2-min read

The current climate change crisis has come to a point where it’s no longer a problem of the future, but instead a global issue on which we need to act today to protect ourselves and our communities. Companies are becoming increasingly aware that it’s not enough anymore to have vague sustainability goals without a clear action plan. In combat against the climate crisis, companies are slowly but steadily taking their sword and shield and gathering their troops.

There are a variety of factors that can make reducing emissions feel like an uphill battle. Companies often find themselves in a no man’s land, not knowing where to go or how to start. Another common problem is that many companies are reluctant to start fighting, afraid of what they will uncover and the challenges they will run into. On top of that, there is still the perception that addressing sustainability in the value chain may interfere with other goals such as lowering costs or increasing business performance.

The good news is that taking action to reduce emissions usually isn’t complex or costly and can even save money and result in better business performance. A recent study has shown that the majority of a company’s CO2 emissions are embedded in its supply chain, and that around 40% of all emissions generated across the supply chain could be eliminated at little to no cost through for example implementing material and process efficiency measures. Supply chain leaders are therefore ideally suited to lead the charge for operational efficiency and supply chain decarbonization in order to combat climate change.

3-step strategy to conquer climate change in the supply chain

1. Plant the seed: Create awareness within your organization about the impact of supply chain processes on climate change and the company’s overall sustainability goals. Provide transparency by measuring CO2 emissions and waste generated at each step of the production process.
2. Develop strong roots: Focus on reducing waste and emissions coming from your own operations (the so-called ‘scope 1’ and ‘scope 2’ emissions) through process improvements and planning optimization.
3. Create one ecosystem: Next to addressing ‘scope 1’ and ‘scope 2’ emissions, also include upstream and downstream value chain emissions (so-called ‘scope 3’ emissions) in your game plan. Collaborate with stakeholders across the entire end-to-end value chain to enable common sustainability ambitions. Climate change is the common enemy of every organization so collaboration always creates a win-win.

Let’s close ranks against climate change

Still no clear plan of attack? Depending on where you are in this 3-step journey to becoming more sustainable, we have several tools in our arsenal to help you launch the battle:

• Sustainable insights: Translate strategic sustainability goals into operational KPIs, make your largest waste and CO2 emission contributors visible​, and identify the areas for improvement with easy and fast analysis through actionable online dashboards.
• Circular planning: Optimization of supply chain planning to integrate return flows in the existing linear supply chain, and creation of valorization models to facilitate value recovery of (by-) products created in the value chain.
• Supply chain network optimization: Evaluation and redesign of your supply chain.
• Sustainable supply chain digital twin: Creation and implementation of a digital twin with the goal to find the optimal balance between product availability and waste.
• Excess & obsolete inventory optimization: Design and implementation of E&O process, and optimal inventory target setting.

There’s no easy way out of the global climate change crisis. We’re what we sowed yesterday. Since tomorrow is still in the making, let’s plant good seeds in the supply chain of today. As the English primatologist Jane Goodall said:

“We must all join that fight before it is too late.”

Curious about how EyeOn can join forces in your battle against climate change? Contact our expert André Vriens or visit the sustainable value chain page on our website.

Remember to keep an eye on this page where we will address further supply chain challenges you will be facing this year.

The post Our planet, our future: Join the supply chain combat of climate change appeared first on EyeOn.

Here is how you can increase supply chain sustainability and resilience:

Supply chain sustainability and resilience go together

The business world is full of attempts aiming at supply chain circularity and sustainability. Companies are rolling over each other announcing dates on when they will be CO2 neutral and realize their climate goals. In a world where companies must pay for emitting CO2, redesigning supply chains and optimization of the supply network can make a difference. This raises questions like; can facilities nearby serve the markets? Can we save on transportation and reduce our CO2 emissions?

In parallel, the drive towards circularity asks for integrating return flows into the forward supply chain and building an integral closed loop or circular supply chain. We should avoid creating global flows of disposed products and materials to recover residual value. Regionalization is likely to be the best answer. Recover the value in the region where the product was produced and consumed. Regionalization (or nearshoring / reshoring) is the same solution proposed to mitigate supply chain risks. This movement is gaining traction; according to a recent survey of supply chain managers by Gartner the pandemic has prompted 30% of firms to shift the focus of their supply chains from global to regional.

Drivers for redesign and benefits

Next to supply chain sustainability and risk resilience, there are several other situations where supply network design and optimization can bring additional value to organizations:

• Optimizing an organically grown supply chain to be fit for the future with optimal allocation of supply to markets by balancing costs, inventory, and service. This ranges from optimizing the production and distribution footprint, and the portfolios it supplies to markets, to considering new transport modalities on costs, speed, and environmental aspects.
• Harvesting synergies after mergers and acquisitions by leveraging the new possibilities and removing the doublures. Next to closing locations, a major gain is in optimizing the allocations from suppliers to factories, factories to distribution centers (DCs), and DCs to markets too.
• Preparing for future growth; typically, strategies focus on products and market. The supply base follows. The recent crisis clearly shows the relevance of the supply chain. Proactively developing your supply chain along with your strategy is a good practice.

The benefits of supply chain network design and optimization can be significant. At EyeOn we often see cases achieving single- and double-digit millions of euros savings. And with respect to savings, let us not forget the ‘hidden’ costs of complexity and risk. Many companies have learned this the hard way over the last years.

Expertise needed

In times of big data and artificial intelligence, redesigning a supply chain has become an advanced science. Excel models do not fulfill the needs. Considering the amount of data to process, the computational power needed simply isn’t enough to handle moderately complex supply chains. This becomes more evident once multiple scenarios and sensitivity analyses are asked. This is not optional, but a must. The goal is to build a more resilient supply chain. To be successful, you need to combine business expertise and understanding of your strategy with thorough data science expertise to make the calculations. As consultants, we can help!

Keep your supply chain design models live (’Digital twin as-a-service’)

In a fast-changing world, it is worth considering not only designing a robust supply chain for the current dynamics but also assessing its purpose for unforeseen changes. For this reason, we recommend raising the frequency of supply chain network evaluations and building the capability. This can be done in-house but can also be outsourced as a service! After a turn-key project, we offer our clients the possibility to transfer to a service model, where we keep the model live and up to date with the latest data and are ready to run a scenario when needed.

We are here for you!

Are you ready to revise your supply chain network design or optimize it? We are here to help you in this journey. Together we will take the steps towards a more resilient and sustainable supply chain. Contact us now!

This is the time to build resilient, agile, and sustainable supply chains, maximizing the benefits of digitalization and advanced analytics.

The post Rethink your supply chain for increased sustainability and resilience appeared first on EyeOn.