of sustainability. This necessitates the alignment of policies with international sustainability goals such as the United Nations Sustainable Development Goals (SDGs).

Applying the recommendations – findings from research

University of Manchester research findings underscore the importance of a holistic approach to sustainable supply chain management. By leveraging AI models, behavioural insights, integrated sustainability assessment, and early-stage risk mitigation strategies, organisations can navigate complexities, enhance resilience, and drive transformative change towards sustainable supply chain practices.

Our study Optimization model for sustainable food supply chains: An application to Norwegian salmon’ investigates transportation scenarios and captures the impact of adopting maritime transportation methods in place of road transportation for lowering the overall cost, the fuel costs and for reducing carbon emissions. Our research report “Improving the operational efficiency and reducing transport-related carbon emissions of food distribution hubs” provides empirical evidence on the benefits of collaboration between local food producers. This can contribute to: more sustainable food systems; improved producers’ economic fortunes; and, with small-scale food producers suffering from low margins and weak bargaining power, improved local economic development.

The convergence of research insights and policy imperatives presents a compelling opportunity to drive transformative change in supply chain management.

By embracing evidence-based policymaking and collaborative governance, policymakers can steer towards resilient, equitable, and sustainable supply chains that benefit present and future generations, while ensuring the robustness and efficiency of the supply-chain infrastructure.