Go Organic or Go Broke?
The latest Gartner Chainnovators Awards revealed that there was a “major methodology [shift towards] increased corporate social responsibility.” Featuring interviews with Elemica, Enevo, and VANTIQ on their green initiatives.
The Gartner Supply Chain Top 25 for 2020 lists supply chain leaders and their operational models, ranking their management practices and innovation capabilities. This year’s pandemic crisis has brought a certain degree of novelty to the ranking. In the fast-changing environment, companies needed to stay agile and make use of their transformation capabilities, to sometimes pursue goals outside of their main focus areas.
Despite the challenging times, the report finds that leading companies give increased attention to Environmental, Social, and Government (ESG) measures. Organizations are actively researching ways to make their supply chains more ethical and sustainable. We take a closer look at this trend and list the top initiatives that ESG-focused companies have been pursuing in the first half of 2020.
1. Ethical Sourcing
Ethical sourcing is a top priority for organizations that are aiming to run sustainable supply chains. They partner up with suppliers and encourage them to respect environmental and social standards. They also emphasize visibility well beyond the first-tier suppliers and across the entire supply network.
The Swedish H&M has opened up its global supply network to other players in the industry. They offer expertise as a service and enable smaller brands to pursue sustainability and share their long-term supplier partnerships. Like this, they share the keys to their own ethical practices, which have become a top priority in the past years.
This shows how achieving true sustainability is not an endeavor that a single company can tackle, but rather a collective effort, that includes players all around the global supply network.
Elemica, digitally transform providers in supply chain logistics, Global Director of Marketing, David Cahn, mentions that they are “helping companies make green vendor choices by using electronic certificates of analysis during transit, which tell the source, quality, and all the details you need to know to make a sourcing decision.” Also noting that preferential treatment is given to green vendors, saying, “it is imperative in certain industries that ingredients are sustainable and green or they lose out on contracts.” Elemica offers a way to ensure those sourcing initiatives are enforced.
2. Focus on Recycling
Global supply chain leaders give recycling extreme importance. Not only is their production process optimized to reuse as many components as possible, but they also give their customers the possibility to engage in recycling behavior. Such is the example of Alibaba, which has deployed 75,000 recycling depots, where buyers could dispose of packaging and shipping boxes.
At the same time, Colgate-Palmolive has certified the first recyclable tube and aim to make all their products recyclable by 2025. They also make their research and technology open source. By sharing their findings with other companies, they help turn recycling into normal behavior and enable less resourceful companies to raise the bar on their sustainability practices.
“As government incentives and attraction to companies with green initiatives grows, so does the need to verify and track recycling and collection rates,” says Geoffrey Aardsma of Enevo.
Installing Enevo trash sensors is one way that companies can quantify changes in recycling habits in their stores, restaurants, factories, and more. In one use case for +100 locations of a popular donut chain in the U.S., these trash sensors decreased waste costs by 28% and proved an effective way to measure and optimize recycling efforts and collection. In another case, applied to city trash collection, by tracking fill rates and setting notifications for as-needed pickups, this Enevo backed solution “optimized routes for trash collection which reduced carbon emissions by 49%.”
3. Conservation of Natural Resources
Leadership companies are aware of pressing climate issues and act accordingly. They make conservation a top priority since they recognize the crucial role that natural resources play on a global scale. They also keep an eye on the interaction between their business choices and natural environments and engage in responsible behavior for mitigating their impact.
Unilever is utilizing digital tools and geospatial tracking technology, in their attempt to certify the origins of palm oil. Since this resource is crucial for the development of their personal care products, they aim to keep an eye on local issues such as deforestation and the disenfranchisement of smallholders.
VANTIQ works with companies around the world to take real-time data from IoT devices and use it to improve sustainability and operational efficiency in smart cities, supply chains, and in the supply of water:
“WaterBit is using VANTIQ technology to help large-scale farms improve their water usage. WaterBit has hundreds of IoT-enabled sensors in place at these farms. Farmers can take action based on the data collected - and it’s working. For instance, water use has dropped by as much as 40% while water use efficiency has climbed 20% to 30%.” - David Sprinzen, VANTIQ
4. Commitment to Reduced Carbon Emissions
Awareness of their carbon footprint is a common characteristic of almost all companies in Gartner’s list of Chainnovators. While some have announced their intentions to actively try & reduce carbon emissions, some are planning to reach net-zero within the next decades.
Amazon is doing efforts in this direction and aims to reach net-zero carbon by 2040, 10 years ahead of the Paris Agreement. With their large number of physical assets and logistics infrastructure, they have already taken a series of steps towards this goal. For once, they have announced the acquisition of 100 000 electric vehicles that should start delivering in 2021. This shows commitment to the use of electric vehicles and is likely to set a global trend that more companies will follow.
5. Decreasing Packaging Waste
Top Chainnovators give extreme attention to how their product packages are designed, recycled, and repurposed. Some focus on the elimination of non-recyclable plastics, while others take an active role in dealing with post-consumer waste. Their ultimate goal is to reduce the environmental impact of their packaging and come up with innovative and sustainable solutions.
To illustrate, Colgate-Palmolive has invested efforts into becoming TRUE Zero Waste and into gaining that certification for a large number of its manufacturing sites. Supported by the Green Business Certification Inc. (GBCI), the TRUE Zero Waste certification program enables organizations to identify, plan, and achieve their zero waste goals. This is not an isolated case since more and more companies are defining similar initiatives (such as Coca-Cola’s “World Without Waste”).
6. Renewable Energy
Another ESG objective common to most Chainnovators is the transition towards renewable energy. This is a global transition, that happens across all continents, independent of national regulations and policies. Private companies have a leading role in the global transition towards clean energy.
Apple, for example, is already running all its offices, data centers, and retail locations on renewable energy. Its commitment to solving ESG issues across its global supply network has secured it a Top 5 in Gartner’s evaluation.
Other multinational corporations that scored particularly well on their renewable efforts are PepsiCo, P&G, and General Mills. Given the large scale at which these companies operate, it is expected that their efforts will have a long-lasting, positive impact on the global supply network.
7. Circular Economy
Particular focus on the Circular Economy is another trend observed across companies operating top global supply chains. This regenerative model enables economic development that benefits not only businesses but also the society and environment. As such, it is more and more important for global players to balance the consumption of finite resources with their economic growth.
HP Inc. and Lenovo’s CE practices brought the two technologies companies in the list of global Chainnovators. Their ESG strategies are centered around circularity across multiple business layers: from hardware and product development to packaging and repair/reuse policies.
Cisco and Schneider Electric have also been praised for their Circular Economy practices:
“Leaders such as Cisco and Schneider Electric are focused on recycling components from old equipment back into new offerings or, at a minimum, recapturing some value from them before safely disposing the remainder.”
With all the examples above, the outcome of Gartner’s research is clear: purpose-driven organizations take the lead in the supply chain. On their quest to develop ethical and sustainable supply networks, they constantly improve their operational models and keep awareness of their impact on the world. These changes are amplified when companies partner with machine learning capable firms like Blue Orange Digital. As American Express notes that, “market-research firm IDC predicts that by 2020, 50 percent of mature supply chains will use AI and advanced analytics for planning.” This leads to transformational capabilities and sustainable goals that inspire customers and employees alike.
In the process, supply chain practices are improved, transparency is increased and all involved parties develop for a greener, sustainable future.
For more on AI and technology trends, see Josh Miramant, CEO of Blue Orange Digital’s data-driven solutions for Supply Chain, Healthcare Document Automation, and more.
Josh Miramant is the CEO and founder of Blue Orange Digital, a data science and machine learning agency with offices in New York City and Washington DC. Miramant is a popular speaker, futurist, and a strategic business & technology advisor to enterprise companies and startups. He helps organizations optimize and automate their businesses, implement data-driven analytic techniques, and understand the implications of new technologies such as artificial intelligence, big data, and the Internet of Things.
Featured on IBM ThinkLeaders, Dell Technologies, and CU Insight. Recognized among NYC's Top 10 AI Development and Custom Software Development Agencies by Clutch and YahooFinance for his contributions to NLP, AI, and Machine Learning. Specializing in predictive maintenance, supply chain/grid/marketing/sales optimization, unified data lakes, anomaly detection, recommendation systems, among other ML solutions for a multitude of industries.
Originally Published: https://medium.com/datadriveninvestor/green-initiatives-of-gartners-2020-top-chainnovators-222ecae5c770