We know that sustainability will continue to be a top priority for businesses in the years ahead – but there’s still a gap between the desire to do the right thing, and executing on it. In our recent SAP sustainability survey, we found that one third (31%) of UK businesses say a lack of environmental strategy is holding them back from meeting their ESG goals.
If you dig into the findings, it’s easy to see why there’s a gap between motivation and implementation. Many businesses don’t believe they have the right data to accurately measure their impact on the environment, and – notably – nearly half of companies rely on estimates to screen their supply chains.
If we are to make meaningful progress in the coming years and secure a better, greener, future for our planet, this data gap needs addressing. The answer here could lie in digital twin technology. Through this, organizations can map their ever-changing supply chain environment, making sure they have the insight necessary to stay on top of potentially environmentally ruinous changes and meet sustainability targets in real time.
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Balancing supply chain uncertainty with sustainability
Supply chains are cumbersome at the best of times, and due to current macroeconomic conditions, are increasingly fluid and changeable. From ongoing repercussions of the pandemic and Brexit to the current cost of living crisis creating additional uncertainty, businesses are constantly having to adapt and change tack with supply chains in a state of flux. When navigating these ongoing challenges, it can be easy to lose sight of sustainability aims and tracking environmental impact can be like trying to hit a moving target.
Supply chains require a considerable amount of financial and human resources to fund and manage. From the way raw materials are sourced to the production and transportation of goods, each stage has an environmental impact that needs assessing. To balance both challenges, while also making progress towards sustainability aims, businesses need to take innovative approaches to their business models that allow them to anticipate and eliminate environmental impacts, directing resources where needed. To make this possible, this requires the right solutions that enhance visibility into supply chains, making sure impact can be measured and addressed.
Steve Van Wyk is SVP & Head BTP for Customer Success at SAP EMEA North.
Enhancing insights and driving better business
Cloud-enabled solutions that leverage blockchain and machine learning technology to generate digital twins of supply chains are supporting businesses in meeting their ESG goals. By providing enhanced visibility across the value chain, businesses can not only track material flows from source to market, but can even simulate sustainability outcomes using parameterization, seeing what happens if we do this or that. This means that as materials move throughout the supply chain, businesses can assess waste, such as carbon emissions, in the process. This drives improved decision making as organizations leverage the tools to identify and address the points of greatest impact, while also being given the insight needed to determine areas where resources can be better managed and reused. Through this, sustainability can be embedded into the core of business operations.
Not only does this support businesses in reducing their environmental impact, but also allows them to stay competitive and reduce overheads in the long run. By having a holistic view of the entire supply chain, businesses can ensure they’re complying with regulatory standards, whether that’s related to plastic packaging or carbon emissions.
At the same time, consumers are becoming increasingly purpose-led, meaning they’re more likely to engage with businesses that make sustainability a priority. Therefore, taking the necessary measures and adopting technology that helps organizations put sustainability first is a strategic decision that permeates throughout the business.
Leading the way, digitally
There are already businesses leading in this space and using supply chain technology to make sustainability a driving force in everything they do. For example, pledging to achieve net zero emissions and halve their virgin plastic use in packaging by 2039, Unilever is using digital twin technology to make this possible. By tagging each part of the supply chain through blockchain, the solution creates a trail of digital signposts that in real-time capture information on the materials origin and journey across the supply chain, giving them the ability to take a targeted approach and intervene on areas where there is higher environmental impact.
In other instances, we’re seeing businesses track their supply chains to optimise product quality and reduce plastic packaging. Leading plant-based consumer packaged goods company, Upfield, is using digital twin technology to ensure 100% natural formulation of materials used in its products and track carbon footprint. Through this, it is able to assess the suppliers it works with and ensure it identifies ones that align with its product strategy, while also meeting sustainability requirements.
Sustainability starts with technology
Sustainability is now at the forefront of the business agenda globally, prompting many to put their money where their mouth is and alter their business models to meet targets. At the very center of this transformation is the supply chain. With the potential for environmental impact across the value chain, it is now essential that businesses have the oversight and data necessary to identify and address areas for improvement. And technology is the driving force making this possible.
Through digital twin technology, businesses have enhanced visibility into their supply chains, allowing them to measure and stay on top of their environmental impact. Then, they can act accordingly, altering businesses practices in line with this. Although this is no easy feat when taking into account other macroeconomic forces at play, both business and planet stand to benefit in the long run.
