Navigating Climate Change with Supply Chain

I recently wrote about how two surveys of business executives put supply chain top of mind amongst them, their expectation that that there’s more disruption to come. With the backdrop of floods in Germany, Belgium, the UK and China, wildfires raging in Greece, Italy and the west coast of the United States,https://www.theguardian.com/us-news/2021/aug/10/heat-drought-and-fire-how-climate-dangers-combine-for-a-catastrophic-perfect-storm a?major new United Nations scientific report?in essence says there’s more to come. The Intergovernmental Panel on Climate Change (IPCC) concluded the treaty is almost surely out of reach.

?While many are turning to the public sector to take the wheel, the private sector is waking up. As Kimberly Nicholas, a scientist and author of Under the Sky We Make told Fortune, “As much as any other sector, businesses benefit from a stable, predictable climate. The more we let the climate warm, the harder it is to adapt.”

While businesses look lower the risks of their supply chains, impacted often by these natural phenomena as well as geopolitics, they are also increasingly looking at how their supply chains might be impacting the environment. For instance, large cargo ships which are the standard oceanic transport of material and goods expel 2.9 percent of global carbon dioxide emissions – as much as the South American continent produces. Interestingly, one solution being considered is taking advantage of wind, which is generated by changes in air temperature. A number of ships equipped with modern sails are already in use serving as proof of concept for wind propulsion.

Business leaders are increasingly recognizing the importance of sustainability, with 86% of respondents in the Oxford Economics “Surviving and Thriving: How Supply Chain Leaders minimize risk and maximize opportunities” survey noting it as a competitive differentiator. ?

And what is SAP doing about this? Earlier this year we introduced the SAP Business Network to help customers align with their business partners to manage commercial flow, while gaining gaining insights into sustainability opportunities. Collaboration through this network addresses design, manufacture, shipping and delivery and the maintenance of products to lower carbon footprints while reducing waste. ?

Throughout the end-to-end Design to Operate process, many elements help customers to create a sustainable enterprise with thinking green, embracing the circular economy, and ensuring transparency. Companies can gain visibility to carbon footprint data throughout a product’s supply chain, bringing the ability to take sustainable supply chain decisions based on actionable insights. Product-related?carbon footprint data (e.g. for production, material sourcing, or transport) from SAP Product Footprint Management (PFM)?can be utilized in SAP Integrated Business Planning (IBP).?

SAP has embraced an end-to-end sustainability mission to address the three pillars of sustainability:?economic, social and environmental. This approach addresses the our customers’ priorities: profits, protecting the planet and people. The SAP solution portfolio ensures that these principles of sustainability are embedded in the products. For example SAP’s Climate 21 initiative address areas like sustainability index reporting and circular economy through the design to operate pillars of Design, Manufacturing, Logistics and Assets. The individual pillars of design to operate address the customer needs around recyclable and environmentally sustainable products, ethical sourcing and traceability, reduction of waste and lowering of emissions, health and safety of assets and people, overall reduction of carbon footprint through efficient planning and logistics management, and efficient operation of assets to reduce energy consumption. This eliminates a single-dimension approach to sustainability around just one or two topics.

While the IPCC’s conclusions don’t provide a feel good moment, they do provide another strong incentive for companies to examine how their supply chains can make the world a better place. Not only is supply chain not boring, it’s taking center stage.?