Make Sustainability Hot, Not the Planet!

Make Sustainability Hot! Not the Planet

Make Sustainability Hot, Not the Planet!

Each year, the Indian Monsoon with its torrential downpour washes away the entire country’s terrain in what I like to think of as a cleansing ritual. “The smell of the wet earth in the rain rises like a great chant of praise from the voiceless multitude of the insignificant,” wrote Rabindranath Tagore in Stray Birds, a collection of micro tales, resonating in my heart while I take in the petrichor—the most intoxicating redolence that memories are made of. As I sit today by my window, peering at the uncommon, rinsed skies, another short poem from Stray Birds comes to mind, “Clouds come floating into my life, no longer to carry rain or usher storm, but to add colour to my sunset sky.” I wonder if the skies were clearer in 1916 when Tagore reflected on nature’s pulchritude. Or if my beloved niece and her children will continue to savour these divine blessings, that we, still, take for granted.

Working for a supply chain management firm, I’m hardly oblivious to the fact that the industry is responsible for a larger share of the global energy consumption and adverse environmental effects on the planet than others. Climate change, rising pollution, dying species—are all matters closer to home than one assumes and definitely not somebody else’s problem.

Supply Chain Sustainability Stats

What’s the Sustainability Goal?

Supply Chain Sustainability is the management of environmental and social impacts within and across the supply chain network consisting of suppliers, manufacturers, distributors, and customers in line with the UN Sustainable Development Goals. This spans every stage of the supply chain, from extraction of raw material to sourcing to production to consumption and end of product life. For perspective let’s take a look at UN’s 17 goals of sustainable development.

As is evident, most of these 17 ambitions are deeply affected by the supply chain process. In recent years a large number of organisations have pledged to adhere to social and environmental standards, however, what about their suppliers, or their suppliers’ suppliers? The practices of lower tiers are almost always worse. The responsibility needs to cascade down from top to bottom if any real change is to be expected.

Sustainable Management Goals

An Inconvenient Truth

Harvard Business Review studied three multi-national companies and a total of nine top-tier and 22 lower-tier suppliers based in Mexico, China, Taiwan, and the United States. Some of the key takeaways that illuminate the precariousness of the system are as follows:

  • 10 lower-tier suppliers in China and Taiwan had marginal environmental practices.
  • 3 out of 7 lower-tier suppliers in the US had high concentrations of airborne chemicals.
  • First-tier suppliers rarely concerned themselves with their own suppliers’ sustainability practices, a large number of which were dubious.
  • The lower-tier suppliers don’t have any incentives to follow standards and often lack education and expertise to handle sustainability factors.

A Global Movement

A Shifting Mind-Set

I’m not overstating when I say that Supply Chain Sustainability is undergoing a new-age renaissance! From Al Gore’s An Inconvenient Truth, an eye-opening documentary on climate change to a Ted Talk titled How We Can Make The World a Better Place By 2030 by Michael Green, British Physicist and pioneer in String Theory; a single individual like Greta Thunberg, a true force of nature (pun intended), to the ‘Paris Agreement’ of 2015 where 195 nations united and recognised the urgency in acting towards climate change and sustainability; not to miss celebrity environmentalists, Leonardo Di Caprio or Jane Goodall—one can witness an aphoristic, poignant, unrelenting cultural shift in our outlook of the planet’s future.

There’s a Cost to Waste Management

As per the World Bank, the world generates 2.01 billion tonnes of municipal solid waste annually, with at least 33 percent of that—extremely conservatively—not managed in an environmentally safe manner. Worldwide, waste generated per person per day averages 0.74 kilogram but ranges widely, from 0.11 to 4.54 kilograms. Financing waste management operations is a challenge—in higher-income countries operating costs for integrated waste management exceeds $100 per tonne, and in lower-income countries it costs about $35 per tonne. However full cost recovery is limited to only higher-income countries.

There’s Profit in Sustainability

Today, companies seeking profitability are realising that they need sustainable energy and resources to meet the regulatory demands implemented through scientific consensus by governments and business leaders alike. To this end, there are a set of best practices in supply chain that leverage technology and innovation to help industries reduce their carbon emissions and minimise waste while maximising profit.

Best Practices in Supply Chain Sustainability

Circular Economy with Everything-As-A-Service

My dear colleague Vatsa Kirani, Associate Vice President, Oracle at InspireXT, an ardent advocate of environmental ethics and sustainability, recently hosted our inhouse Fireside Chat Series throwing light on some of the pressing issues of supply chain sustainability and provided us with insights about an economic model—the circular economy—as the beacon of hope for long-term sustainability goals.

Progressing from SaaS (Software as a service) and PaaS (Platform as a service) models to the XaaS (Everything-As-A-Service) model implies that companies will no longer be selling products, instead they will be selling services. For instance, a washing machine will be sold with ‘x’ number of wash cycles after which the customer can return the product which the original company can recycle, refurbish, and even resell. This, unlike linear economy with the concept of Cradle-to-Grave, where that washing machine would end up in a city landfill, here the product flows through a Circular Economy with the concept of Cradle-to-Cradle and is returned to the maker to be reused.

Circular Economy

Reverse Logistics to the Rescue!

Most supply chains will stop measuring the success of their goods once the product is shipped and is delivered on time. Instead, as per the Cradle-To-Cradle concept, the return of the products will become a significant operation in the future. This process, known as Reverse Logistics, starts backwards in the supply chain, from the end consumer to the distributor and finally to the manufacturer. It also includes processes where the consumer is responsible for the final disposal of the product, including recycling, refurbishing or resale. As per Oracle, worldwide, returns are worth almost a trillion dollars annually where less than 10 percent of in-store purchases are returned, compared to at least 30 percent of items ordered online. The different phases of Reverse Logistics include:

Reverse Logistics

Benefits of a Digital Supply Chain Enabling Circular Economy

  • Reduced Waste: Reducing wasteand increasing efficiency of all supply chain facets are the principle benefits of making supply chains more circular. Inefficiencies and missed recycling or reuse opportunities produce waste and pollution. Pollution has an inherent economic cost because of its consequences on individuals and environments around the country. Reducing waste saves money and helps the overall economy.
  • Enhanced Customer Loyalty: Customers who choose to support environmentally friendly companies feel better about spending money there and will be more loyal to the brand and its products. In the Unilever study, brands that integrate sustainability have 30% higher growth than those that don’t.
  • Being Ahead of the Regulatory Curve: Government regulation on sustainability efforts like closed-loop supply chains are almost guaranteed at some point in the future. By adopting these policies now, companies and organisations can lead the way for lawmakers and influence policy decisions through their own experience.
  • Improved Public Perception: Environmentalism is now mainstream and will continue to become a bigger part of consumer habits. According to a Unilever survey conducted in five countries, 33% of customers prefer sustainable brands. Changing to a closed-loop supply chain is a great way to earn positive publicity and can make both consumers and other businesses alike feel better about associating with green companies.

What We at InspireXT Can Do?

Our Connected Supply Chain is a perfect example of how organisations can leverage technology to optimise their operations as well as reduce their carbon footprint. Here’s how!

Our Cloud services and award-winning Value Chain Advisory are excellent tools for optimising supply chains from start to end. The benefits, to list a few:

  • Accurate demand forecasting and supply planning helps to build sufficient inventory in time to fulfil a demand and to avoid excess inventory or delays which could lead to involving expensive (for the environment and for the customer) modes of transportation to make stock available and in turn reduce wastage.
  • Product Lifecycle Management applications optimises product lifecycle from design to disposal and has the potential of expanding its bandwidth to include product recycling as in circular economy. By helping to develop a robust design for the products, helps to reduce carbon footprint, raw material wastage, energy consumption, CO2 emission, overall load on system.
  • Sales, Commerce, and Service Cloud support the As-A-Service model in future and help in enhancing customer loyalty and retention.
InspireXT in Sustainability

If you want your supply chain to be sustainable, you’ve got to digitise it! InspireXT can help you achieve that and much more! Reach out to us….

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