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It all connects: supply chain sustainability is just good business

  IMAGE: SHUTTERSTOCK

IMAGE: SHUTTERSTOCK

It’s not just hip brands like Reformation, TOMS, and Seventh Generation that are generating buzz around initiatives to create more eco-friendly business practices. In other words, while there are plenty of hipster, prestige brands that are focused on missional and humanitarian practices, that’s not only what sustainability means. Today, increasingly, sustainability is about engineering and mind-blowing technology, and it comes from good planning and business pragmatism.

Gone are the days when a brand’s success was reliant on a business model void of concerns over waste, the environment, or the humans who do the dirty work for cheap. Consumers are expecting brands to reduce unnecessary waste, source products responsibly, and use environmentally friendly transportation and logistics practices.

Does this added pressure and complexity impact a company’s bottom line? Come to find out, a sustainability strategy is good for everyone.

“I have come to find that sustainability and cost have a good correlation with each other. People don’t want to overproduce and carry unnecessary inventory. It comes down to better planning, lead times, etc.,” Hala Zeine tells FreightWaves by phone.  

Zeine is SAP’s president of digital supply chain. She heads a complex operation of multiple portfolios, and manages businesses on a daily basis who continue to learn and develop plans on how and why sustainability in the supply chain is crucial for success in today’s business ecosystem.

“From a functional perspective, I work on the overall go to market strategy and the development of those products and the cloud development of those products. From every point in the supply chain. While it’s easy for seeing a product going one way, it’s not as easy to seeing it moving back,” says Zeine. 

On one level, the very meaning of the word sustainability has expanded. It means more than tree-huggers caring about their mission over making a profit. The word sustainability now encompasses the very words that we associate with sound business. In transportation management, for instance, it’s about better planning from the beginning. It’s about finding micro-efficiencies wherever they can be squeezed from the turnip at any step in the supply chain. It’s about not producing more than you need of a given product, which naturally cuts down on cost-per-unit, storage, shipping, and ultimately getting rid of the waste. It’s about worker safety. It’s about smart manufacturing. It’s about creating products with components that can break back down and be re-used.

“I have come to find that sustainability and cost have a good correlation with each other. People don’t want to overproduce and carry unnecessary inventory.” — Hala Zeine

You get the idea. So, why have things changed? In a world that keeps banging out carbon emissions, decimating rainforests, and denying rising sea-levels (or at least that we bear any responsibility), it might seem odd that on a serious, business-minded level we would suddenly start caring so much about the environment that it would begin to infiltrate every level of our logistics and production planning. 

“Some [companies] have specific sustainability solutions, but in general when you bring a product to the table we need to think about how can the product come to life for the environment, and for workers,” says Zeine. “The better they plan, the better they can profit,” she adds. 

“We also look at worker safety. They have cameras inside the trucks, but what if we use the cameras for other purposes like measuring the movement of the head or hands to evaluate fatigue,” says Zeine.

What’s really going on is that we’ve reached a tipping point in technology advancements. Today, ironically enough, it’s the scientists and engineers who are effectively creating the solutions to level-up our businesses and sustainability solutions simultaneously.

“I’m wearing a 3D printed badge as we speak,” says Zeine. “Additive is very interesting. I was just visiting HP and they were explaining that 80% of the powder they use [which is a plastic] can be broken back down and re-used. But also you can produce on-demand and according to order. You’re lowering production, shipping cost, and even waste.”

Zeine gets particularly excited when talking about the connection of the physical world with the digital—and the other way around. “A lot is with IoT technology,” she says. “You can infuse with mathematics and physics to reproduce the way equipment is working and generating energy. Ansys is a company we’re working with to simulate what’s happening in the real world. You can predict before breakages happening like drilling oil, or your turbine isn’t spinning the right way and maybe sand is getting stuck in it. Instead of letting it break and having an oil spill, you can repair it and move forward in a shorter amount of time. Digitalizing the physical world can also help extend the life of the equipment so we can get more for less.” [See the video below for an extended example]

In June, ANSYS (NASDAQ: ANSS) and SAP SE (NYSE: SAP) announced their first solution under a new partnership to drive the Intelligent Enterprise by linking engineering and operations. The partnership’s first solution, SAP Predictive Engineering Insights enabled by ANSYS, will run on SAP Cloud Platform and empower industrial asset operators to optimize operations and maintenance through real-time engineering insights, to reduce product cycle times and increase profitability. 

Besides “optimizing solutions” as a supply chain sustainability strategy, companies would also do well to listen to consumers as well. Increasingly, people want to know where and how their goods are produced—and for a variety of motivations. Apps like Buycott, a barcode and QR bar code scanner, are growing in popularity. There are also plenty of blockchains in development that are focused on transparency not only for B2B solutions, but also for B2C.

“A lot of companies do have a missional approach specifically in the food and health industry,” says Zeine, “especially with track and trace to the seed and additives and wash equipment and finally to delivery. Health aware consumers, and much more planet-aware consumers.” SAP works with such conscious-minded companies as well.

SAP’s goals range from the short to medium to long term when it comes to sustainability plans. Cargo Sous Terrain has partnered with SAP to digitize its operations. The company aims to create a “world-class infrastructure for logistics” by 2040. The company is a coalition of private companies that plan to create a network of underground tunnels connecting major cities throughout Northern Switzerland. The goal is to build central logistics hubs in cities for goods that will allow companies to easily deliver them across the country.

Switzerland expects a 37% increase in freight transport over the next 20 years. Cargo Sous Terrain believes that its 24x7 delivery system will reduce road congestion by as much as 40%. Autonomous vehicles will move goods from one urban hub to another. Items will be loaded onto vehicles powered by electricity, so as to reduce the carbon footprint, and bring them directly to people’s houses. 

“It’s like a huge conveyor tunnel that goes underground so we don’t clog up the Alps and the beauty and the trucks just go into the cities and make the last-mile delivery,” says Zeine. “It will take years to get there, but it’s a long term ambitious project. There are lots of big ideas with this technology where we can really make sustainability and business-solutions. It all connects,” she says. “The more the technology advances the more the businesses find solutions and the two don’t become a contradiction of terms.”