Supply chain visibility creates opportunities to reduce CO2
You can read this article in 8 minutes
The supply chain is a one trillion dollar a year global industry. Over recent years the complexity has increased dramatically. Rising expectations from consumers, changing routes and processes, more participants and specialists, and the adoption of new technologies, have all contributed to extend the requirements for successful management. A 2021 Gartner report stated that by 2023, 50 percent of global product-centric enterprises will have invested in real-time transportation visibility platforms. The drive for innovation is no longer in the domain of early adopters but has come to define a major shift in thinking across the whole enterprise ecosystem.
Depending on whose research is referenced, humans produce between 38 and 42 Gt of CO2 per year. The scientific community has reached a consensus that in order to avert an increase in global temperatures of 1.5 degrees centigrade, we must spend no more than a total of 420 Gt of additional CO2.
This is going to be a major test of human endeavor. Humans have accomplished many incredible feats including mega engineering projects, space exploration and the invention of game changing technologies. One area which always presents particular difficulty is in overcoming national interests and geopolitics to act collaboratively across the planet. If reducing reliance on fossil fuels for energy production means that a country is not able to deliver on promised economic gains, then populist political incentives steer policy against carbon reductive action.
The drive towards a carbon neutral future is largely in the hands of enterprise, supported by the scientific research community, the younger generation of consumers and the media, which is increasingly promoting climate positive behavior.
Enterprises have a duty to their shareholders to deliver profits on investments and strive for continual growth. With the right technology these requirements can be fulfilled at the same time as enabling reduced negative impact on the environment from excessive emissions and waste. What does this technology look like and how can we be sure it will be truly fit for purpose?
One can change what one knows
Visibility is a word that promises a path to transformation and new capabilities. The inference being, that one can change what one knows. If inefficiency is visible, it’s possible to take corrective action to reduce and even remove it. The phrase ‘knowledge is power’ is used often enough, and it seems to make sense to the layman. However merely knowing something is not enough on its own. It’s important that we can take actions on that knowledge and do this in time and in a way that doesn’t create new and even greater problems due to unseen co-dependencies and complexity.
Before we look deeper into the subject of visibility, let’s take a moment to consider what is really meant by the term ‘supply chain’. In his 2012 book ‘Managing Supply Chains: A Logistics Approach’, Dr. John Langley, defined the concept as follows: “A supply chain encompasses business functions and enterprises interconnected by resource flows of goods, services, information and funds. Supply chain management spans these interconnected networks to acquire, produce and deliver goods and services in our global economy.”
Perhaps in times gone by, we may think of these flows in terms of chains, but in a hyper-connected post digital world we must shift towards thinking in terms of ‘global value networks’ characterized by intensive co-reliance and iterative commercial structures.
Many think of logistics and supply chain as primarily the flow of goods. Dr. Langley reminds us that it includes much more than that. Business functions and enterprises are interconnected by flows of goods, services, information and funds.
To ensure performance across all of these resource classes, the information concerning the current status, expected status and impact of uncertainty must be managed to create enterprise hegemony. A truly digitized enterprise uses information to create knowledge and then act on that knowledge with humans and machines working in tandem to exercise a greater degree of wisdom that was impossible before advanced computing became standard in our lives.
In complex systems one event can be amplified across the entire ecosystem to drive significant impact. In cases where multiple co-dependencies are inherent, the consequences are potentially devastating. Whatever the causes of the Ever Given running aground in the Suez Canal on the 23rd March 2021, the fallout was considerable.
Localized high winds, a dust storm, possible human error and the narrowness of the channel all contributed to the holding up of approximately $9.6bn of goods per day with over $900m of damages being directly attributable. Similarly, in the summer of 2017 the Rastatt rail line collapsed in Germany resulting in up to seven weeks of reduced intermodal traffic flow through central Europe.
Whilst it is impossible to entirely prevent unforeseen accidents, the far-reaching consequences of these events demonstrate the need to predict supply chain weakness and put in place capabilities for live visibility to act fast and ensure economic impact is minimized.
Opportunities for CO2 reduction
So, there is a business need for transparency but what has this got to do with climate change? The tools of visibility are equally applicable to reducing emissions. Just as negative events are often amplified across the entire system, so positive gains are also felt more broadly. Improved visibility can be leveraged to increase the speed of critical processes with service partner events like vessel loading or asset maintenance procedures.
Data can be used to ensure accountability, quality of goods, responsibility for errors and to make choices based on real evidence to drive process improvement. Many of these optimizations have a dual positive impact on profitability and emissions like CO2.
Cutting-edge algorithms provide business leaders with the tools to get value from raw sensor data, IoT gateways, connectivity and machine learning capabilities. The digital twin is a simulation model of a real-world object, asset or system. Such advances provide decision makers with the opportunity to create advanced tools to try out new things, experiment with business models and processes and share ideas with other business units to see where the limitations might arise or define opportunities to create commercial and environmental impact.
Nexxiot, the company I founded in 2015, works with cutting-edge technology including sensors, IoT gateways, Big Data analytics and new types of user interface to represent and experiment with new processes. I believe it’s important to optimize human infrastructure today and build new processes and mechanisms for tomorrow. No single strategy is enough, but it’s quite clear that in rail freight, shipping and cargo transport there is much to improve and many opportunities to create environmental benefits.
A major reason for this is that these digital solutions simultaneously drive commercial value and climate impact. Another reason is the neglect that these industries have suffered since they are heavily tied to their legacies. Bottlenecks and delays can be caused by the breakdown of any related service in the value network. It doesn’t need to be as major as a huge vessel that’s run aground. It could be simply a missing document or a broken component or part.
It has always been my ambition to create data driven services to provide real visibility and the toolset to act decisively and in time. This supports a clear path for the digital supply chain industry to evolve. Together stakeholders must play an active part in defining and extending the roadmap to adoption so we can enable the progress that we all so urgently require. A useful question to ask is ‘How will my processes be transformed to add more value, claim a greater share of wallet and enable maximum sustainability impact at the same time?’