Each year, the 22nd of April brings everyone together to commemorate Earth Day, the world’s largest environmental movement designed to drive positive action for our planet.
Supply chains are a critical area where businesses can make a significant impact, as they are responsible for a considerable portion of greenhouse gas emissions. In fact, according to the World Economic Forum, 80% of global carbon emissions derive from supply chains. With the world needing transformational change, Earth Day serves as an important reminder of the urgency to introduce and accelerate sustainability efforts across industries and supply chain processes; to reflect on the impact that we have on our planet and to take the necessary steps to minimize it.
As a global issue, sustainability is reshaping organizations’ priorities across every sector. Environmental, Social, and Governance (ESG) approaches have evolved significantly over the past few years, as companies across the world try to respond to the pressure from regulators, investors, consumers, and more stakeholders. Research from PwC shows that 91% of business leaders believe their company has a responsibility to act on ESG issues, driving the need towards supply chain sustainability.
Making our supply chains more sustainable is not only good for the environment, but it is also good for business. More and more companies are recognizing the benefits of sustainability strategies that drive value for the organization, reducing costs and driving productivity. Research from Gartner indicates that 86% of business leaders see sustainability as an investment that protects their organization from disruption.
As organizations strive to level up their corporate sustainability initiatives, the convergence of digital and sustainable supply chain transformation is on the rise. IDC predicts that by 2026, 70% of organizations with integrated planning and execution will achieve improved operational efficiencies leading to distinctive business benefit of improved ESG and financial performance.
But progress in changing practices to operate more sustainable supply chains is slow – and 30% of supply chain leaders say they have no or low-maturity supply chain sustainability goals. There are numerous challenges, including limited resources, conflicting priorities, lack of knowledge or understanding of sustainability concepts, and the lack of solutions available at scale that are sustainable.
The focus is on increasing commitments to sustainable development, measuring the impact on climate change, contributing to strategies to reduce carbon emissions to net zero, and looking at sustainability as a competitive differentiator that can increase operational and financial performance.
A green supply chain requires a holistic approach to environmental, socioeconomic, and legal concerns. Incorporating sustainability into a company's supply chain is complex, but there are several initial steps to consider. One of them is leveraging the technological advances in supply chain planning.
How to use Supply Chain Planning Technology to Improve Sustainability
Supply chain planning technology equips companies with tools and insights to optimize their supply chains and make operations more sustainable, reduce environmental impact, lessen costs, and improve brand reputation.
These are some of the areas where supply chain planning technology helps make a difference to improve sustainability:
Increase Supply Chain Visibility
Advanced supply chain planning technology solutions provide real-time visibility into supply chain operations, enabling businesses to identify inefficiencies and opportunities for improvement. With increased visibility across the network, companies can track the movement of goods, monitor supplier performance and production practices, and identify potential risks to the supply chain.
By providing real-time data and insights, supply chain managers are able to make more data-driven decisions about their supply chain operations and identify areas for improvement, for example choosing to operate with more sustainable suppliers, or switching to more sustainably sourced materials. With this information, supply chain leaders can model how these decisions will impact the overall business.
Optimize Inventory to Reduce Waste
With the right technology in place, companies can identify and eliminate waste in supply chains which can typically come in the form of excess inventory, damaged goods, and transportation emissions. From tactical target planning to MEIO (Multi-echelon Inventory Optimization), advanced solutions that drive strategies for better management of inventory help companies reduce the need for storage space and the associated energy consumption. This also translates to unlocking working capital and improving profitability.
Measure Environmental Impact
Technology also provides valuable insights and reporting tools for measuring the environmental impact of a supply chain, allowing companies to monitor metrics such as carbon emissions, water and energy usage, and waste generation. Businesses can use this data to make more sustainable decisions, identify areas where improvements can be made, set sustainability targets, and track progress.
Implement Efficient Transportation
Companies can reduce their environmental impact significantly by using more efficient transportation methods, for example by utilizing full containers and trailers and consolidating shipments. Technology solutions with predictive analytics allow planners to effectively forecast where and when products will arrive at a specific location, facilitating the consolidation of shipments for multiple locations and suppliers.
Advanced supply chain planning software solutions facilitate collaboration and alignment between different stakeholders across the supply chain network, including manufacturers, suppliers, logistics, and customers. This means companies can share information and resources effectively and identify opportunities for joint sustainability initiatives, such as reducing product or packaging waste, optimizing distribution and transportation, improving energy efficiency and so on.
Automate to Improve Demand Forecasting
Automation driven by analytics and machine learning is continually improving processes for companies throughout the supply chain. One of the key benefits is improving demand forecasting by using machine learning algorithms that analyze historical data, market trends, and other relevant factors to help companies avoid overproduction and minimize waste, leading to a more sustainable supply chain.
Make Supply Chain Sustainability a Reality
Supply chains are highly complex networks that span the globe, with a substantial impact on the environment, society, and the economy. All businesses ought to rise to the challenge and take the critical next steps to translate awareness into action and create more responsible supply chains. This not only benefits the planet and society but can also lead to increased profitability and long-term success.
Reducing the environmental impact of supply chains will continue to be a focus for companies. The right technology solutions combined with forward-thinking processes and talent will help organizations accelerate actions to achieve their sustainability goals and build more sustainable and ethical supply chains, while reducing costs and improving brand reputation.
Let us work together towards supply chain sustainability and create a more sustainable future for our planet.