How Supply Chain Management Can Improve North Carolina’s Environmental Footprint

by Rejaul Hasan, Ph.D. Candidate, College of Textiles, NC State University

For many firms, supply chain management is an important lever for a business to create a positive impact in the marketplace, and by extension the world. By working together, buyers and suppliers in a global supply chain and a network can impact human rights including labor rights, climate resilience, environmental protection, inclusive economic growth and ethical business practices, all linked with the overall business sustainability. According to United Nations Global Compact, a company’s supply chain management practices can make a significant impact on anti-corruption activities, as well. Although the phrase “sustainable supply chain” has all but developed into jargon, a holistic supply chain approach based on the philosophy that socially and environmentally responsible products and practices are not only good for the society but are vital for long-term business profitability.

Additionally, an increasing number of companies have realized the crucial importance of incorporating sustainability requirements into their supply chain management activities in order to secure their own brand value, manage legal, regulatory and reputational risks, as well as foster product innovation and explore new markets. The industries of the supply chain in North Carolina are no exception and reflect these trends.

According to a report published by the Supply Chain Resource Cooperative (SCRC)  at the Poole College of Management at NC State University, North Carolina’s Supply Chain: Conduit for Commerce and Economic Development, the Old North State has traditionally had strong supply chain industries and plays a vital role in statewide economic health. The report indicates that across the state, supply chain industries employ nearly 12% of the state’s workforce, or more than 479,800 employees with average labor income of more than $67,700, 56% higher than the state’s average non-farm wage. The indirect and induced economic impact on North Carolina’s economy accounts for an additional 770,000 jobs across all industries, representing more than 31% of North Carolina’s entire labor force, and provides a total GDP contribution of more than $150B, or 32% of state GDP for 2013. Through the creation of this large number of skilled labor job and significant contribution in GDP, North Carolina’s supply chain is making an important impact in the social & economic life of the state.

Every sector of North Carolina’s supply chain demonstrates adaptation and strengthening their environmental stewardship and sustainability considerations. The investment of $6.3 Billion in clean & sustainable energy in North Carolina between 2007 and 2015 is just one example. Recent data from NC Sustainable Energy Association (NCSEA) shows this investment is spurring local economic growth throughout North Carolina and generates $12 billion total economic impacts. The proliferation of green, sustainable forestry practices is an example of the supply chain’s focus on sustainability in the Paper Products and the Wood Products sectors. These complement efforts to increase fleet fuel efficiency across air, ground, rail, and ocean transport industries. There is evidence, too, that this trend represents a growth opportunity for many other supply chain sectors across North Carolina.

Offshoring production of primary and intermediary goods has impacted manufacturing industries in North Carolina with Textiles & Apparel Manufacturing as the most impacted industry. Favorable government incentives and local consumption are aimed at supporting these and other sectors that maintain production in North Carolina. Additionally, through highly skilled labor and research and development infrastructure, North Carolina is promoting the development of sustainable supply chains for those sectors where research and development are vital to maintaining global competitiveness. That is why some highly technological, research-intense and innovative industries as Pharmaceutical, Medical Products, or nonwoven textile manufacturing are at home in North Carolina.

It is clear that supply chain management strategies are capable of improving North Carolina’s sustainability footprint statewide; however, the commitment of businesses to engage in and expand sustainable practices can wane. A group of researchers from Duke University surveyed 100 companies across North Carolina and found suppliers generally comply with or exceed environmental sustainability requirements. The study also found evidence that supply chain pressure can be sometimes counterproductive and suppliers might abandon practices that exceeded customer requirements and were not recognized, incentivized, or rewarded. It is important, therefore, that supply chain management strategies must be designed and developed carefully to support a proactive focus on sustainability throughout supply chains in North Carolina.