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Supply-chain sustainability begins with a strong digital backbone

Jan. 3, 2023

By Sanjay Brahmawar, CEO, Software AG

The past few years haven’t been kind to supply-chain executives, as anyone who has paid attention to headlines can attest. From labor shortages and skyrocketing prices to the infamous obstruction in the Suez Canal, moving products from point A to point B has rarely been more complex or unpredictable.

As immediate supply-chain issues persist, it’s easy for supply-chain executives to lose sight of long-term goals. Among the most important and susceptible of getting pushed to the backburner: sustainability. However, with consumers and governmental bodies demanding greater improvements in the carbon-heavy supply-chain industry, that is about to change. And new research shows supply chains may not be ready.

A recent survey from EY found that roughly 80% of supply-chain executives are increasing efforts to make their supply-chain operations more sustainable—but “Few have the visibility, technology and comprehensive programs in place to measure their success.” Without these key reporting and tracking functions in place, it’s incredibly difficult to monitor environmental efficiency and therefore find opportunities for improvement across the supply chain.

There’s still time for supply-chain execs to get these programs in place—but the clock is ticking.

Sustainability starts with a strong digital backbone

To build value-added services and applications that deliver more services with less waste, businesses must start by strengthening their digital infrastructure. This underlying tech stack is the backbone that supports an organization’s ability to operate better, faster and thus more sustainably.

In many cases, this backbone is supported through processes like hybrid integration and API management, which enable users to connect applications and move data between different locations. Having this visibility across the organization is key—without it, there’s no way to get a holistic view of which processes can be improved.

Building up this digital backbone to better manage data from your applications, devices and processes is the crucial first step to making supply chain operations more sustainable.

Improving processes throughout the supply chain

Once a solid digital backbone is in place, your organization can begin monitoring its practices with a data-driven approach to identify areas for optimization. Technologies like process mining automatically identify hidden inefficiencies and bottlenecks that drive up costs and emissions.

Using a business’ unique data to create a “digital fingerprint” of its existing processes, process mining automatically analyzes existing procurement methods, from the flow structure to resulting KPIs. Intelligent algorithms can reveal the causes of delivery problems and process deficiencies at the source. This is invaluable data, as it enables your business to spot and resolve inefficient processes before losing valuable resources and time.  

Going a step further to connect IoT sensors and technology throughout the supply chain, you’ll gain full visibility of processes to resolve issues and monitor performance in real time. Without properly integrated devices, you’re left with incomplete and siloed data.

As an example, let’s look at the time-sensitive task of moving cold-storage goods across the supply chain, where a slowdown means more than wasted emissions but also wasted product. With sensors detecting and connecting everything from equipment on the factory floor to the trucks heading to stores, you’re able to receive alerts at the first sign of disruption. In the longer term, you can track and manage key indicators in a secure, traceable manner.

That’s all well and good, you may say, but how does this improve sustainability of supply chain operations? It’s all in the data.

Sustainability in action

Intelligent supply-chain logistics benefit more than consumers; they benefit our planet as well. Predictive analytics and machine learning, for instance, equip supply-chain pros with real-time data they can use to kickstart business initiatives while improving fuel efficiency and spend.

For a great example of this strategy in action, let’s look at the transportation sector. A few years back London set an ambitious goal to create the world’s first ultra low-emission zone in central London by 2020, along with a 50% reduction in soot particles and nitrogen-oxide emissions. To do so, German company Sensor-Technik Wiedemann (STW) kicked off a program that included cutting-edge particle filters and catalytic converters to dramatically reduce emissions.

Right away, it became clear that blind implementation wouldn’t be enough. Being able to monitor London’s fleet of more than 5,000 buses in real time was necessary to understand what each vehicle was doing at any moment. By leveraging a custom IoT platform that connected more than 150 buses and transmitted data to the cloud in intervals of only two minutes, STW was able to monitor and analyze bus operations in real time for a more holistic view of the individual module systems.

The result? The busses in question cut particulates by 99% with a 90% reduction in nitrogen-oxide emissions. Ultimately, strengthening the digital backbone to improve visibility and processes is a sustainability initiative. It’s all about implementing long-term strategic changes to improve your business’ sustainability and resiliency.

The world is watching closely as companies plot their paths to a sustainable future, and perhaps no industry is under more scrutiny than the emissions-heavy supply-chain sector. As with any industry, there’s no one-size-fits-all approach that will magically support emissions reduction. The key is to have the right technology in place that enables your business to monitor and optimize in real time—to ensure that hard work is working for a cleaner supply chain and a cleaner world.