Supply chain waste occurs when resources are used inefficiently, leading to a negative impact on both the environment and a business’s bottom line.
The UNI Environmental Programme reports a staggering amount of plastic waste alone is generated each year – about 400 million tonnes! This emphasises the vastness of the overall waste problem and the importance of tackling it head on.
Understanding Supply Chain Waste
Here are some common types of supply chain waste you might have heard about:
- Overproduction: Making more products than needed can lead to excess inventory and wasted resources.
- Excess Inventory: Holding onto too much stock ties up valuable space and money.
- Defects: Products that don’t meet quality standards require rework or disposal, costing time and materials.
- Transportation: Inefficient movement of goods, like using the wrong size vehicle, creates unnecessary costs and emissions.
Waste can significantly impact businesses by reducing profits (wasted resources means less money), damaging customer satisfaction (with delays and reduced product quality leading to unhappy customers), and hurting your brand reputation (unsustainable practices).
7 Strategies to Reduce Wastage Along the Supply Chain
These practices are intended to help you reduce waste, streamline operations and keep costs under control in the long run.
Waste Audit
Just like a health check-up, conducting an audit of a supply chain can help identify weak spots in your supply chain. Get started with:
- Mapping Supply Chain: Tracing your products’ journey from raw material to customer delivery.
- Identify Waste Points: Look for inefficiencies like excess inventory, unnecessary steps or where recurring delays crop up at each stage.
- Analyse the Data: Get specific on waste types, quantities and costs to understand the impact.
Some tools to help you with this are:
Value Stream Mapping – helps visualise your supply chain, highlighting potential waste points.
Lean Six Sigma – this methodology focuses on eliminating waste and improving process efficiency.
Planning Inventory
Excess inventory ties up valuable warehouse space which can lead to spoilage, especially with perishable goods like food or cosmetics. By keeping stock levels optimised, businesses can go further than reducing waste, and benefit from increased free space.
Ways to implement this:
- Just-in-Time (JIT):Order and receive materials only when needed for production. This makes sure products are fresh and reduces overall storage costs.
- Kaizen (continuous improvement): Never settle for good enough! Encouraging a culture of developing your supply chain throughout a company could help to consistently build optimised processes.
- 5S Methodology:Sort, Set in Order, Shine, Standardise, Sustain.
Technology (AI)
Technology plays a crucial role in optimising supply chains. One key development is the use of AI to manage waste and aid with automatic processes, leading to reductions in errors.
AI and Machine Learning (ML): ML uses data and algorithms to continuously improve how it tackles tasks. With waste reduction, this could mean optimising production schedules through predicting demand, ultimately reducing waste.
GovUk reported that 15% of businesses in the UK alone have adopted at least one AI technology system since 2020.
Enhancing Supplier Collaboration
Collaborating with suppliers isn’t just about getting the best price – it’s about working together to minimise waste throughout the entire chain.
By collaborating on demand planning and forecast for example – sharing data to predict needs – you and your suppliers can reduce the risk of overproduction and excess inventory for everyone involved! As well as just generally supporting open communication and information sharing.
Sustainable Practises & Packaging
Poorly packaged products and excessive layers of plastic aren’t particularly appealing to customers. So it’s especially important to pack products for both their protection, and correct size to reduce wastage.
Eco-friendly packaging: Is there an option to use biodegradable packaging? If your business is committed to reducing waste going to landfill and microplastic prevention then this is a great place to start.
However, it’s important to remember that not all biodegradable packaging requires the same environment to decompose. Some biodegradable options need industrial composting facilities, not your typical backyard bin.
Staff Training and Education
Education can be an amazing tool to support and equip employees with the knowledge and skills to identify waste points and make their own small eco-conscious choices throughout the workday.
Including staff in the journey is just another way to strengthen and have purpose in your goals as a company. Those closest to the products and processes really do have a knowledge basis your business could learn a lot from.
Delivery & Returns
It can be a nightmare from both sides when a parcel is unable to be delivered. The time and energy (not to mention fuel costs) can start to get really expensive.
Since 2006, the IMRG Valuing Home Delivery Review has tracked online delivery trends, highlighting the importance of successful first attempts. Failed deliveries, often requiring a one-to-five-mile round trip to collect an item plays into the significant environmental and financial burden.
Flexible delivery options and making the returns process as simple as possible consequently work hand in hand. Offering click-and-collect or locker deliveries to reduce ‘missed attempts’ with pre-printed labels and clear instructions makes for a smooth process for everyone.
Summary
Inefficiencies can lead to a lot of waste. From excess inventory to poorly planned deliveries, these inefficiencies can hurt your bottom line and be damaging to the planet.
Taking environmental responsibility through training in waste reduction to switching to eco-friendly packaging could boost business through intentional changes.
Back Share
