In today’s business landscape, purpose is playing a critical role in profitability, pushing sustainability to the forefront of business agenda. Yet, there’s still a gap between the desire to do the right thing, and taking the necessary action.
Our recent SAP sustainability survey shows why this gap still exists. For instance, a third (31%) of UK businesses reported that a lack of environmental strategy is preventing them from achieving their ESG goals. As it stands, many businesses don’t believe they have the right data to accurately measure their environmental impact, and – notably – nearly half of companies rely on estimates to screen their supply chains.
For meaningful progress to be made in the coming years, and environmental disaster to be avoided, this data gap needs addressing. Digital twin technology may provide a viable path forward. By helping businesses map their ever-changing supply chain environment, and providing the necessary insight to stay on top of environmental damage, they can meet sustainability targets in real time.
Managing a rapidly evolving supply chain environment
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.
Track, trace and eliminate waste
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 parameterisation, 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 organisations 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 organisations put sustainability first is a strategic decision that permeates throughout the business.
Putting purpose into practice
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 can assess the suppliers it works with and ensure it identifies ones that align with its product strategy, while also meeting sustainability requirements.
Driving the green agenda
With sustainability at the forefront of the business agenda globally, it’s not set to change any time soon. Now is the time for businesses to live up to their promises, put their money where their mouth is and alter operations to secure a better, greener future. Transforming the supply chain will be crucial to this. With the potential for environmental impact at each stage, it’s now essential for businesses to have a holistic view of their supply chain. This will help them identify and address areas of the greatest impact. And technology is the driving force in making this possible.
Digital twin technology is providing the transparency businesses need, with insight into the supply chain from source to market. Through this, they can accurately measure their environmental impact and take meaningful action to address this. While there are still macroeconomic challenges to take into account, making this investment will support businesses to be more strategic, sustainable, and, therefore, profitable, in the long run.
