In almost all industries, companies are confronted with the sustainability challenges induced by climate change, scarcity of natural resources, and ever-shifting customer demands.
In general, a sustainable supply chain is one that ensures to balance the economic, social, and environmental performances – such as better assurance of human rights, ethical work practices, carbon footprint reduction, waste management, and resource efficiency.
Supply Chains Cause 90 percent Of Companies’ Environmental Impacts
Starting at the source, as supply chains consume a large amount of resource and energy, they are currently leaving a disproportionately vast carbon footprint on our planet earth.
Meili Robots’ research found that roughly 33 billion tonnes of CO2 were emitted into the atmosphere by consumer packaged goods (CPG) companies alone in 2016. This equals 66 percent of the whole world’s emissions combined.
The earth’s warming over the next 10 years is bound to happen, and in order to avoid physical and economic hazards, all parties need to get involved in large scale decarbonisation.
According to the Paris Agreement, businesses across the supply chains need to cut their greenhouse gas emissions by more than 50 percent by 2030 and eliminate it completely by 2050.
Furthermore, statistics also show that sustainability can help companies enhance their reputation, giving them a competitive edge during this unprecedented time – 85 percent of consumers are more likely to buy from a company with a reputation for sustainability than from a neutral company if their prices were equal.
Companies that are actively integrating sustainability principles into their businesses, according to a recent CPD report, can also benefit from cost reduction as well as minimising risk and vulnerability – over €28 billion were saved in 2020.
They also discovered that more than €1 trillion of revenue will be at risk if businesses fail to mitigate and adapt to climate change by the year 2025.
Jim Fitterling, chairman and CEO, Dow, says: “Climate change and plastic waste are among the biggest issues the world is facing, even in the midst of Covid-19, and our products and the technologies we’ve developed are crucial to addressing both.”
7 Innovations Can Build Sustainable Supply Chains
Introducing more ethical and environmental-friendly supply chains is a good practice for any business.
By leveraging technology – such as automation and robotics, tracing and mapping technologies, and transportation innovations like electric vehicles – businesses can achieve transparency, energy efficiency, waste minimisation – just to name a few – across the entire supply chain operation.
Artificial Intelligence and Machine Learning
Artificial Intelligence (AI) and machine learning are growing faster than ever before, permeating the supply chain industry.
These technologies bring new automation power – such as facilitating planning activities, demand forecasting, predictive maintenance, synchromodality and collaborative shipping – using scenario analysis and numerical analytics.
As a result, AI capabilities can help reduce error rates significantly, decrease operational costs, and optimise supply chain flow.
According to PwC and Microsoft, AI can help reduce global greenhouse gas emissions by 4 percent in 2030 – equivalent to 2.4 billion tonnes of CO2 emissions.
Robotics and Automated Things
Since the start of the pandemic, online shopping has risen by over 150 percent and customer expectations for faster and cheaper delivery have increased, pushing the existing capacity of warehousing and last-mile logistics provision to its breaking point.
With the help of robotics and automation – such as drones, delivery robots, inventory management robots, and disinfection robots – businesses can increase productivity, efficiency, and product quality, as well as become more sustainable since they are extremely accurate and do not require as much energy to operate as humans do.
3D Printing or Additive manufacturing
This new technology allows companies to maintain virtual inventories and manufacture stock on demand. This means that businesses can eliminate a large amount of shipping and packaging costs, as well as energy.
Furthermore, there is potential for using recycled materials from within the supply chain as the base materials.
A study showed that 3D printing could reduce the CO2 emission intensities of industrial manufacturing by up to 5 percent by 2025.
Industrial Internet of Things (IIoT)
IIoT solutions empower real-time data collecting, sharing, and analysing, and ultimately optimise machine performance and automate maintenance to reduce energy usage and eliminate redundancies in workflows.
As disclosed in a 2018 survey, 70 percent of businesses operating with IIoT noticed improvements in their environmental performances.
Blockchain technology can make businesses more secure and transparent by providing a record of immutable truth across the supply chain – products and materials can be accurately traced back to their places of origin.
This will certainly provide a better line of sight into a product’s history while improving practices like eliminating redundancies and bottlenecks, and eventually, consuming fewer resources.
The use of smart sensors in the supply chain includes real-time behaviour status location, the temperature of vehicles, the pressure of vehicles, and more.
This will broaden management visibility, allowing repair cost and maintenance downtime reduction, real-time inventory tracking with improved demand planning, strengthening product life cycle management, and ultimately enhancing customer satisfaction.
Implementation of a state-of-the-art cloud-based ERP solution could improve efficiencies with the company while streamlining the supply chain.
With its ability to manage, analyse, and showcase big data through insight-driven dashboards, ERP systems allow businesses to make better decisions – such as what areas need adjustments, improvement, or removals.
A ‘Close to The Core’ Approach
The changes required are huge, transformative, and ultimately essential. Every industry, government, and even individual has a role to play. In the quest to recover from multiple disruptions, businesses must unlock supply chain visibility by investing in information technology to ensure economic efficiency and sustainability.
Emmanuel Faber, CEO, Danone, says: “For us, climate is not an externality. It’s part of the resilience of our business, so addressing it is not a question of philanthropy – it’s a question of smart business.”