The supply chain is a vast and complex system – one that requires continuous monitoring and improvement to “keep up” with shifts in politics, improvements in technology, and re-alignment of products. The most effective way to do this while also incorporating ESG goals is to explore the possibility of leveraging ERP solutions for supply chain sustainability.
Setting and Monitoring ESG Goals
The push for companies to acknowledge responsibility for their organization’s environmental responsibility is coming from all directions: governments at a federal and local level, consumers, shareholders, executives, and other regulatory bodies. It’s imperative that businesses understand and evaluate what their impact is and where their performance can be improved.
Corporate goals are shifting, and now traditional goals are expanding to encompass environmental, social, and corporate governance (ESG) goals as well. One way that businesses can set and monitor these goals is by implementing enterprise resource planning (ERP) systems, which can provide the right tools to measure and improve sustainability. However, organizations need to evaluate their ERP system’s ability to monitor their goals to understand how well their operations are supported when it comes to supply chain sustainability.
What is Supply Chain Sustainability?
Supply chain sustainability extends the focus of an organization’s traditional performance goals to also include ESG goals and KPIs. A holistic view of a supply chain is imperative for the systemic success of an organization. Many organizations will look to their upstream supply chain (e.g., sourcing, processing, and manufacturing), but it’s also necessary to search downstream supply chain activities for weaknesses that can be improved (e.g., shipping and transportation, and waste management). Many organizations are turning inwards to see how their sites can be more sustainable, and while this is necessary, it’s not enough for a single organization to be sustainable. The upstream and downstream partners must also be included in sustainability efforts. Partnerships must hold each other accountable for their practices to ensure that goals are being met and regulations are being followed.
Why should you use Supply Chain Technology?
As any one supply chain is extremely complex, with many teams and many moving parts, it takes a lot of time and effort to manage these components. Having each team track and trace their practices can add complexity to daily operations; there should be a uniform way to include the data and see it as a complete picture. Supply chain and sustainability teams need a reliable way to collaborate, collect critical data, manage risks, and analyze their data. Regulators like the SEC and other agencies are only adding to the need to have this data available and easily accessible to remain in compliance with contracts.
ERP Solutions for Supply Chain Sustainability
Software for supply chain sustainability has come a long way, ranging from multi-faceted cloud programs to narrowly targeted monitoring systems. Understanding what your organization needs is the first step to deciding which program is the best fit for your sustainability goals. Finding the right fit to ensure it aligns with the appropriate ESG KPIs that your organization is targeting is a highly involved task.
Integrating sustainability into existing solutions is a great way to cover all angles. Large and developed ERP systems like SAP, and advanced planning solutions like Logility, already have modules focused on environmental impact and monitoring of an organization. Below, we provide a few summaries of the various solutions available:
- SAP rolled out a complete end-to-end reporting solution aptly called the SAP Sustainability Control Tower. This software is an answer to total control over ESG, improving transparency and business performance. The centralization of data allows organizations to record actual data and see it in real time. Data collection no longer is a tedious process with automated integration, which creates reliable data, improving the integrity, quality, and workability of the information and ensuring your organization is audit ready. The program maps your data seamlessly, showing impacts across all business functions, including finance, HR, operations, and more. Reports are created built on a singular foundation, making them reliable and accessible. These aspects culminate in making your organization action ready. Having the data reliably at your fingertips keeps your company agile in the monitoring of any potential dips and restored quickly.
- Logility emphasizes traceability in your supply chain, helping you share more information reliably with customers, corporate partners, and company stakeholders. Improved traceability maintains and elevates credibility in your network, making it easier to comply and adapt with shifting legislation and regulations. Transparent traceability aligns your business values to your consumer’s values, showing respect for the people doing business with you, building trust and consumer relationships. Looking outward, Logility offers solutions to minimize risks and prevent getting blindsided by suppliers. In 2022, Logility launched a corporate responsibility solution within their Digital Supply Chain Platform, to help businesses track the social compliance and environmental status of current and potential suppliers. Looking at every supplier from high to low level is the key to unlocking a sustainable future, according to the Harvard Business Review. Having a unified and strong message of values, ESG goals, and economic goals an organization wants will help in translating that to suppliers and creating a more sustaining supply chain.
- o9 Solutions, like SAP and Logility, offers end-to-end ESG solutions for supply chains, but one particularly interesting service they offer is Circular Operation Planning. It helps move away from the linear waste cycle to map a more cost-effective and environmentally conscious resource management cycle. This system offers both retrospective and proactive resource management, so that you can see your current products’ circularity and input new product ideas into the system to project downstream effects. This data helps deliver on zero-waste commitments, creating a sustainable portfolio of products. Approaching a circular operation model helps with short- and long-term costs, decreasing the overall bottom line and planning costs, as well as creating a better environment for decision-making.
Creating a More Sustainable Supply Chain
These are just a few examples of available ERP solutions for supply chain sustainability. It’s imperative to evaluate where your business needs help in the ESG space and which aspects of your supply chain need the most focus. From there, challenge software providers to offer solutions to meet your goals, select solutions that best align with your corporate goals, and configure and implement the software to fit your company’s needs so that your organization can be the best version of itself, building consumer trust and system longevity.
Re-evaluating and integrating sustainability in your supply chain is not as daunting of a task as it was even five years ago. Technologies exist that can strengthen your understanding of your organizations impact and help to control what can be controlled. Organizations need to continue to challenge providers in both improving existing ESG capabilities and pursuing prospective new capabilities offered by these software companies for an enduring supply chain.
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Contributions from Julie Talbot