Could Renewable Energy Fix Supply Chain Issues?
Supply chains are working on their image, muddled by COVID-19, international distress and material inaccessibility, among other adverse factors. Counterfeit materials, lack of supplier diversity and reliance on fossil fuels damage resilience. Demand will continue to increase, so supply chains need a swift and straightforward answer — could it lie within renewable energy?
How Do Fossil Fuels Damage Supply Chains?
There is a sociocultural assumption for supply chains to rely on fossil fuels. It is embedded into operational expectations, budgets and job descriptions. However, scarcity and a push for renewable energy are causing fossil fuel prices to fluctuate, surprising supply chains as they attempt to compensate. Renewable energy generation could alleviate this stressor while potentially earning supply chains additional revenue from power distribution.
Supply chain reputations are also at stake, as companies jeopardise B2B and B2C relationships by wanting to collaborate exclusively with eco-conscious, ethical organisations. With inconsistent profit margins, supply chains cannot afford to lose more business because of bad press. These dynamics are illuminating because they show how renewable energy gives suppliers a competitive advantage, increasing stability.
Using fossil fuels also reinforces a toxic mindset among supply chains to have cradle-to-grave structures. Once they make the products, customers buy them and the items go to the landfill when they start to wear down. Fossil fuels instil this belief when organisations could focus on developing more circular practises to make them more prepared against disruptions and delays.
What Problems Do Renewables Fix?
Many industries — including supply chains — change based on circumstances outside their control. Wars, natural disasters, delays and bottlenecks from third parties are external influences, but renewables decrease the severity of these disruptions, also known as supply chain risk management.
One of the ways it helps is by eliminating scarcity. Preparing for disasters usually involves bolstering emergency stocks. Supply chains could store countless pieces of technology like transformers or fuel stores for impending disruptions. However, these mentalities put pressure on an already stressed supply chain, leaving resources and labour harder to come by when emergencies have not even struck.
Renewables prevent this fear-based purchasing from bottlenecking trade lines and transportation routes. Companies can generate more renewable energy and store them in batteries that connect to the grid. It makes the community more resilient while acting as insurance for their operations.
Another positive byproduct is international inspiration. The United States only has 7% of energy generation from hydropower, a reliable renewable energy European and coastal nations could leverage. Global supply chains providing healthy competition by incorporating higher percentages of renewable energies will invigorate international business connections to look to trend-setting suppliers as role models.
How Can Companies Make the Transition?
Research and development will be the supply chains’ most essential asset when moving to renewable energy. The degree of misinformation surrounding green power is almost as toxic as the pollutants and landfills themselves. Companies can unravel the potential setbacks and account for what they can prepare for so they are not resorting to excuses to delay. Renewable energy is becoming more affordable and technology is not as expensive to invest in. Plus, the kickback from brand loyalty and internal and external buy-in will pay for itself.
One of the reasons companies are not making the switch is there is a misunderstanding about what is effective and how to avoid greenwashing. They may also perceive renewable energy suppliers as hard to come by. In reality, local and national providers in all renewables are gaining traction with the most ferocity in history, from geothermal power plants to wind turbine suppliers. Supply chains that try to be a forerunner in the sustainability movement will stand tall against other businesses.
If they want to expand outside commercial renewable energy for supply chains, they could begin developing the field, like the Spanish-German company that engineered recyclable wind turbines. Reimagining power for the future levels up organisations against supply chain issues because their unique technologies no longer rely on numerous third parties that others rely on too — they can become more independent.
Leveraging Renewables to Save Supply Chains
Renewable energy is not a panacea for supply chain issues, but it could incite a strong start into a more productive, eco-friendly future. Renewables have the most comprehensive impact across supply chains, from workforce development, energy consumption, financial savings and environmental impact. Plus, it begins a mental revolution that makes energy transitions less intimidating and more widely accepted and encouraged. Supply chains implementing them sooner will immediately see benefits, catapulting them ahead of the competition.
Article by Jane Marsh: Jane works as the Editor-in-Chief of Environment.co where she covers topics related to climate policy, renewable energy, the food industry, and more.
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