Sustainability has become one of the most important concerns of every organization across different industries. Research from McKinsey & Company shows that companies with high ratings for environmental, social, and governance (ESG) factors have a lower cost of debt and equity and outperform the market in the medium and long term.
Supply chains have a huge and direct impact on society, the environment, and financial performance. With the appropriate use of recent technologies, supply chains have more potential to create and encourage a sustainable world.
By harnessing a combination of technologies like IoT, AI, and Blockchain, companies can reduce greenhouse gas emissions, optimize routes, reduce waste, ensure efficient transactions with suppliers, improve workers safety, and mitigate risks.
Technology trends for a Sustainable Supply Chain
Here is a brief list of technologies and how they can enable companies to meet their sustainable supply chain needs.
1. Internet of Things (IoT):
A simple definition of the internet of things, or simply IoT, is the concept of connecting devices between them and to the internet. These connected objects, which are embedded with sensors, are connected to an IoT Platform. This platform is where the magic happens. Data from different devices are analyzed and can be used to give recommendations, detect patterns, or quickly discover potential risks.
So what are some of the applications of IoT that enable a sustainable supply chain?
- By using an integrated IoT solution and with the help of other technologies, we can find better driving routes. Therefore, we can reduce the consumption of diesel and gasoline fuel used by freight vehicles, which are one of the biggest energy users and contributors to greenhouse gas emissions.
- Another benefit of IoT in respect to sustainability is the reduction and elimination of waste. With a connected IoT technology, we can track and have real-time visibility of all goods from their point of origin to their destination. Therefore, we can reduce all kinds of loss, theft, and damage.
- IoT technology can also be used to improve safe working practices, which is one of the key concerns of every manufacturing and logistics company. Internet-connected sensors can be located around a factory or warehouse and worn by workers. Data about their activity and movements can be analyzed to discover quickly any dangerous or risky behavior.
2. Artificial Intelligence (AI):
- AI algorithms can help in Backhauling activities. These are the return movements of trucks from their destination to their points of origin. AI can analyze vehicles, volumes, routes, and stops instantly to identify optimal opportunities to share shipping with other organizations. Sharing shipping doesn’t help just in reducing transportation costs, it also reduces the environmental impact.
- AI can also have a huge impact on the sourcing activities of an organization. An example of this is Prewave, a company developing a new monitoring system that uses AI to find, monitor, and analyze suppliers’ news through the internet to find quickly some sustainable risks like CSR incidents, labor unrest, customer unrest, financial stress, and so on.
- Manufacturing products that people will not buy is another issue that can impact not only the financial performance of a company; but also the environment. AI can therefore be a very useful tool in predicting the customer’s demand accurately. And so, companies only manufacture and ship what customers are going to buy.
Blockchain is regarded as the next disruption in the technology world that can overcome many business obstacles. In addition to its economic and environmental benefits, Blockchain has many other benefits concerning Social Sustainability.
IBM defines Blockchain as a shared, immutable ledger that facilitates the process of recording transactions and tracking tangible or intangible assets in a business network.
Here is how blockchain can encourage sustainability in the supply chain:
- Blockchain enables a healthy supplier and customer relationship by providing transparency and trust between the supply chain stakeholders.
- Blockchain can also be beneficial for humanitarian supply chains. It allows easy and quick financial transactions in times of crisis or disaster. [Click this link to see how humanitarian organizations use SCM Globe as part of their disaster response: https://www.scmglobe.com/how-humanitarian-organizations-use-scm-globe-as-part-of-their-disaster-response/]
- Through the use of Blockchain, we can guarantee healthy, safe, and high-quality food. That will certainly reduce the spread of foodborne illnesses and also increase customers’ trust in the food industry.
The goal of sustainable supply chains is to engage with direct and sub-tier suppliers and maximize overall social, environmental, and ethical impact. Technologies like AI, IoT, and Blockchain can play a critical part in achieving this goal and much more.
Perceiving technology and sustainability as a competitive advantage and focusing on systems change, along with individual programs, to ensure long-term and sustained impact is the secret to success.