Drive sustainabilitywithin your supply chain

Drive sustainabilitywithin your supply chain

Drive sustainability within your supply chain

Track your supply chain’s carbon emissions in real-time and ensure sustainability while sourcing

Problem Overview

Companies are now realizing that they must take responsibility for their indirect impact on climate change. With increasing regulation and stakeholder demand, the business risks of carbon-intensive supply chains are dramatically rising.
Supply chain inefficiency affects more than just emissions, environmental impacts and the planet. Companies are starting to see the negative effects of climate change on their bottom lines and revenues.

It has become imperative for companies to examine each stage of their supply chain and consider efficiencies that could be implemented. A study demonstrates that 80-90% of the world’s goods are transported by sea. Each year, container ships spew about 1 billion metric tons of carbon dioxide into the air — about 3% of all greenhouse gas emissions.

“According to McKinsey, the typical consumer company’s supply chain accounts for more than 80% of greenhouse gas emissions and more than 90% of the impact on air, land, water, biodiversity and geological resources.”

End-to-end supply chain transparency has now become critical. Sustainability initiatives of corporations need to extend from their raw materials sourcing, to last-mile logistics, and even to product returns and recycling processes.

The Challenge

To identify highest sources of carbon emissions and monitor sustainability in the entire supply chain

Recent events about the problem

In recent years, customers, employees, investors and governments have put increasing pressure on corporations to demonstrate greater environmental stewardship and social responsibility. For many businesses, it took the arrival of COVID-19 to deliver the sharp jolt of realization as to just how outdated and vulnerable their supply chain operations were.

Including the huge loads of greenhouse gasses and carbon emissions that are released by supply chains, consumers are also getting aware of the unethical practices that exist in many supply chains – like child labour, forced labour, and gender discrimination. A Deloitte research revealed that 65% of respondents expect CEOs to do more to make progress on societal issues, including reducing carbon emissions, tackling air pollution, and making business supply chains more sustainable.

The importance of sustainability in a supply chain now extends beyond going green. Because of environmental responsibility being a crucial focal point in today’s industry, a supply chain built on a sustainable platform creates more partnership opportunities. Not only is tracking and managing supply chain emissions beneficial to the environment, but also positively impacts a corporation’s brand.
Corporations need to practice eco-awareness in every aspect of their business to improve their reputation as well as further legitimize their organization.

Why is this a serious problem

Consumers advocate sustainability

  • According to the Carbon Trust, 45% of shoppers would be prepared to stop buying their favorite brands if
    they refused to commit to measuring their product carbon footprint.
  • As per an Oliver Wyman survey, more than 7 out of 10 respondents of younger generations were more likely to say that a company’s emissions commitments would influence their willingness to buy goods from them.
  • Deloitte’s research shows that 23% of consumers say they will switch to buying products from an organization that shares their values on environmental issues and 42% have already changed their consumption habits because of their stance on the environment.

Corporate bottom lines are taking a hit

  • McKinsey found that upward of 70% of consumers would pay an additional 5% for a green product than for a comparable non-green alternative.
  • According to McKinsey, those products that were marketed as sustainable have been growing 5 to 6 times faster than the average market.
  • The World Economic Forum shows that sustainable sourcing practices in supply chains can reduce costs by up to 16%.

Serious lack in supply chain visibility

  • In a recent survey by The Sustainability Consortium (TSC), more than 50% of the 1,700 respondents reported being unable to determine sustainability issues in their supply chains.
  • A report from the Economist Intelligence Unit (EIU) commissioned by The Association for Supply Chain Management (ASCM) claims that more than half of companies lack end-to-end visibility in their supply chains. Consumers advocate sustainability Corporate bottom lines are taking a hit Serious lack in supply chain visibility.

The Cost of inaction

Loss of customers

Most of the consumers that participated in the Oliver Wyman Forum believe that corporations should make commitments to reduce their carbon footprints and become net-zero emitters, and many of them claim that those commitments will influence where they buy goods and services. Another Deloitte research of 2022 indicated that 40% of consumers shifted to brands that had environmentally sustainable practices/ values, a 6% rise compared to the previous year.

As customers (both businesses and consumers) are seeing the real-world results of climate change on newsfeeds and streaming channels daily, they are quickly shifting loyalties to companies that demonstrate significant, permanent steps toward a sustainable future customers.

Higher Cost

“Greening” your business might take an initial investment, but, over time, corporations have drastically reduced their costs by prioritizing sustainability. A McKinsey survey on the of sustainability revealed that 33% of businesses were integrating sustainable practices specifically to improve operational efficiency and cut costs — resulting in a 19% increase from the previous year.

By reducing waste and increasing energy efficiency along the entire supply chain, corporations have seen a substantial return on their investment – while at the same time an improvement to the quality of their product.

Bad Reputation

Having a climate friendly and sustainability in the supply chain not only enhances a corporation’s brand but also protects it from garnering a bad reputation.

In today’s digital era and age of easy access to information and even easier dissemination of said information, one claim of non-compliant practice in any part of a corporation’s supply chain could mean the death sentence for their company, or if not that, a massive hit to their bottom lines and revenues. A new international study by Unilever reveals that a third of consumers (33%) are now choosing to buy from brands they believe are doing social or environmental good.

Consumer’s view sustainability as a plus, and corporations with green values are seen to be superior to the ones that don’t advocate a climate friendly mode of operation. Going green depicts an organization’s priority to something of more emphasis than money.

Products marketed as “sustainable” grew 5-6X faster than regular products.

In the US 75% of 18-34 year old employees expect their employers to take a stand on climate change

Solution

Corporations can adopt an IoT and digital twin solution combined with supply chain data management tools, to enable supply chains to be virtually modeled in real time. By assigning each product its own ‘digital twin’, corporations can unlock sophisticated real-time monitoring of their supply chains. This helps them to make supply chain decisions that can reduce waste, increase efficiencies and create circular processes. Digital twins can also enable corporations to test scenarios for mproving resilience and identify areas where key gains can be made in their journey to net-zero. As the digital twin technology scales, the overall carbon footprint can be accurately measured and decreased.

IoT monitoring devices riding along with the cargo can also help in gathering huge volumes of real-time data and analyzing emissions on a shipment level. Corporations can use the collected data to make key business decisions, reduce energy use and lower the carbon footprint of their supply chain.

Visibility at every supply stage

  • Achieve visibility at every stage of the supply chain, from raw material till the finished product

Justify sustainability claims

  • With tracing and end-to-end collaboration, product sustainability claims can be backed

Track carbon footprint

  • IoT sensors track and analyze emissions at every stage

Case Study

Before: The challenge

A French sporting goods retailer had thousands of suppliers across different business units handling more than 100K unique materials across different tiers. They were looking to achieve greater control over their sustainability chains in order to ensure 100% confidence in their product sustainability claims. To achieve this, the retailer had to somehow track millions of transactions (material movement, shipments, production processes) from farm level – and link it all the way to finished garments. Successfully managing this amount of data across their large organization was a complex task.

Solution

By achieving lot level traceability of every material – across tiers and business units, the following was achieved

  • Full visibility of material movements across the supply chain, enabling suppliers across three different continents to mimic the physical flow of materials as digital transactions on the platform.
  • Successfully gained greater control of the movement of materials from one supplier to another, within the supplier facilities, as well as the records of the transformation of raw materials to final products – everything at a lot level.
  • Successfully collected quality reports and transaction certificates for every lot – thus enabling higher confidence on the retailer’s sustainability claims.

After : The result

  • Onboarded every supplier across 3 continents within the first 3 months.
  • Was able to trace 30% of their units within the first 12 months of implementation.
Neel Vithlani
thexfuture.com/

Neel is a creative who's always ready to lay his hands on anything that is innovative and captures masses. He is currently working with The X Future. Apart from technology and business practices, he drools over psychology, history, and cinematography. You can find him on hiking trips, talking over anything from alien belief systems to 90's cartoon shows.