Organisations are under greater pressure than ever before. Along with financial constraints, leaders must comply with ever-evolving legislation like the EU’s Corporate Sustainability Reporting Directive. Vague ESG governance is no longer enough; organisations need to achieve total transparency when disclosing the environmental impact of their operations. Unsurprisingly, businesses are feeling the heat as they scramble to meet expectations.
In addition, supply chains are growing in complexity, with 51% of supply chain leaders increasing the number of locations in their network in the past few years. Despite this, only 53% have sufficient or high master data quality. A further 33% of companies lack a clear case for sustainable supply chains.
However, sustainable business is the way of the future. Creating long-term strategic goals based on unsustainable practices is akin to embedding obstacles into the company’s architecture and artificially limiting growth. Companies must balance growing operations and shift to more environmentally friendly business practices. To achieve a net-zero future, supply chains must collaborate. From integrated data and enhanced operational transparency to more collaborative working practices and partnerships, supply chains could hold the silver bullet to sustainability.
Getting a birds-eye view of operations
The first major step is understanding the current picture regarding Scope 3 emissions. This is the most significant emissions category for most companies, and supply chains often present the biggest question mark when measuring the environmental impact of operations.
No matter the company’s maturity, the best place to start is by understanding the supply chain. This includes how many tiers are involved, the suppliers and what they supply, and what the knock-on emissions are for those materials. Though many companies use averages to arrive at a Scope 3 calculation, the time is coming when a more granular understanding will be essential. However, that will be almost impossible without tying emissions to distinct materials, business processes, and suppliers.
Increased transparency, data sharing, supply chain technology, and collaboration between every link in the supply chain will build the foundation for success.
Sustainability doesn’t have to involve sacrifice
Visibility is vital to scale operations and enable meaningful and accurate measurements of Scope 3 emissions. Fundamentally, scalability and sustainability are related concepts when building a supply chain strategy. A course of action that is unsustainable is unscalable, so sustainability needs to be a factor for any company that wishes to grow in the long term.
For example, consider a company manufacturing capital equipment its clients use to drive their day-to-day operations. This equipment is sophisticated and complex, and the value it provides depends mainly on its uptime. If the equipment breaks down, client operations halt at tremendous financial and opportunity cost to clients. Because of this, it is essential to have plenty of inventory available to repair the equipment quickly when needed, keeping downtime to a minimum. However, it is also necessary financially to carry minimal inventory and avoid rushing it from hotspot to hotspot. In other words, it would be wise for the business to only stock what it needs at the right place the first time.
This business practice dramatically reduces the waste from overstocking inventory and the emissions created by expediting it from place to place due to suboptimal planning. But these efficiencies can only be achieved with enhanced transparency and collaboration internally and with clients, suppliers, and other partners. Free-flowing data and total visibility informs these proactive decisions and enables leaders to balance sustainability and scalability effectively.
Collaboration drives cultural change
Creating a sustainable and scalable organisation relies on awareness of existing limitations. Evolving operations can be challenging without an idea of what resources are and are not available. Data-driven decisions and analysis of these decisions will ensure sufficient supply and solutions are in place when and where they are needed.
A holistic view of partner-wide and company data encourages better businesses and reduces complexity across the supply chain. With such a wealth of activity taking place – from manufacturing, transportation, and logistics activities to cross-border regulations and flows of components, businesses easily risk becoming siloed.
Connecting these processes, partners, and data in one place simplifies the change-making process and creates one collaborative space. It also allows companies to model changes in real time and optimise processes more efficiently. Real-time collaboration enables businesses to handle their extended supply network in fast and cost-effective ways.
Company-wide buy-in and stakeholder engagement will be vital to make this vision a reality. For change to be system-wide, stakeholders must see the ecological and financial benefits shared data offers. Unlocking significant opportunities in the circular economy, such as large-scale electrification and carbon-neutral business, will require all players to lean in. Collaboration and end-to-end visibility should be instilled across the entire value chain to drive meaningful change. If leaders can achieve connectivity, they can unlock efficiency across operations and create spaces where scalability and sustainability thrive alongside one another.
