Cloud Mindset & Culture Series Part 3: The Role of the Cloud to Create More Sustainable Supply Chains

by Peter Pluim, President, SAP Enterprise Cloud Services

This July the UK recorded the hottest day in the nation’s history as temperatures soared to over 40 degrees Celsius (104 in Fahrenheit). Similar temperature records were reached in other parts of Europe and North America. The sweltering heat, triggering wildfires and drought, is impacting food supply chains. Looking at the key food staple wheat, experts predict a lower wheat yield in France, Spain, and India, among other countries. The rising temperatures also change harvest times. In Southern Germany the winter wheat harvest started already in June this year.

Climate change is a large-scale global challenge for food manufacturer and their supply chains. They need to adapt quickly to ensure the continued production and delivery of their goods and services to maintain their customer trust.

This is not “just” a challenge for food manufacturers.

When boiling it down, companies across all industries need two things: the ability to adapt to immediate challenges quickly, and a move to more sustainable and intelligent business models and operations with their entire supply chain for the long-term.

That’s where cloud infrastructure solutions and services come in.

The cloud enables companies to embrace a more sustainable resource management – from design to waste management. By becoming more intelligent and sustainable, companies are not only prepared for the future, they also shape a better future for our planet and society.

?Here is how: The cloud serves as the foundation to expand enterprise resource management (ERP) to business networks and supply chains. This has several advantages.

First off, transparency across the entire value chain. Having real-time visibility across business network through a cloud ERP environment enables companies to instantly act on disruptions. They can transform fragmented, siloed supply chains into a collaborative, agile?business networks.

Let’s look at an example from the automotive industry. Catena-X is the first integrated, collaborative, open data ecosystem for the automotive industry of the future. It wants to achieve climate-friendly and sustainable production and utilization along the automotive value chain.?To achieve this integration, ?Catena-X is facilitating a secure and standardized data exchange across the automotive value chain, such as sharing production quality data between suppliers and manufacturers. This is possible with the cloud-based Catena-X Portal that connects different partners – from automotive manufacturers to small and medium-sized suppliers to IT providers – to collaborate and drive innovation. This allows also to act quickly to events, such as product recalls. And on the long-term, the network can drive innovation together with other industries and ecosystems to create the future of sustainable transportation and mobility.

Second, the ability to embed sustainability in business processes: This greater transparency along the value chain enables better decision-making to conserve resources and design business processes operations based on sustainability goals.

?SAP has been helping companies, and entire industries, to optimize resources for over 50 years. Cloud solutions and services take enterprise resource management to the next level. Companies who benefit the most from moving to a Cloud ERP environment are those who go beyond lifting and shifting current applications and processes to the cloud and see it as an opportunity to redesign business processes and operations for a circular economy. This allows to activate circular business processes across business network from responsible product design to sourcing, production, distribution, and waste management. Moreover, by using cloud-based solutions and services companies can embed sustainability in business processes in their entire value chain, to pursue zero emissions, zero waste, and zero inequality.

When Honeywell digitized its supply chains, the multinational conglomerate used it as a chance to simplify its supply chain structure, shifting from a transaction-oriented approach to a more strategic structure, with shorter cycle times and localized distribution hubs. The supply chain became more resilient and efficient, while also achieving sustainability benefits from reducing the overall miles shipped. Honeywell’s ongoing supply chain transformation has reduced 90% of its greenhouse gas emissions since 2004.

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Third, tracking sustainability progress across supply chains. By connecting their business network partners with the cloud, companies can track key financial and sustainability metrics for integrated reporting. It also provides customers the transparency they need about their sustainable practices.

?For example, one of the world leaders in seafood and sustainable fishing, Royal Greenland A/S, digitalized their entire processes to provide full transparency to consumers and government authorities -?from catching the fish in the Artic Sea to bringing it to the table of consumers. By developing easy-to-use mobile apps for fisherman, the company could streamline catch registration, data logging, and approvals. The digitized catch registration process reduces the risk of error and noncompliance and helps fishermen to get the best price for their catch, which in return supports their local communities.

?Operating in a cloud ERP environment creates the foundation to make sustainability profitable, and profitability sustainable with redesigned business processes for a circular economy and more resilient supply chains.