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Digital transformation for sustainable supply chains

digital transformation

The only way industry can effectively reduce its carbon emissions is by digital transformation of supply and value chains.

With heightened environmental scrutiny a business can no longer claim to be ‘green’ if the companies it buys from are not and digital transformation through enterprise resource planning (ERP) solutions can help ensure the sustainability of supply and value chains.

“With EY recently reporting that more than 90 per cent of a typical organisation’s greenhouse gas emissions and 50-70 per cent of operating costs are attributable to supply chains, it’s clear that assessing supply chain data is key to understanding the impact of environmental, social and governance (ESG) initiatives,” said Andy Coussins, SVP & head of international at Epicor Software.

Alongside investing in digital transformation, upskilling staff and managing risk, manufacturing businesses are trying to understand how they can embed sustainability into their extended supply chains to support long-term growth and profitability. However, EY’s research also revealed that 33 per cent of companies lack a business case for sustainable supply chains and nearly half are struggling to measure the return on sustainable supply chain activities. 

“New environmental legislation and an increased consumer demand for sustainable products means that it is now a top priority that retailers and customers are provided with more than just the basic product information listed on a product’s labelling,” Coussins continues. “Evolving customer attitudes, changing laws on plastics and recyclable packaging means manufacturers must figure out how to comply with new regulations and ensure the sustainability of their supply chains while remaining profitable. Now, manufacturers must prove that their products are also sustainably sourced as part of move towards a circular economy

“Two themes currently affecting how manufacturers approach supply chain sustainability within the UK are changes in government policy due to increased consumer scrutiny, and changing buying attitudes towards sustainable products.”

Recent research from Trivium Packaging’s Buying Green Report 2022 surveyed more than 15,000 end consumers across Europe, North America and South America, finding that 68 per cent of respondents have chosen a product in the last six months based on its sustainability credentials, with 70 per cent identifying themselves as environmentally aware.

With the UK government pushing ahead on sustainable business policies to meet net zero carbon policies by 2050, manufacturers are having to quickly adjust their sourcing, production, and distribution processes to meet new consumer demands and remain compliant with the latest regulations.

 “While many businesses have long-term sustainability goals for their supply chains beyond risk avoidance and compliance, EY reported that few have the visibility, technology, and comprehensive programmes in place to measure their progress. In terms of technological innovation, powerful Enterprise Resource Planning (ERP) solutions have already become invaluable in helping businesses to demonstrate how their products are being manufactured and distributed across each stage of the supply chain. As well as helping to identify and introduce efficiencies in processes and resources.

“Despite increased supply chain visibility being a top priority for businesses only 37 per cent have seen an improvement. Reporting tools embedded within these ERP systems are essential to providing transparency and give manufacturers an accurate way of proving that their products are sourced and manufactured in an environmentally responsible way.

“Having a fully integrated ERP system that captures end-to-end product data across a digitally connected supply chain is essential to calculating the true cost of compliance for manufacturers,” Coussins concludes. “Any change to the manufacturing process can be acted on with the touch of a button, to ensure that products are still profitable and crucially, affordable for their customers.”

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