If there’s one thing that’s plain about organizations’ environmental, social and governance objectives and progress, it’s that they need to be transparent about them. But a necessary step in creating that transparency is innovation in the supply chain. As we said in our last post, no organization can “go circular” entirely on their own.
Supply chain logistics can help with the traceability of products, services and materials; integrating new technologies and innovative business strategies can also help to minimize energy use, lower transportation costs and create other efficiencies.
But supply chain innovation can’t be done in isolation. It requires collaboration with different members in the chain and new ways of working together—especially in a world where ESG goals and targets are becoming increasingly important to consumers, employees, boards, investors, suppliers, regulators and other stakeholders.
Blockchain—a digital ledger of transactions that can’t be altered, deleted or destroyed—can be used for traceability, providing a trusted end-to-end view of where a product comes from and what’s involved at every point in the value chain. This helps organizations get a better view into the suppliers of their suppliers, while helping their clients make more informed choices.
But there are other applications of technology in the supply chain that will help you do more with less—or at least do more with the same—and meet your ESG objectives. Digital twins, for example, is a game-changing technology that allows you to create a real-time virtual model of a physical object or process, ideal for simulations or scenario modeling.
For example, digital twins can be used for supply chain applications such as creating a 3D rendering of a seaport or airport, and then layering on datasets to create simulations. As you change variables, the rendering will adjust around those variables. The next evolution of this technology will involve layering on machine learning and artificial intelligence, so simulations get “smarter” in their use of data, allowing companies to become more predictive and make better decisions.
Twins for the wins
Once you understand what can be done with digital twins, the applications are bound only by the breadth of your imagination. Scenario modeling can be expanded beyond an individual seaport or airport so that you could create, for example, a digital twin of your entire supply chain from end to end—or even the planet—to seek out new ways to improve the flow of goods or to minimize load and offload times at each end of the shipping journey.
When it comes to ESG goals, digital twins could be used to map out scenarios related to climate change to see how robust your supply chain is and to mitigate any potential risks. For example, how do seaports plan for a rise in sea levels? Digital twins allow you to create different scenarios, model them out and then see the impacts of those decisions.
If the organization’s goal is to reduce CO2 emissions, you could model out a scenario where all modes of transportation are shifted to electric and then map that profile against factors such as load times, wait times and distribution times to weigh the costs and benefits.
While you can also crunch the numbers in a spreadsheet, digital twins provide a more visceral view of those impacts. “Visceral analytics” is the idea that you can “experience” a spreadsheet and bring that decision-making mechanism to life in a new way—and ultimately move the dial on sustainability goals.
In with the new
Innovative technologies allow organizations to create efficiencies, mitigate risks and, ultimately, meet their ESG goals. Technologies such as digital twins can serve as powerful tools to help bring data to life, which in turn can create stakeholder buy-in for decisions related to ESG goals and the supply chain. The key is getting clear about what insights you’re looking for.
But innovation isn’t just about technology; it’s about fundamentally changing the way organizations conduct business throughout the supply chain—from looking at different ways of sourcing products, to bringing goods and services closer to our shores to reduce their carbon footprint, all of which may require a fundamental shift in the way we do business.
Digital transformation has impacted every corner of our lives, so there are lessons to draw from and a roadmap to follow. It’s becoming even more important as stakeholders continue to demand transparency around ESG progress and objectives. The challenge is significant, but the opportunities are even larger. You can get there from here, you just have to know where you’re going.
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