Guide to end-to-end supply chain sustainability
For many years, even the best end-to-end supply chain managers believed that you could either have it quickly and profitably, or sustainably – but you couldn’t have both. Today, the Amazon Effect means that consumers expect ever-faster delivery speeds, and are far more likely to choose an item that can arrive on their doorstep within 2 days. And at the same time, there has also been a steady rise in demand for greener products, with a movement towards conscientious consumption – particularly among Gen X consumers.
For businesses to thrive and grow in the current market, they must find new and innovative ways to meet (and exceed) the growing expectations for both speed and sustainability. This means that companies are now looking more closely at either “end” of the supply chain – from assessing labour and sustainability practices to iterating based on customer feedback, and everything in between.
What are some sustainable end-to-end supply chain processes
Today, businesses face more rigorous competition and greater pressures — from industry and regulatory bodies, customers, and employees — to meet and exceed their sustainability expectations. And it is to their supply chains that businesses look to help them achieve their most ambitious and meaningful sustainability goals. Below are some of the innovative practices and smart solutions that businesses are using to optimise and modernize their global supply chains – from one end to the other.
Sustainable product design for a circular economy
- Products with components that are more easily disassembled and recycled
- Items that are stored, shipped, and displayed with less packaging
- Products that can more easily be repurposed (either wholly or by their constituent parts)
- Products that are specifically designed to require less resource-heavy manufacturing
- Raw materials and components that minimise carbon usage and distance to factory
End-to-end supply chain planning
The ability to forecast and predict is at the heart of supply chain planning. The best planning outcomes help lead to greater efficiency, less waste, and smoother operations overall. These benefits can be best achieved by gathering and analysing data, developing simulations and scenarios, and by looking across the entire business to compare and contrast disparate data sets and trends – in real time. Analytics and predictive capabilities are made feasible through the use of smart business and supply chain planning tools such as integrated business planning, materials requirement planning (MRP) systems, supply chain control towers, inventory optimisation, and other business planning solutions that deliver extensive visibility and insight across the global supply chain, from end to end.
In addition to ensuring their own compliance with environmental, social, and governance (ESG) standards, companies need to be confident that their suppliers and partners are also able to understand and adhere to those same stringent values and guidelines. Tools like sensors and blockchain can help to generate a map of provenance and handling that even includes suppliers’ suppliers. This allows companies to gain greater visibility into raw materials sourcing and processing, and ensure that ethical labour and trade practices are in place. Sustainable sourcing means that businesses can bring on new suppliers quickly and with greater confidence.
Sustainable manufacturing and green factories
Green factories are those that streamline their processes to minimise both waste and energy usage. One of the keys to a successful green factory initiative, is the ability for manufacturers to connect their assets, their suppliers, and their resource planning tools – on a single, cloud-based platform. This greater visibility helps to reduce surplus, support on-demand virtual inventories, and use data and performance analytics to help develop more ergonomic and efficient manufacturing processes.
The most obvious step toward greener logistics is the effort to reduce carbon-based fuel usage – from the cargo freighter to the final drop-off at the customer’s door. But e-vehicles and alternative fuels are only part of the green logistics picture. When giant ocean-going cargo shipments get atomized into millions of individual orders, each one of those items has a unique destination and delivery deadline. For today’s supply chain and logistics managers, smart technologies hold the key to managing those millions of orders in real time, and with maximum efficiency. Some core challenges for green logistics include:
- Connecting the last-mile delivery network to a centralised system to help amalgamate loads and optimise routes
- Finding ways to better coordinate and streamline shipping and transport, all the way back to the raw materials suppliers and original manufacturers
- Managing growing volumes of returns and reverse logistics to not only use less fuel, but also use less packaging, and lead to less wastage
Sustainable EAM (enterprise asset management)
Enterprise asset management hinges on connectivity, a fundamental component of Industry 4.0 technologies. When an industrial internet of things (IIoT) network connects all your company’s assets in the cloud, supply chain managers can plan and measure all their operational activities on a unified system. Sensors help to support predictive maintenance and maintain energy efficient operations. AI-powered data analytics can assess the efficiency of automated processes and recommend improvements. And the use of digital twins and supply chain simulations helps businesses put virtual systems and assets through rigorous testing scenarios without risk or use of energy in the real world.
End-to-end supply chain sustainability steps and tips
The best companies are earnest in their aims to be good citizens and good custodians of our planet’s resources and energies. But for their shareholders, their employees, and their customers, it’s essential that they also remain profitable and able to continue to innovate in their respective fields. Below are some supply chain planning tips to help optimise your operations across the supply chain journey.
- Leverage your data at every step from end to end. When digitally connected supply chains are powered by AI and machine learning from design to operate, they’re able to combine, process, and understand disparate and unstructured data sets from a variety of sources within the business. From IIoT asset performance to customer service and feedback, every operational area can contribute data insights that help to inform supply and demand, streamline processes, and, make supply chain activities greener and more efficient.
- Integrate your ERP. ERP systems were once primarily used for dealing with finance and day-to-day operations. But today’s smart ERPs can be integrated with your supply chain and manufacturing tools to create a single source of truth across your business. This allows you synchronise your supply chain and manufacturing information with Finance, HR, Sales, and any other department that has interdependencies with supply chain operations.
- Develop a transformation road map. Change management and good communication strategies are part of any digital transformation – as are project plans, task prioritization, and auditing of existing internal processes. By establishing and sharing a clear project road map, your team leaders can build workflows around a common goal and establish how to best leverage and combine the unique skills and strengths of each team and operational area.
- Implement E2E KPIs (and measure them). As part of your road map, it is helpful to have – in addition to bigger goals – a set of achievable and measurable KPIs along the way. This can include onboarding specific new assets into the IIoT network, establishing and disseminating ESG guidelines for vendors and suppliers, and basically, anything that can be assigned, completed, and measured – and that gets you closer to your bigger sustainability goals and targets.
- Engage your teams and celebrate successes. The story goes that JFK was once visiting NASA’s Mission Control in the late 1960s. He passed a janitor who was working, sweeping the floor. Kennedy asked him what his job was and he said “I’m putting a man on the moon”. The point is that to be successful, every business transformation must have top-down buy-in and must encourage team leadership that makes each employee feel relevant to the process and invested in their own personal role in achieving end-to-end sustainability.
End-to-end supply chain visibility: The more you know, the more you grow
We’ve all heard the saying “if you can’t measure it, you can’t manage it”. In a world where we produce hundreds of millions of terabytes of data every day, a surprising amount of that data relates to supply chains. The activities associated with online shopping, global logistics, supply and demand planning, and manufacturing processes – all create unique and complex sets of data. The best end-to-end supply chain management not only seeks to collect and manage all that data and intel, but to use it, to understand it…to leverage it. And the good news is that as consumer demands and business challenges have grown, so have supply chain technologies. Smart technologies like AI, cloud connectivity, and Big Data management, all contribute to an end-to-end supply chain that is faster, more visible, more economical – and more sustainable than ever before.
SAP Insights Newsletter
Gain key insights by subscribing to our newsletter.