3 high-value ways to accelerate your journey to supply chain sustainability

By | 4 minute read | May 4, 2021

Today, consumers want to know where their coffee was sourced and where their diamonds were mined. In fact, more than 70% of consumers indicate that traceability is very important and are willing to pay up to a 35% premium. Governments and investors are holding companies accountable for sustainable supply chain practices too, with Blackrock, the largest investment management company worldwide, asserting it will put sustainability at the center of its investment approach.

Although many people think sustainability programs cut into profitability, research shows otherwise. Numerous reports cite a direct correlation between sustainable practices, share prices and business performance.

Supply chain leaders are stepping up to the challenge. Now, 49% of all companies have supply chain sustainability goals and 70% are planning to invest in circular economies in the next 18 months. With the rush to Net-Zero, carbon neutrality and energy management are top of mind. However, there are opportunities everywhere along the end-to-end supply chain to embed best practices to drive sustainability and help enable circular economies that reduce waste and encourage reuse.

Reaching supply chain sustainability goals requires a global, accurate, real-time view of inventory and the ability to share data across your supply chain ecosystem in a trusted way. But the truth is, all too often supply chain leaders operate in the dark. When you don’t know exactly how much inventory you have and where it is, you over order and have too much working capital tied up in inventory to avoid stockouts. This creates a ripple effect, generating waste in other areas, like warehousing and logistics. And if you lack transparency and data sharing with your deep-tier suppliers, it’s incredibly difficult to track product provenance – from point of origination to delivery – in a trusted and controlled way to identify supplier risk and protect your brand.

Fortunately, technology can help you overcome the visibility and data sharing challenges and enhance your existing supply chain processes to create a sustainable and profitable path forward. Here are three high-value places to focus first.

1. Inventory management

In asset-intensive markets such as oil and gas, mining, utilities, petrochemical, and industrial, companies are optimizing maintenance, repair and operations (MRO) inventory to ensure they have never too much and always enough. Through right-sizing inventory levels they can also achieve a quick and meaningful boost to their sustainability efforts. With IBM Maximo MRO Inventory Optimization, you can make more informed decisions to optimize MRO inventories, increase service levels and minimize unplanned downtime, while freeing up working capital to spend in other strategic areas. You can also help reduce your organization’s carbon footprint as you use excess inventory and reduce warehouse space. An accurate, granular view of MRO inventory performance and optimized recommendations for inventory and reorder levels for each stock item, further cuts waste and environmental impact by reducing dead inventory and the need for emergency shipments.

With IBM Maximo MRO Inventory Optimization, a U.S. utility achieved net improvement in MRO inventory costs of $25 million and brought their 10% inventory growth rate down to zero.

In more consumer-focused sectors like retail, global real-time inventory visibility can make the difference between delighting or losing a customer. IBM Inventory Visibility easily connects to existing systems, so you can check stock across multiple locations and get up-to-the-minute views on what’s available nearby or in transit. Customized alerts and thresholds for your business allow you to fill demand and design out waste by reducing safety stock, markdowns, carrying costs and optimizing physical store and distribution facilities footprints.

2. Fulfillment optimization

Leading retailers and brands – B2C and B2B – are hyper-focused on omnichannel order fulfillment today to give customers the right products at the right time and place. The opportunity also exists to do this in a greener way. IBM Sterling Fulfillment Optimizer with Watson enhances and extends existing order management systems, so you can purposely source inventory that’s closer to the customer to reduce your carbon footprint. You can optimize fulfillment at the lowest cost to serve and reduce logistics-related emissions due to often expensive and unnecessary shipments.

3. Product provenance

From coffee to seafood, batteries to wine, companies that take sustainability seriously work to ensure raw materials are responsibly sourced and products maintain their quality and integrity as they travel through the value chain. With IBM Blockchain Transparent Supply you can build a viable and sustainable ecosystem of partners, designing business and governance models that reflect shared values. Sharing data through an immutable, distributed and shared ledger, you can transact with supply chain partners in a more trusted and efficient way to ensure provenance and quality, reduce product waste and increase profitability. You can provide transparency to today’s purpose-driven consumers by helping them purchase in alignment with their values – and deepen engagement by allowing them to directly engage in sustainability initiatives.

Farmer Connect is using IBM Blockchain Transparent Supply to provide traceability to ensure that coffee is sourced in a sustainable way and even show consumers the journey their coffee has made and allow them to leverage the platform to direct a donation to a sustainability initiative in the farmer’s community.

IBM has dedicated experts with deep domain and industry expertise to help you develop and implement the right strategies, operating models, intelligent workflows and technology innovation to achieve your sustainability goals. Wherever you are on your supply chain sustainability journey, IBM can help.

Explore more IBM sustainability solutions – or read other blogs in our enterprise sustainability series: