While there has been welcome progress in the adoption of sustainable supply chain practices to address climate risk, the 2014-2015 CDP supply chain report indicates that suppliers in major economies could take further steps to increase their resilience to environmental risk.
Suppliers in certain markets have advanced further than others when it comes to creating and maintaining sustainable supply chains. For example suppliers in France, the UK, Spain and Germany – in that order – are identified as the most sustainable as a result of having undertaken extensive measures despite low climate risk exposure in their supply chains.
On the other hand suppliers in China, India, Italy and the US are identified as vulnerable, due to an imbalance between the climate risk exposures they face and the steps the suppliers have taken to make their supply chains more resilient.
Clearly companies across global supply chains need to develop strategies to improve sustainability performance – both in terms of their own operations and by encouraging their suppliers to undertake sustainability initiatives. For manufacturers looking to increase the sustainability of their supply chains, newly emerging digital supply networks can offer an opportunity to progress towards this objective while achieving a number of competitive advantages.
First, as a result of their connectivity, digital supply networks can deliver visibility and traceability while facilitating collaboration between those who are part of the supply network. Doing so can empower connected suppliers to exchange information and create awareness about sustainability practices, share knowledge and collaborate to develop new solutions to help mitigate climate risk.
Second, because these networks are intelligent, they can help manufacturers identify carbon hotspots and water-related business risks in their value chains. The networks use analytics, cognitive equipment and smart apps to convert data into useful information that supports decision making and boosts innovation.
Third, digital supply networks are scalable. They operate at speed, allowing supply chain managers instant access to talent and infrastructure. And as processes in these networks become easier to optimise and duplicate, errors become easier to spot. This can lead to improved sustainability performance in supply chains.
Lastly, technology helps to enable greater flexibility in operating models. In the future, digital supply networks may increasingly give manufacturers the ability to align their operating models to their sustainability agenda. For example, cost-focused manufacturers might align their operating models to help them address resource and energy efficiency-related challenges.
As manufacturers seek to make their operations more flexible and sustainable, digital supply networks can play a critical role. Those organisations that pursue their digital vision while counting sustainability among the outcomes they seek will be well-positioned for both competitive advantage and climate risk mitigation.
☛ Rob Woodstock is managing director at Accenture Strategy.