Business leaders face mounting pressure from consumers, investors and regulators to commit to and achieve Environmental, Social and Governance (ESG) goals. While supply chains represent a massive opportunity to make real progress, many executives struggle to effectively implement sustainable practices.
According to a survey conducted by the Harris Poll, nearly three-quarters of executives want to advance sustainability efforts but don’t know how to do so. Additionally, concerns about the accuracy and completeness of sustainability data persist, with executives citing quality (35%) and access to data (25%) as the top challenges (Deloitte 2022 Sustainability Action Report).
Setting and reaching sustainability goals can be daunting, but some companies are seeing measurable results. In this four-part series, we’ll share their lessons and why digitization, benchmarking, optimization and collaboration were key to their success.
I’d argue that executives who don’t know how to advance sustainability efforts lack the supply chain visibility they need – MIT research shows that only 38% of companies have mapped their supply chains, and less than half (46%) have audited their suppliers.
When you digitize your supply chain, it becomes easier to reimagine them to be more efficient and connected within an ecosystem, reducing the environmental and societal impact of how they source, produce, store and deliver their goods along every stage of their life cycle. That’s because digitization gives your organization a baseline to set goals, measure improvement and identify gaps along its way to zero emissions.
A successful ESG assessment can help an organization “go on that transformation journey and figure out what you need to do to change,” said Donal Daly, executive chairman of Future Planet, an Ireland-based company that helps organizations operationalize sustainable supply chains.
By working from one source of truth, as opposed to disparate sources, organizations can ultimately move the needle further, thanks to an increased focus on goals and concrete measurements for progress made.
Giving all external partners visibility into accurate, real-time tracking data that is comprehensive and without gaps helps reduce risk and potential bottlenecks. By automating communication and performance, all parties have full visibility and control into a process that, if performed manually, creates a high level of risk for your organization.
Digitization strengthens interoperability, which “is essential for circularity” in the supply chain network, said Francesca Poggiali, chief public policy officer of GS1.
“You cannot really trace your product if you cannot identify it the way it is found everywhere in the world. We’re talking data that comes from all the different partners in the global supply chain,” she added. “So we really need interoperability – it is a must. It’s not a nice-to-have anymore. We can only do this all together; it is the only way we can speed up the process for everyone.”
Finally, regardless of an organization’s specific sustainability challenges, digitization in the supply chain naturally leads to improvements in efficiency – the result: Less waste.
Reducing waste, from labor costs to carbon emissions, is only possible if the data is available in real time among all partners within a supply chain network, said Nick Vyas, founding executive director of the Randall R. Kendrick Global Supply Chain Institute at University of Southern California (USC).
“Not only do we need a new sustainability model, but we also need our data to be in real time so that the information is relevant – not yesterday but today and then for tomorrow,” he added. For example, visibility can help prevent late loads causing delays at docks. In doing so, waste emanating from idling trucks is eliminated, and by powering supply chains with real-time data, the bottom line can be reduced, one smart decision at a time.
Achieving meaningful change in any domain, including supply chain sustainability, fundamentally depends on the ability to measure progress. Effective measurement allows organizations to set goals, track performance and identify areas for improvement. However, this measurement process relies on accurate and timely data, which often necessitates some degree of digitization.
In the next installment of our series, we’ll delve into the significance of benchmarking and discuss strategies for setting realistic goals to maintain momentum on the path to sustainability.