Digital supply chain management

A roadmap for measurable ESG impact through digital interventions

Saritha Bs,

ESG Offerings Lead

Published: December 1, 2023

Climate change and geopolitical crises have caused uncertainties about how an enterprise functions, with more emphasis on how enterprises choose vendors who share the same philosophy and values, which uploads an organization's business reputation. Over the years, we have seen global supply chain change due to rising awareness and how enterprises strategize their supplier selection. 

In this perspective, we will look at the aspects of supply chain management and see how and what a sustainable supply chain is and how digitization can help manage a sustainable supply chain.

The need for a sustainable supply chain management system

To run our businesses effectively, we often collaborate with multiple organizations, both big and small. At an organizational level, we evaluate those organizations based on their profitability, credibility, dedication, and competitive models. However, how about analyzing the enterprises we associate with based on their business ethics, values, and alignment with green standards? 

To address these issues, most enterprises have started integrating financial performances with non-financial parameters such as eco-friendly practices, socio-parameters on human rights, employee safety, product safety, etc.

A sustainable supply chain helps assess end-to-end ethical practices, creating more transparency and extending to the partners. Essential supplier sustainability features are raw material procurements, manufacturing processes, transportation, and waste management.  

Navigating business processes and supply chains for long-term success in a net-zero world

A holistic approach to evaluating business processes throughout the life cycle of their product and service, integrating strategies for long-term returns, creating end-to-end transparency, and transforming businesses are essential given the increasing awareness of the impact of climate change and the concerted efforts of most stakeholders to decarbonize their operations and aim for being net-zero backed by science and committed to zero health and safety events (right from product idea inception till the end of the product life). How we operate becomes a critical aspect while we assess our suppliers. Sustainable supply chain management is an approach that goes beyond simply reducing the impact on social and environmental issues. Its goal is to ensure that fundamental human rights are not violated. 

Challenges in supplier KPI monitoring for sustainable operations

Monitoring and tracking supplier KPIs are challenging due to growing sustainability concerns about social (human rights, worker safety, community outreach) and environmental (emissions, resource consumption, waste management). 

Some of those challenges are:

  • Global regulatory push: The impacts of climate change are being monitored globally. Regulatory bodies exert more pressure to bring transparency throughout a product's life cycle.
  • Lack of awareness and complexity of data: There is a lack of awareness of the impact of operations and the climate. Since the vendors do not report or track sustainability KPIs like emission data, it can be difficult for a large organization to determine the true scope of emissions.
  • Quality and assurance: The quality of information for analysis is questionable as the sector struggles with ignorance and greenwashing. False data implications raise reputational risks and result in a low adoption rate of industry practices to achieve the goals. 

Strategic framework for sustainable supply chains

Creating a connected ecosystem and moving towards a single goal helps direct the efforts. Globally, regulatory bodies emphasize climate change, making enterprises adopt and report on the impact on sustainability/ ESG parameters. Enterprises have controls within the business operations they are responsible for, but how will they do it for the vendors they contract with? 

Our proposed approach suggests the following: 

  • Digitization within the supply chain operations
  • Creating a partner ecosystem making it cost-effective 
  • Connecting multiple ecosystems as the information mainly towards sustainability is scattered 
  • One ambition and objective are to measure, align, and comply

Managing the supply chain and ingesting sustainability measures helps not just the organization but also extends the good practices to the suppliers.

The approach focuses on critical aspects, sustainability within the supply chain, creating more transparency, and setting a pathway for supply chain circularity. The supply chain elements are further strengthened with digital solutions, making it possible to meet the benchmarks, innovate, and grow the business. With digitization, it becomes easier for enterprises to monitor and track their performance, enabling them to make informed decisions. Larger enterprises aligned with regulatory requirements are becoming change catalysts in the sustainability world by ensuring the best practices are pushed to the stakeholders, helping them achieve the global goal of fighting climate change. Technology is making it possible through digital transformation. AI and ML solutions help connect ecosystems and bring meaningful insights regarding tracking shipments or monitoring human rights and fair-trade practices. AI and ML solutions enable deeper learning into data and identifying patterns, helping trading partners optimize resources, reduce energy usage, and effectively manage waste. Scrutiny in supplier selection is helping monitor basic wages and better work environments. 

Joint partnerships with technology partners enable solutions and make them affordable for organizations. One platform approach enables marketplaces, digitizes sustainability reporting, and connects ecosystems, resulting in a holistic view. 

Platform enablement is a long-term vision that brings clarity, traceability, and transparency, which is the need of the hour. 

The road ahead

We understand the massive change industries and organizations will undergo. The challenges need to be addressed as global warming and the effects of climate change are here to stay. Through a connected network, we can help build frameworks and set a digital pathway for our customers, partners, suppliers, and beyond. Our expertise in the domain and digital capabilities will bring a transparent and traceable view for better decision-making. We have ways to achieve and re-write a clear roadmap. The opportunities lie in digitizing and transforming the industry and moving towards a low-carbon economy. Technology innovation, different thinking, and the acceptability of modern methods make the supply chain more reliable. We are seeing positive changes not just from optimization but also from the overall impact towards supplier sustainability.  

It is a long haul towards a low-carbon pathway, but we must act now.

Learn how you can join the journey of a sustainable future. Connect with us.

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