Sustainability and climate neutrality: on the way to a "green" supply chain
01/03/2023
By Gerald Scheffels for ifm
Hand on heart: How sustainable is your supply chain? How high is the resource consumption that occurs in the production of your purchased parts and your products? How high is the CO2 footprint per product? And is that even important? If so, can you find the answers in your SAP system?
To start with the penultimate question: Yes, it is important – and it is becoming more and more important. Every company should take this topic very seriously. There are several good reasons for this.
First of all: If the pace of global warming is not reduced and the temperature rise is not limited, this will have serious consequences for the planet. This is consensus among all serious climate researchers. Therefore, every company is called upon to do its part in the careful use of resources and energy in the sense of “corporate citizenship”. Many companies are following this path, for example, by announcing when they will produce CO2-neutral. To do this, they must know their CCF – the Corporate Carbon Footprint – and reduce it step by step.
Sustainability becomes a KPI, the determination of the CO2 footprint a duty
Irrespective of this, (measurable) sustainability has now become a "key performance indicator". More and more companies are publishing sustainability reports documenting their efforts and successes in reducing their CO2 footprint.
This is done out of serious concern for the future of our planet and our economic system. But it also has the quite desirable side effect that companies that strive for sustainable management improve their image and are perceived as particularly responsible. This in turn – apart from saving energy and resources – brings benefits in several respects:
- Customers increasingly include sustainability as a factor in their purchasing decisions – this applies equally to B2B and B2C.
- The image gain has a positive effect on all "stakeholders". Its radiance also illuminates the employer brand: a big plus in times of a shortage of skilled workers.
In some sectors – especially in the automotive industry – it is even unnecessary to ask whether it makes sense or is important to determine sustainability indicators. It is (or very soon will be) simply mandatory. Manufacturers ask their suppliers to tell them the CO2 footprint of the individual sun visor or rear lamp because they are calculating the production footprint of their vehicles and logically also include the supplier parts.
Concrete information and figures are required – from three areas
In this situation at the latest, the manufacturer must provide concrete, verifiable figures. A commitment to sustainability and a declaration of concern for planet Earth are no longer enough. The very concrete question is: How do we determine the carbon footprint for our products and also other KPIs that document the status of sustainability efforts?
The obvious answer is to look where most of the data is collected – in the ERP, or more precisely in the SAP system. But to answer the question right away: No ERP, no matter how well maintained and developed, will be able to indicate or calculate the CO2 footprint of a product produced with the help of this same ERP at the touch of a button.
Nevertheless, one does not have to do without help completely. The SCM software from ifm provides support by creating transparency and enabling targeted sales, demand and inventory planning as well as robust production planning.
Three essential topics will be briefly considered below:
Firstly: The reconciliation of demand and stock
What is in stock? How long is its shelf life? Has it already been opened and must be consumed as soon as possible? Which requirements are pending and when? When must which quantity of which resource be in stock? What needs to be consumed by when? Which container sizes make sense?
If a company can answer these questions, it will avoid waste because demand, stock and order are coordinated. This is where ifm's procurement software can provide useful support as it points out excess stocks, alerts in good time in case of a shortage, compares demand and stock and much more. A balanced flow of material ensures lean processes and avoids waste, dead stock and slow-moving items.
A very simple example: If important information can be attached to each material, such as the best-before date or special features in use, sensible quantities are ordered instead of taking quantity discounts that lead to the material spoiling or becoming brittle and having to be disposed of.
Secondly: Engaging suppliers
By intelligently engaging and connecting suppliers, a company can also influence its eco-balance. For example, it is possible to connect smaller suppliers to the SAP system via a browser-based application from ifm without EDI. In this way, suppliers optimise transport costs with the assigned BANF information, determine sensible delivery horizons and thus make a positive contribution to climate protection. Specifications regarding the type of delivery, the selected means of transport, etc. can complement and reinforce this effect.
Thirdly: Efficient utilisation of means of transport
For reasons of eco-balance, trucks should always be on the road with (almost) full loads. Orders should therefore be bundled in such a way that the planned means of transport is fully utilised or that a suitable larger means of transport is chosen if necessary, as CO2 emissions do not usually increase linearly with the size of a truck. And for smaller delivery volumes, a smaller means of transport should be chosen to improve energy efficiency. GIB Buying offers precisely these possibilities – through the sensible bundling of orders. Incidentally, this not only reduces CO2 emissions, but also logistics costs.
BUT: The climate protection measures listed are only as good and effective as the underlying data allow. Only if the master data in the SAP Core is appropriately maintained and complete, the software can make a "healthy" and sustainable contribution to climate protection.
