Barcelona, October 5, 2023.- Climate change promotes our strategies to reduce the carbon footprint and have more sustainable transport and logistics companies. Below are recommendations for its implementation, according to analysis published by Supply Chain Brain magazine:
Supply chain executives face two main hurdles as they attempt to integrate sustainability into their supply chain planning. First, the volume of data and degree of information sharing among supply, channel logistics and other partners extends well beyond demands like on-time, in-full (OTIF) order fulfillment. Secondly, the upfront and ongoing investment in technology, skilled staff and training to collect, interpret and manage external carbon consumption and emissions data from supply, channel and logistics partners must pay for itself through return on investment (ROI) to retain C-suite buy-in and advocacy over time.
Consumers, investors and lenders are driving the push for sustainable supply chains, explains Graham Wallace, director of product marketing for Netherlands-based location data and mapping platform HERE Technologies. “It’s not just about PR,” he says. “It’s about retaining customer loyalty and making sure that the brands they’re creating live the values rather than just greenwashing.” Up to now, many companies have resisted, in the absence of clear regulation and reporting standards. Nor is there typically a strong senior management advocate in place to assert the need and the potential efficiency and ROI benefits — something Wallace says is vital.
Companies are proceeding slowly with sustainability, knowing that the data management complexity and eventual costs for serious emissions reduction will involve difficult tradeoffs. Wallace cautions against expectations that emissions assessment and monitoring can be outsourced to consultants or third-party logistics and data providers, or that companies can focus exclusively on internal assessment and improvements until forced to bring suppliers and vendors into the conversation by regulators.
“It’s not going to work in the long run,” he insists. “Ultimately people are going to have to do the carbon counting, they are going to have to be accountable for the entire supply chain and they’re going to have to disclose the complete carbon footprint that they’re generating from both in-house and external activities.”
The good news: Much of the foundational technology presently in place for order fulfillment — data structuring and standardization, partner onboarding, real-time shipment visibility — is now relatively affordable and accessible in the cloud. The less good news: The workflow and skill set required to manage risk, exception management and compliance around sustainability will be daunting.
Finding the Right Partners
“Retailers like Amazon are keenly aware of the cost impacts around fuel consumption and materials waste at scale and the importance of data in addressing those costs” says Dr. Manish Govil, supply chain global segment leader for AWS. “Better supply chain planning and execution for large retail operations can have tremendous impact in reducing the carbon footprint by optimizing the movement of materials, whether it’s in transportation, distribution, fulfillment, or inventory.”
Meanwhile, key innovations for transportation data-mapping and planning leaders like HERE Technologies lie in establishing a platform that maps and analyzes real-time operational and contextual data from a connected supply base of vehicles, original equipment manufacturers, satellite mapping and a worldwide fleet of mapping vehicles. In addition, business sites can also be mapped by route to measure fleet performance and reduce dwell time.
Govil explains that AWS and HERE Technologies’ collaboration on fleet management, route planning and last-mile delivery solutions logically leads to extending that collaboration to sustainability, leveraging vehicle data and fleet management optimization capabilities with data processing and analytics capability.
A key supply chain differentiator going forward, Wallace says, will be the capability for real-time, dynamic spatial mapping and visualization of the end-to-end supply chain in any given moment at any given point. That would effectively plug gaps in conventional electronic data interchange (EDI) shipment tracking based on the last order-to-pay transaction completed, to dynamically provide the precise real-time location and status of a shipment in transit or a SKU in inventory. It would enable shippers to continuously update ETAs and issue customer notifications, avoid stockouts, and offer customers delivery options.
Wallace applies a real-world Formula One racing analogy, tracking a car over repetitive circuits of a defined course. In each circuit the car’s weight, road conditions, and the positions of other cars all vary slightly. Eventually, however, a predictive “map” of the track emerges and reveals optimal places and times in a race to accelerate, brake, shift gears or refuel.
“What you’ve got is a lot of data for fine-tuning a business,’ he explains. “That same process can be applied to supply chain. Once you’ve got real-time visibility, you’re picking up the spatial data and can manipulate things very finely to improve overall performance. It’s an added dimension that then shows you the next set of things you can unlock.”
It can be too much information, he adds, without a deep understanding of the data, a precise calibration of exception management and tolerances for error. “It’s a real skill to be able to calibrate a supply chain, to understand how to get things to work, on-time, in-full, no errors, at the 98% level companies aspire to. You need to pick the right partners and develop the right ecosystem of specialists to achieve that.”
Sustainability optimization will not only require more granular end-to-end data but also a new set of key performance indicators (KPIs) and service-level commitments that supply chains previously haven’t dealt with. Partners will need to continuously share information and collaborate on carbon reduction solutions, for competitive reasons and for compliance. Carrier and supplier selection will become more fluid as business objectives evolve.
Cost and complexity of implementation make it imperative for companies to develop clear strategic roadmaps for a five- to seven-year timeframe. Toward that end, a playbook of best practices is emerging among leading companies that includes:
Materiality. “Sustainability” means different things to different people, with widely varying standards for assessment and measurement. Leading companies begin by identifying and focusing on core operational areas where sustainability programs can have the most impact, and where the business has particular risk exposure.
Carbon emissions reduction affects all companies; widely accepted measuring and reporting standards are mostly in place. Materials waste and circularity is similarly straightforward to measure area and will likely see increased regulatory scrutiny.
Phased progress. Many companies are opting to break sustainability strategy down into smaller projects by budget year, making sure that risk, resiliency and financial parameters are properly calibrated and then building on data generated at each stage to plan and secure organizational for next steps. Some are bypassing time-consuming evaluation and testing processes for projects viewed as inevitable, preferring to begin building the real-world data needed to prioritize and plan follow-up initiatives.
Greening the IT stack. Data centers are major consumers of electricity, especially those with operations routinely processing, storing and managing massive data volumes on behalf of clients. Power consumption, translated into potential emissions, will factor into required supply chain scoring in coming years; less efficient data centers also risk supply chain slowing or downtime depending on grid capacity, and can add costs.
Supply Chain Technological Trends 