Is Net Zero the key to transforming your supply chain?

With the scale of the climate and nature emergency becoming clear, as many as 1,400 global companies have already formally pledged to reach Net Zero by 2050, with many others expected to follow. Net Zero is a must today and one good way to meet tightening regulatory requirements for sustainability is through an end-to-end overhaul of your supply chain. 

Optimising your supply chain for Net Zero increases efficiency, reduces costs and improves customer service. It builds your reputation among consumers who have rising expectations for sustainable business. And it wins support from investors who increasingly demand strong environmental, social and corporate governance.

However, applying good practice across operations can help organisations meet these targets. Implementing a series of iterative actions can quickly add up to big strides towards Net Zero targets.

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How to put a Net Zero lens on supply chains

One simple way to drive your supply chain for Net Zero is through stock keeping unit (SKU) and packaging rationalisation. Do this by examining your portfolio to see whether some products and packaging types could be discontinued to improve efficiency. Rationalisation can eliminate unprofitable or marginally profitable products, reduces the need for changeovers on production lines (thereby reducing expedited transport and re-packing), shrinks inventory storage requirements and saves costs by removing the need for new facilities. However, this does require all functions - sales, marketing and operations - to work together for success.

Early in the pandemic many consumer goods companies temporarily stopped production of speciality items to focus on meeting skyrocketing demand for best-sellers. While many of those more specialised items have since returned to production, organisations such as PepsiCo’s Frito-Lay division expect some cuts will become permanent for items that “add complexity to its distribution system or have low consumer demand”.

Another strategy for moving towards Net Zero is to switch to more sustainable water and energy supplies – this drives lower carbon emissions and regulatory compliance and improves long-term resilience.

Similarly, organisations can become more sustainable by seeking out environmentally responsible suppliers or looking for innovative alternatives for raw materials and other inputs. Closely assessing the supply chain in this way also helps to improve transparency and traceability. And it appeals to consumers who increasingly want to support green businesses.

Finally, companies can gain a wide range of benefits through automation and intelligent technology. Predictive maintenance can alert organisations to potential equipment failures before they happen – avoiding the cost and energy waste of unexpected downtime. 

Smart sensors on production lines can control the plant operational equipment, managing speeds of belts, motors, pumps and gearboxes, saving energy, water, wear and driving bottom line value. Investing in such technologies provides a competitive advantage now, but the digital factory will soon be a necessity.

Getting to sustainability – and better business – one step at a time

Making incremental improvements over time does more than help your business move towards Net Zero carbon targets – it also helps to drive greater sustainability across other parts of your supply chain. 

These improvements also reinforce sound, foundational operational practices: efficiency, cost-effectiveness, reduced waste and optimised use of resources. And the money saved can be reinvested into other important areas, such as better planning and forecasting, more efficient transport management or innovation to replace or eliminate wasteful packaging.

Here at PwC, we’ve already made several improvements as part of our commitment to achieve Net Zero by 2030: reviewing our own supply chain, operating differently, consolidating floorspace and offices, upgrading our building stock, investing in new technology and switching to renewable energy sources. We’re ready to help if your organisation needs help with its Net Zero ambitions, so please get in touch.

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