The Benefits of Sustainable Demand Planning
Companies have a significant impact on the condition of the environment, and that’s why so many companies are changing their business practices to become sustainable. Pollution and waste produced by businesses are consequential and put the planet at risk, challenging the livable conditions for future generations to come. Additionally, more business owners are observing significant benefits as they adapt to become more sustainable in their operations.
Companies can incorporate practices such as reducing waste, gas emissions, water consumption, and non-recyclable materials. More companies are making the transition to practice eco-friendly operations each day, incorporating a new sustainable goal down the line of eco-friendly practices.
Forbes confirms that “the data on sustainability practices and business performance matures, business leaders are having a harder time ignoring it. That’s because sustainable initiatives in the workplace are undeniably good for business.” Going green or becoming environmentally friendly is becoming a larger movement that many are recognizing will benefit businesses in the long run, especially compared to the outcomes of their current operational practices.
While there are different methods to approach and practice eco-friendly operations, Green Supply Chain Management (GSCM) is practical and accessible. According to Syed Abdul Rehman Khan’s “Introduction of Green Supply Chain Management”, GSCM “help organizations to improve their environmental performance such as reduction in carbon emissions, elimination of waste from end-to-end supply chain, effective and strong collaboration with suppliers would decrease their communication costs and easily promote reuse, recycling and remanufacturing.” Numerous benefits come from GSCM, and by taking on this kind of management, businesses are taking sustainable action in different areas that impact the environment.
Where to Start in Adopting GSCM Initiatives?
By practicing sustainable supply chain management, businesses can reduce the excessive waste they create from production, packaging, and overstock. They can begin with better warehouse management and demand planning, meaning the plans and demand forecasts need to be more accurate. The goal is to mitigate over-purchasing products, especially products with a short shelf life like products that contain raw materials or products that take up a lot of space in the warehouse, such as furniture. Overall, minimizing overstock regardless of the product is better to reduce investment losses and overstock, leading to waste.
Businesses can take action in better demand planning and warehouse management, beginning with purchase orders, calculating how much product is needed and when. Purchase orders (POs) are created based on a demand prediction. However, when the forecast is mismeasured, as a result of insufficient or outdated demand planning tools, businesses tend to over-purchase stock to avoid stockout. This can be problematic since this is where the excess inventory that was not purchased leads to waste. Companies need to develop better planning in order to generate a more accurate demand forecast to find out what products they need to order, how much the customers will actually buy, and when. With a more precise plan and forecast, preventing overstock and excess waste is possible.
What Changes to Expect from Sustainable Demand Planning
By using more effective demand planning, businesses can become more sustainable in their supply chain while also experiencing growth. There are multiple benefits all around when adopting such a plan. Some of the benefits include:
Reducing Gas Emissions: A substantial contributing factor to climate change is purchasing orders from overseas, which require ships to travel to and from the supplier. If every company changed their approach to purchasing orders, fewer ships and trips would be necessary, which would lead to fewer emissions. Container optimization effectively reduces over-purchasing and buying unnecessarily too often, not to mention that shipping delays are avoidable since demand planning software considers this as a major factor when processing data. Stockholm Environment Institute creports, “emissions from maritime shipping have been largely overlooked in discussions on climate mitigation.” The impact, while it is commonly overlooked, is massive and continues at an aggressive rate. “Maritime shipping generated an estimated 1 billion tons of greenhouse gases (CO2-equivalent) per year in 2007–2012,” and at this rate, “maritime shipping emissions are forecast to rise between 35% and 210% by 2050.” The impact from the current rate and future prediction could be irreversible, which is all the more reason gas emissions can no longer be a neglected matter.
Favorability & Customer Satisfaction: Moving to sustainable methods also means pleasing customers and gaining their favorability. Forbes reports a study performed on 1,000 people that revealed “87% would buy a product with a social and environmental benefit if given the opportunity,” additionally, they state, “Customers are becoming better informed and more aware of the environmental impact of consumer products. Thus, they are demanding that industry improves the environmental performance of its products.” The rate of sales and interest from customers will increase if companies make an effort for sustainable practices since they prefer and expect this from the companies they purchase.
Employee Motivation: A recent study conducted by researchers at UCLA found that “Employees in such green firms are more motivated, receive more training, and benefit from better interpersonal relationships. The employees at green companies are therefore more productive than employees in more conventional firms.” Employees will feel more compelled to stay on task and with initiative. This helps teams and departments work individually and together with more purpose and productivity, which can only benefit business performance and goals.
Increased ROI: A more accurate demand forecast permits businesses to purchase what customers will buy, so sales increase and reduce buying products that don’t sell quickly, which helps save on investments. Additionally, by purchasing the products that will sell, companies can avoid stockout so best sellers are always available, allowing for increased sales and margin. Investments that go towards purchasing will always be used appropriately and will prevent over-purchasing and overstock.
Time Saved: Using a demand planning cloud-based platform powered by AI technology provides insights to data instantly. The time it takes to perform tasks to generate a purchase order is reduced tremendously. Time is minimized because it’s possible to “manage your locations, assess your inventory needs, create your POs and send them to your suppliers with just a few clicks” when using a demand planning platform.
By simply preparing purchase orders in a more efficient and timely manner, businesses can easily reduce the number of shipments they receive, increase the return on investment, gain customer favorability, and keep employees motivated.
Do Businesses Have to Make Significant Changes to Their Demand Planning Process?
Transferring current data and history over to the software reduces time since information regarding demand planning will be easier to manage and the software works for you to produce valuable insights. It also keeps all demand plans and information highly visible and available at team members’ fingertips. The amount of time it takes to make the transition is minimal since demand planning experts input data and promptly develop a plan to move forward and keep their clients on track, improving demand planning along the way. Any recognizable changes would appear beneficial in the growth of the company and the outcomes listed above while operating more efficiently.
Using the right demand planning tools and partnering with experts will put a sustainable business plan in action and reduce the time it takes to complete the tasks for demand planning, forecasting, and generating purchase orders. The outcome of this transition doesn’t include any major changes in the planning process aside from minimizing the time it takes to complete these tasks and having all the information available on a single platform, which is always available for businesses.
Don’t Hope for a Greener Future, Start Working Towards One
Remaining optimistic in these changes is critical, as following a few changes to alter methods and practices makes a huge difference. While many efforts can be made to help the current state of the environment, starting with some essentials, such as reducing waste will make a major difference, positively influencing the environment and benefiting businesses in their growth. By setting goals, companies can achieve their sustainable plans and greener operations step by step, all of which will contribute to a healthier planet. Every day, companies worldwide are making an effort to practice sustainable methods in the different areas and departments for which they are responsible. Companies that want to join the movement can do so by starting with waste reduction, using a plan that will benefit them and the environment.