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Building Sustainable Supply Chains: From Design to Reuse
Sustainability is no longer just a nice-to-have; it’s a business must. Customers, regulators, and investors expect companies to take responsibility not only for their own operations but also for the environmental and social impact across their entire supply chain. That’s where the concept of double materiality comes in: it examines both how sustainability risks and opportunities affect a company's financial performance and how its activities impact society and the environment.
The challenge? Supply chains are sprawling, multi-tiered networks that cross industries, continents, and regulatory systems. But within this complexity lies opportunity. With the right strategy, processes, and technology, companies can build supply chains that are not only resilient and compliant but also drivers of long-term value.
In this blog, we’ll explore how organizations can move step by step—from design to reuse—towards building truly sustainable supply chains, and we’ll highlight some of the SAP solutions that make this transformation possible.
Why Sustainable Supply Chains Matter
Supply chains are at the heart of the sustainability challenge. In industries such as automotive, consumer goods, and manufacturing, they can account for the majority of a company’s carbon footprint. Scope 3 emissions, encompassing those from suppliers, logistics, and product use, can account for more than 70% of a company's total greenhouse gas (GHG) impact.
And carbon is just one piece of the puzzle. Companies must also navigate regulatory requirements, such as EUDR and CBAM, improve resource efficiency, reduce waste, and prepare for climate-related risks, including water shortages and flooding. It sounds daunting, but within this complexity lies a real opportunity.
Think of the supply chain as a circle rather than a straight line:
- Design sets the stage. Choices about materials, packaging, and product life cycles determine environmental impact long before anything is produced.
- Plan and Procure shape how responsibly resources are sourced and how suppliers are engaged in meeting sustainability goals.
- Manufacture is about efficiency and using less energy and water, generating less waste, and embedding circular practices into production.
- Delivery focuses on logistics: reducing emissions in transportation, optimizing routes, and rethinking packaging.
- The product usage shifts the spotlight to the customer, where durability, repairability, and energy efficiency influence both sustainability and satisfaction.
- Reuse closes the loop through recycling, remanufacturing, or creating entirely new business models around product-as-a-service.
This circular approach transforms sustainability from a compliance exercise into a growth engine. Companies that weave sustainability into every step of their supply chain can cut costs, win customer trust, unlock new markets, and build resilience against disruptions.
Smart Design, Lower Impact
Take the example of a car seat. Sustainability starts in the design phase: the choice of materials, say eco-friendly upholstery instead of leather, has an immediate impact on the product’s footprint. In fact, leather use can trigger regulatory requirements in certain markets, such as the EU Deforestation Regulation (EUDR) compliance in Europe. Beyond materials, the way the seat is designed also matters. A seat that’s easy to disassemble makes it simpler to recycle components or reuse some material later, extending its lifecycle.
This is where technology comes in. SAP Responsible Design and Production helps manufacturers anticipate future Extended Producer Responsibility (EPR) fees, giving them the insight to make smarter design and packaging decisions upfront. Meanwhile, SAP Green Token offers chain-of-custody transparency for certified sustainable and recycled materials, providing the credibility companies need to back sustainability claims, including compliance with regulations like EUDR.
In addition, with SAP Product and REACH Compliance, manufacturers can assess and document the environmental compatibility and regional marketability of their products.
From Cost to Carbon: Why Supply Chain Planning Needs a Sustainability Upgrade
Supply chain planning has traditionally focused on three things: cost, availability, and quality. But today, there’s a new non-negotiable: sustainability. Take the former example of a car seat: if the design calls for leather, then in Europe that leather must be EUDR-certified. Certifications like this shouldn’t be seen as an afterthought; they need to carry the same weight in planning as cost or quality.
And it goes beyond compliance. In the past, planners compared scenarios to find the best margins or service levels. Now, the question is just as much about impact: Which scenario delivers the lowest carbon footprint?
Smarter planning naturally leads to less waste. Optimizing inventory and capacity not only improves efficiency and saves money, but it also reduces emissions, creating better outcomes for both the business and the planet.
For global manufacturers, this matters even more. Europe requires EUDR-certified leather, while other markets may not. By weaving sustainability into planning, companies can stay compliant in every region without sacrificing efficiency.
This is where solutions like SAP Integrated Business Planning (IBP) make a difference. IBP allows companies to embed sustainability into every step in the process, treating certifications as sustainability attributes, simulating emissions across scenarios, and flagging ESG risks before they escalate.
The bottom line: Future-proof supply chains don’t just balance cost and service; they balance cost, service, compliance, and environmental impact.
Procurement as a Catalyst for Sustainability
Procurement isn’t just about negotiating the best price or ensuring materials arrive on time; it's also about managing risk and optimizing supply chain efficiency. Every buying decision has a ripple effect on a company’s sustainability footprint, making procurement one of the most powerful levers for driving meaningful change.
Suppliers are validated based on their overall risk profile. This does include their exposure to climate change-related risks, their mitigation strategies, certifications, and overall sustainability performance. In our example of EUDR-certified leather, it is about the validation that the leather has not been produced by farms with deforestation practices. In addition, suppliers are requested to share the carbon footprint of their products, the calculation method, and potentially assurance documents. The capability of exchanging sustainability data, such as scope 3 emission data, across the value chain becomes crucial for collaboration to hit greenhouse targets. Analyzing the carbon footprint of different material choices allows companies to make informed sourcing decisions and balance cost, quality, and sustainability.
SAP offers multiple solutions to help customers. Embedding sustainability attributes into the risk assessment using SAP Ariba Supplier Risk helps to manage climate-related risks. Using SAP Sustainability Data Exchange supports a standardized and certified way to exchange sustainability data, SAP Sustainability Footprint Management calculates and analyzes emissions tied to product purchases, transportation, and manufacturing, and finally, SAP Green Token helps companies to be compliant with EUDR regulations.
When procurement leaders embrace these tools and practices, they move from simply buying materials to actively driving decarbonization and ensuring compliance. Sustainable buying isn’t a “nice to have” anymore; it’s a game-changer for business and the planet.
Beyond Compliance: Embedding Sustainability Into Manufacturing Operations
Once raw materials arrive at the factory floor, the responsibility shifts from sourcing to production. At this stage, manufacturers face a critical challenge: how to minimize energy use, conserve water, cut waste, ensure worker safety, and stay compliant with evolving regulations.
Sustainable manufacturing isn’t just about checking boxes; it’s about embedding smarter processes that strengthen resilience and competitiveness. Here’s how leading companies are approaching it:
Energy and emissions tracking: By modeling energy flows across production lines, manufacturers can allocate emissions directly to activities and products, providing the transparency required to develop and track decarbonization strategies.
Waste reduction: Cradle-to-grave waste management and recycling programs help eliminate inefficiencies and reduce environmental impact.
Worker health and safety: Predictive tools highlight potential hazards, while real-time tracking improves visibility into incidents and ensures safer working conditions.
Take upholstery manufacturing as an example. By modeling the energy flow of a production line, businesses can calculate the carbon footprint of each unit produced. This not only enables accurate product-level sustainability reporting but also highlights where efficiency gains can be made.
To enable this shift, technology plays a vital role. SAP solutions help manufacturers close the loop:
#SAP Environment Management monitors emissions, waste, and compliance across operations
#SAP Workplace Safety strengthens incident visibility and fosters a culture of safety
SAP Sustainability Footprint Management calculates product footprints based on measured data for transparent reporting
When done right, sustainable manufacturing reduces risk, ensures compliance, and delivers products with smaller footprints, turning sustainability into a competitive advantage.
Sustainable Logistics: Reducing Emissions Beyond the Factory Gate
Once a product leaves the factory, its journey has only just begun. Trucks, ships, and planes carry it across regions and continents, but these movements come at a cost. The logistics and distribution phase is one of the biggest contributors to supply chain emissions. The good news? Smarter delivery models are proving that it’s possible to move goods efficiently while shrinking environmental impact.
It starts with transportation optimization. By consolidating shipments, reducing empty miles, and adopting low-carbon fuels, companies can cut unnecessary emissions while saving costs. Just as important is knowing how much carbon is being released. By tracking emissions from different types of transport and sharing that information with customers, companies can be more transparent, helping customers to make better, more eco-friendly decisions.
Collaboration plays a powerful role, too. By sharing carbon footprint data with customers and partners, manufacturers can build trust and enable joint action. For example, the automotive supplier calculates the full carbon footprint of the car seats from the material used, the inbound transport of those materials, through manufacturing energy use, to outbound delivery. The results are shared with OEM partners via Catena-X, creating a shared foundation for decarbonization across the value chain.
Technology is what makes these advances scalable:
SAP Transportation Management optimizes routing and freight networks, reducing both emissions and costs.
SAP Sustainability Footprint Management calculates carbon emissions, including scope 3.1 as well as logistics-based emissions such as scope 3.4 and 3.9 categories.
SAP Sustainability Data Exchange enables transparent and secure sharing of carbon data across networks
By embedding sustainability into logistics, companies can reduce costs, meet rising customer expectations, and support Scope 3 reporting, all while ensuring their products reach the right place at the right time with a lighter footprint.
Closing the Loop: How Circular Supply Chains Create New Value
The final stage of a product’s life cycle isn’t really the end; it’s the beginning of a new cycle. That’s the power of circular supply chains: they extend product life, recover valuable resources, and dramatically cut waste. It starts with managing and auditing waste streams responsibly, making sure even hazardous materials are handled the right way. From there, recycled inputs can be looped back into production, reducing the need for virgin resources and shrinking the footprint of every product made. Partnerships with recyclers and waste handlers play a big role too, creating steady, sustainable flows of materials that companies can depend on. But one of the most powerful strategies is remanufacturing and reuse. By reusing components and remanufacturing products closer to home, companies recover higher value while cutting both costs and emissions tied to sourcing and logistics. This approach strengthens ties with suppliers and gives both providers and customers a chance to reduce waste and build more sustainable products together. In our example, car seat fabrics might not just be made from recycled plastics supplied by disposal companies, but also combined with cork-based materials to meet demand, lowering reliance on new resources while delivering products that customers want. SAP helps bring these strategies to life. SAP Environment, Health, and Safety Management ensures compliance and auditing of waste streams, SAP Integrated Business Planning balances demand and supply for recycled inputs, and SAP Waste and Recycling makes it easier to collaborate with recyclers and waste handlers. The impact speaks for itself: car seat manufacturers, adopting circular supply chain practices, have cut carbon emissions by 52% through smarter routing and sustainable materials, reduced per-seat emissions by 34%, and made emissions reporting 75 times faster. Circular supply chains don’t just close the loop; they create new opportunities for efficiency, savings, and competitive advantage. The final stage is not the end but the beginning of a new cycle. Circular supply chains extend product life, recover resources, and reduce waste.
Conclusion: The Future of Supply Chains Is Sustainable, Digital, and Circular
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