More and more companies are investing in sustainability, and there’s a good reason for that: climate change is one of the biggest issues facing humanity and we’re already seeing the consequences, with increasingly severe floods, forest fires, shrinking ice caps, record temperatures and deadly droughts.
Companies feel these consequences not just on a human scale, but they also see it affecting their bottom line. Supply chains are disrupted, and insurance premiums are set to rise due to global warming. Consumer demand is changing, putting a sharper focus on the environmental impact of individual products. Governmental restrictions on emissions are ramping up the pressure on supply chains to adapt. At COP26, countries have been asked to come up with ambitious road maps to achieve a global carbon emission net-zero by 2050.
It’s becoming increasingly clear: for a supply chain to be truly resilient and future-proof it must also be sustainable.
Supply chain planning systems can be a pivotal aid in the journey to the sustainable supply chain. Here are four steps to transform your planning system into an invaluable sustainability tool:
The digital twin is the planning solution’s window on the whole supply chain – it’s a digital representation of the plants, the machines, the orders, the products, the customers, and every transportation lane that constitutes the supply chain. The most advanced planning solutions also allow emissions and resource use data to be incorporated into the digital twin.
How much CO2 does a particular transportation process emit? How much water or electricity are used in each specific production process? What’s the environmental impact of sourcing from this or that supplier?
When these data aren’t available, or are not sufficiently granular (for example, electricity use per plant and not per machine), the parameters can be approximated using data science methods.
Once the planning system has a view on the emissions it can evaluate and report on the plans’ environmental impacts.
For example, how much CO2 will be emitted over the next couple of years based on the latest S&OP plan? Which processes have the biggest impact on sustainability?
These reports allow plans to be compared and the trade-offs identified from an environmental standpoint and can pinpoint the areas where it is smartest to invest in new technology.
Solvers and AI are just as capable of finding the most sustainable plans as they are at spotting those that are cheapest or business-optimal. Sustainability can be looked upon as a KPI like any other, allowing the solver to either fully optimize for it, or optimize for mixed strategies, where sustainability and cost-effectiveness are both included. These plans can show how day-to-day operations can be made more environmentally friendly, resulting in sustainability quick wins.
In his blog post ‘How steel manufacturers can reduce carbon footprint by optimizing tactical and operational planning’, my colleague Paul shows how, in the metals industry, this approach can lead to an 18% decrease in CO2-equivalent emissions.
As more sustainable technologies are developed, companies have to decide where to invest. The planning system can help here too.
Every possible investment decision can be incorporated into the digital twin and, with the help of solvers and AI, their impact on the supply chain can be simulated. This way companies can see which technologies have the biggest impact on their footprint.
Moving towards a sustainable supply chain can seem like a daunting task, and it’s certainly not going to be an overnight process. But it’s a process that doesn’t just benefit the health of the planet, it benefits the health of your business too. And through it all, planning systems are by your side and ready to help.
Want to create sustainable value, today and tomorrow? Find out what Green Planning can do for you.
Ioana is a consultant in the Solver team. There, she primarily works on the advanced S&OP solver and collaborates closely with project teams to ensure customers get the most out of OMP’s vast solver offering. She is passionate about mathematics and dislikes writing her own biography.