The Importance Of A Sustainable Post-Pandemic Economy
By Alina Gross
The COVID-19 pandemic has shown how vulnerable global value chains actually are and companies are realizing that supply chains have to be more resilient than ever before. In order to be ready for the next post-pandemic economy as well as the next unforeseen crisis, businesses have to rethink, and in many ways, reinvent the way they run – to operate in a more resilient and sustainable way.
The aim for our economy must be to emerge from the crisis more climate-sensitive and resource-efficient. Businesses therefore should evolve their focus and shift from crisis management to recovery, to growth, to resiliency, to sustainability.
Keeping up with the Paris Agreement
The Paris Agreement, reached by 195 countries at the United Nations climate-change summit in December 2015, aims for reducing global greenhouse-gas emissions enough to prevent the planet from warming by more than two degrees Celsius.
To achieve these global climate goals while meeting the growing demand globally, companies have to significantly cut their greenhouse-gas emissions. To address that, SAP started an initiative called Climate 21.
As Toby Croucher (Energy and Natural Resource Industry Lead for EMEA North at SAP) stated in a recent podcast, for companies to figure out “where they stand”, some kind of accounting is needed, and managing a ‘carbon budget’ can help. A carbon budget is the cumulative amount of carbon dioxide (CO2) emissions permitted over a period of time to keep within a certain temperature threshold.
Companies however need help with this calculation and transparency of their emissions. Toby Croucher explains: “Climate 21 is an ability to have the needed visibility and be able to manage that and to have the ledger that passes through as products and services move down through the industrial, ultimately to us as consumers.”
Sustainability from the very beginning
In another podcast, Thomas Ohnemus, explains that “already in engineering, companies decide on a lot of the impact a product has along the whole lifecycle, during its life until it gets recycled.” In the design phase of a product, companies should hence make decisions that reduce the impact the product has during its lifetime and those that will help to increase its recyclability. Supply chains are a massive part of a company’s carbon footprint.
Companies should therefore have a sustainable agenda these days – they should try to design products in a sustainable way, to manufacture products in a sustainable way, and to deliver and operate these products in a sustainable way.
Richard Howells further explains in one podcast: “sustainability needs to be driven all the way through the business process – from designing more sustainable products, leveraging the correct natural resources, minimizing waste and the pollution in the manufacturing processes, all the way to delivering sustainable practices and optimizing deliveries and truck loads and finding better ways to delivering goods to the customers whilst taking into account ways of minimizing the carbon footprint.”
The circular economy model is inspired by nature’s own ecosystem, resilience and longevity. Waste does not exist in nature. A circular economy ensures an economic system where no materials are wasted. Instead, they are managed in closed loops. Products are designed and built so that, at the end of their lifecycle, they can be reused, refurbished or repurposed.
With this concept in mind, companies have better visibility during the manufacturing process of identifying what the quality of a product is, what its waste is. As Thomas Ohnemus mentions, sustainable design processes that help recycle material into other manufacturing processes also help to eliminate waste. It should be companies’ ultimate goal to produce 100% recyclable products and to leverage anything wasted or buy and use products that can get reused in other processes.
In another podcast, Mike Censurato expresses, he believes “the term sustainability or sustainable supply chain now also includes the health and safety of the workforce. In this specific time period of the pandemic, it’s a key reason why you want to drive to a sustainable supply chain, making sure that the workers are safe and injures and the infection rates are lower.”
Industry 4.0 and sustainability go hand in hand
In another podcast, Hans Thalbauer states that, Industry 4.0 and sustainability go hand in hand. “The efficiency in manufacturing, the reduction of energy consumption in manufacturing, the reduction of water consumption during the production processes, all of this actually goes hand in hand. And so, both topics for me are connected.”
He argues that establishing a circular economy needs connectivity. “I need to be connected to the business partners; I need to be connected to the things. The more connectivity I have, the better I can manage efficiency. For example, efficiency in transportation, where I really make sure that the truck is never empty. That the truck really has the shortest route between point A and point B. This is in the end all about reducing waste. Industry 4.0 enables us to be more sustainable and, to measure and control it in a much better way. We need to leverage all the concepts which are being created from sustainability, circular economy, the whole waste reduction concepts as part of Industry 4.0. It really goes hand in hand in my mind.”
Green fleet management
In addition to efficiency in transportation, electro mobility will shape the future in the logistics industry. Logistics and electric mobility are increasingly more related.
In one of our podcasts, Rushil Goel discussed the results of a survey his company Samsara conducted: around 90% of the respondents reinforced that e-vehicles are the inevitable future, they are positive about the investment and see the efficiencies and savings, as being meaningful. In his opinion “10 years is a reasonable time in which you will see a significantly higher adoption across all industries for e-vehicles.”
Sustainable value chains can make a stabilizing contribution to the post-pandemic world. It is now necessary to focus entirely on an efficient and, as far as possible, circular economy. This ranges from healthy, resilient workforce to sustainable product components, from designing a product to operations. Applying the Industry 4.0 concept for better connectivity can hereby help. And lastly, technologically, as battery-driven e-vehicles show, there also is “a new way to go".
For more interesting podcasts, check out the The Digital Supply Chain podcast by Tom Raftery, discussing thought leadership, best practices, and the latest innovations in delivering a sustainable supply chain.