Sustainability in the Supply Chain: Role of Suppliers to be Put Under Greater Scrutiny
7/24/2023 Industry Sustainability Article

Sustainability in the Supply Chain: Role of Suppliers to be Put Under Greater Scrutiny

CSRD reporting, approved by the European Parliament at the end of 2022, requires large companies to provide more detailed sustainability reports. This inevitably includes the environmental impact and carbon footprint of shipping and transport packaging of manufacturing suppliers.

Industrial warehouse with different types of packaging. The packaging of raw materials, consumables and tools depends heavily on the type of product and the manufacturer's requirements.

In November last year, the European Parliament adopted CSRD reporting (Corporate Sustainability Reporting Directive). This means that the EU is officially expanding sustainability reporting as part of the transition to a green and sustainable economy. Under the new rules, which large companies must follow, a greater number of companies will have to submit more detailed sustainability reports in the future. Many companies also want to make their entire corporate activity climate neutral. These efforts involve the entire supply chain and thus also the packaging of the products supplied. Suppliers to manufacturing companies are therefore under pressure to improve the sustainability and carbon footprint of their shipping packaging.

The manufacturing industry comprises sectors that are primarily characterised by machine production, division of labour and production of larger quantities. In Germany, road vehicle manufacturing is the largest sector within the manufacturing industry with 21.7 percent. It is followed at some distance by the chemical and pharmaceutical industry (11.1 percent), mechanical engineering (10.4 percent) and the electrical and digital industry (9.6 percent).

These companies rely on a variety of equipment suppliers and subcontractors to function effectively. This ranges from raw materials, parts and equipment to tools, cleaning agents and lubricants. The packaging of these raw materials, consumables and tools can vary greatly and is highly dependent on the nature of the product and the requirements of the manufacturer.


Use of Recycled Material Reduces the CO2 Footprint

As the largest industries in the manufacturing sector, automotive and mechanical engineering constantly require supplies. Many of these products, especially larger or heavier items, are delivered on pallets, often wrapped in shrink or stretch film to secure them during transport. While a sophisticated reusable system has long been in place for pallets, there is still considerable potential to improve the environmental performance of stretch film.

One of Europe's largest transport and logistics service providers DSV is therefore looking for a sustainable alternative to LDPE stretch film. In the meantime, the company has succeeded in reducing film consumption by using films with 11 µm instead of 17 µm. In addition, the packaging machines can be configured to use less film, resulting in material savings of up to 75 percent. When orders need to be divided into parts, the group also uses mesh boxes instead of film. Other companies also use biodegradable stretch films or films with a higher recycled content.

Many raw materials also reach companies in the manufacturing industry in big bags, FIBCs (Flexible Intermediate Bulk Containers) or drums and barrels. These containers are stable and therefore ideally suited for multiple use. Big Bags and FIBCs are flexible bags made of a strong plastic fabric. It is therefore worth taking a look at the material composition here too. Big bags and FIBC bulk bags, for example, are available with a recycled content of 30 percent – which significantly improves the CO2 balance.


Even Small Containers are Being Reviewed

The manufacturing industry also relies on consumable parts and especially tools that wear out and need to be replenished regularly. For CNC machines, these include milling cutters, drills and indexable inserts. These high-quality tools come from specialised tool manufacturers and in packaging that focuses more on the protective function and less on sustainability. The tool manufacturer Seco has therefore now switched to product packaging made of recycled material. The machining specialist has announced its intention to achieve a 90 percent recycling rate by 20230 and climate neutrality by 2050. The newly introduced boxes for indexable inserts are made of recycled plastic, most of which was disposed of as packaging plastic in private households. In 2024, the demand for virgin plastic is to be reduced by about 99 tonnes or 81 percent compared to 122 tonnes in 2021. As the company emphasises, the decarbonisation of supply chains plays a key role in this. Competitor Ceratizit is taking the same approach. In order to be able to offer plastic shipping packaging with a recycled content of 100 percent, the tool manufacturer is working together with Rose Plastic, a world market leader in the production of plastic packaging for tools.


The electrical industry is just as dependent on high-quality electronic parts as the automotive and mechanical engineering industries. To ensure that these arrive safely, they are sent on their way in cardboard boxes with additional protective and primary packaging, for example. Here it is worth looking for material alternatives and possibilities for reducing the packaging volume. Because by reducing the volume, the CO2 emissions generated for transport can be drastically reduced.


Reuse and Reduction Improve Sustainability

In addition to raw materials and tools, manufacturing companies need a wide variety of consumables and production materials. For example, nothing works in production without lubricants and cleaning agents. In metal processing, for example, the tools and machined parts must be constantly cooled. These special coolants and lubricants are usually delivered in drums. Reusing the containers is not quite as easy with these products as with other chemical products. The German supplier of lubricants, printing inks and industrial chemicals, Zeller+Gmelin, has therefore taken up the cause of reconditioning used drums and IBCs. In this process, the containers are cleaned and reconditioned for use. In this way, the lubricant experts saved 3,608,448 kilogrammes of CO2 in 2020 alone by using reconditioned packaging compared to virgin material. An advantage that also pays off in the customers' sustainability reports.


Suppliers and Customers Benefit

With the adoption of CSRD reporting by the European Parliament, sustainability reporting and greener supply chains are moving even more into the focus of manufacturing companies. In Germany, sectors such as vehicle manufacturing and mechanical engineering have begun to implement more environmentally conscious practices. By reducing the amount of packaging, using recycled material and reusing, outfitters and suppliers can improve their own carbon and sustainability footprint and support their customers on the path to carbon neutrality.