Digitising For Sustainability In Industrial Supply Chains

Thursday, April 14th, 2022

Photo Courtesy Of Schneider Electric

Supply chains are a major contributor to environmental impacts. Hence, it is now crucial that they make the effort to digitise to reduce their carbon footprint.

Contributed by Craig Roseman, Consumer Packaged Goods Segment leader for Asia- Pacific & East Asia and Japan at Schneider Electric.

Supply chains are still at the centre of focus. With the pandemic bringing the supply chain’s shortcomings into the spotlight, adapting is essential.

Today’s manufacturers are seeing a 74 percent increase in customer dissatisfaction with order status visibility, with 73 percent of supplier deliveries being late. In addition to these supply chain issues, one of the greatest challenges is sustainability.

Despite increasing calls for action, evidence suggests that current climate change policies won’t be enough to prevent the crisis. Incorporating digital tracing into the supply chain and monitoring the cold chain are vital steps to reducing industrial carbon emissions.

While becoming more resource efficient can help reduce direct greenhouse gas emissions, decarbonising indirect emissions from industry remains a significant challenge. In the food industry where electrically powered devices or equipment are used, indirect emissions may result from the transportation of raw materials and from the distribution of final products.

Traceability can assist in monitoring this to ensure that any inefficiencies in processes are identified and corrected throughout the supply chain, allowing carbon emissions to be reduced more quickly.

Outlined below are the most important considerations for improving supply chain sustainability across the industry.

Digital Tracing And End-To-End

Industrial companies across all sectors, including the food industry, are faced with climate targets, yet a standardised process to monitor any progress is still missing.

Measuring the emissions of products throughout their life cycles will be the most meaningful way to illustrate how production, manufacturing processes, and distribution methods affect overall carbon emissions. Carbon emissions information therefore needs to be detailed and easy to access in order to support traceability.

As guidelines are introduced to ensure companies are ethically and sustainably accountable for their climate targets, this kind of life cycle traceability will be vital to monitoring their environmental impact.

By digitally enforcing trust across manufacturing and production processes, end-to-end traceability solutions have the potential to improve industrial resilience. They can assist in identifying the preliminary causes of manufacturing mistakes and can develop methods for safely sourcing, producing, and shipping high-quality items.

Photo Credit To GettyImages

End-to-end traceability also provides new competitive benefits. Benchmarking carbon footprint data across industries will result in speedier emissions reductions and better control of long-term manufacturing and material costs.

Accessing data on an ‘as-needed’ basis allows decision-makers to share knowledge, collaborate transparently, and build consumer trust. Product recalls, quality, counterfeit, or conformity issues, for example, will trigger access to relevant information and ensure that operations are safe, sustainable, and environmentally transparent. It’s critical for ESG compliance to make this information more accessible, and it’ll also help brands with sustainable appeal establish consumer loyalty.

In this era of hyper-connectivity and abundant data, companies that harvest and analyse data selectively and securely, and fully embrace digital traceability across industrial processes and value chains, have much to gain. It’s undoubtedly about improved productivity, performance, and flexibility – but it will also advance industrial decarbonisation at a faster pace.

This level of data granularity throughout a supply chain and integrated into machines can eliminate downtime by allowing teams to continually monitor to improve performance, detect issues and create diagnosis before outages occur.

This enables predictive and preventative maintenance which ultimately increases efficiencies and drives sustainability.

Cold Chain Monitoring

Without a doubt, supply chains are major contributors to environmental impact – the cold chain even more so. With additional pressures on the delivery of perishable goods and increased hoops to jump through in terms of stringent safety standards and increased quality control measures required for food and biopharmaceuticals, cold chain companies need to take care of their supply chains more closely.

Monitoring is therefore essential to ensure that journeys along the cold chain are as efficient as possible in order to reduce not only the carbon emissions from the journey itself but also reduce the risk of lost, damaged, or stolen goods.

Improved transparency will bring a host of benefits including automatic data generation and faster collection, processing and management. Monitoring will also help to reduce wait time at ports where further energy is required to maintain necessary storage temperatures and control systems.

Remanufactured products applied to cold chain monitoring can result in a dramatic reduction of energy and materials used. Sustainability programs such as Green Premium, which make manufacturing sustainable by design, may result in a 98 percent reduction in carbon footprint.

It also helps provide transparent information on environmental impact and circularity attributes through third-party labels and product certifications.

Photo Credit To GettyImages

Regionalisation

The past 20 years have seen the supply chain footprint shift. In early 2000’s, the footprint was highly concentrated in mature markets. By mid-2000’s, to align with customer footprint and optimise costs, it shifted to an industrialised footprint with international production lines.

Today, the risks associated with long chains, along with growing trade tensions and geo-politics, are causing many organisations to again re-evaluate. Globalisation will probably not disappear, but going forward, greater regionalisation can be expected.

Implementing a multi-local and balanced footprint approach, complemented by tight global coordination is a great way for the industry to further build local resilience through shorter supply chains, rooted in local communities.

Local operations can understand better, adapt quicker, reverse logistics, and repair locally. This is not a shift from globalisation, merely a new form – global players connected in shorter chains.

Digitisation drives sustainability – it is critical for efficiency, circularity, and decarbonisation of energy. Sustainability is a driver for regionalisation – reducing mass transportation significantly reduces climate impacts. Regionalisation allows tailored supply chain solutions through flex centers bringing even more value to customers. And as an increase in digitisation across supply chains develops, regionalisation will be facilitated.

A purely local footprint is not feasible – one disruption can bring down the whole chain. To overcome this, organisations need to regionalise, with a form of redundancy, and empower the regional level, with a tight coordination of local sites. Of course, such reorganisation will impact costs.

But it will be beneficial with increased CapEx for redundancy and relocation, and reduced costs due to decreased inventory and working capital from shortening the supply chains, as well as higher sustainability.

Achieving sustainable operations is one of the most important challenges the industrial world has ever faced. Taking these steps is vital in mitigating climate change and other sustainability problems. Whilst current industrial automation has done a good job of advancing us to where we are today, we still need to fully realise the promise of the Fourth Industrial Revolution and make bold moves.

With the digital tools all around us, we already have what it takes to build the industries of the future – starting with digitising the supply chain.