The secret to achieving sustainability in the supply chain

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As a business, it has never been more important to manage as sustainably as you can. There is a lot of pressure on companies to keep green as much as possible, while also remaining cost-effective and efficient. These demands are coming from all directions – from customers, staff, government and, in many cases, shareholders.

For many businesses, increasing sustainability may seem impossible without increasing costs, but the good news is that this is not the case.

In recent years – and especially since last year’s COP26 conference – stability has been forced to be at the top of business leaders’ agendas, and it shows. In a survey of 765 industrial business leaders conducted by technology company ABB, 71% said they were giving more priority to sustainability objectives as a result of the epidemic.

One industry that is booming in the COVID-19 era, though it still has a long way to go before it can truly claim to be sustainable, is logistics.

Interestingly, 72% of ABBs said they were increasing their spending on industrial IoT somewhere or significantly in order to improve their sustainability and I think they deserved to do so.

It is becoming clear that digitization will play a major role in how we live and work, and we have moved away from using IoT only for efficiency; It has also become capable of sustainability goals, including supply chain sustainability. According to a report by Vodafone and WPI Economics, emerging technologies such as IoT and 5G could help the UK reduce CO2 emissions by 17.4 million tonnes per year.

For many years I have been championing IoT to help make logistics more sustainable. Like puzzles, there are key components to solving and IoT techniques can help.

Supply chain durability and spoiled goods

No one wants spoiled goods. They cause headaches for both suppliers and consumers and can increase carbon emissions for companies as they bid to rectify the problem. I believe the root of the problem is basically the lack of data.

With very little or no data, spoiled goods are reported at their destination and it is very difficult for logistics companies to know the exact details of why goods arrive in that state.

They do not necessarily know where and when the goods are damaged, or – crucially – whether there is a chance to save them. This increases the likelihood of goods spoiling on a regular basis, which costs companies and affects the environment.

IoT trackers can collect real-time information about key shipment metrics, including location, shock, temperature, humidity and light, so that problems with goods can be identified and corrected before irreparable damage occurs. Through real-time tracking, companies can retrieve data when it deviates from normal operations. For example, when transporting food products or medicines, humidity and temperature indicators are very important. If the recommended indicators are exceeded, the goods will start to deteriorate. Using real-time sensors, notifications will be sent to the carrier as soon as the problem starts, enabling them to resolve it as soon as the problem starts, and not at the moment when the goods are damaged.

Labor costs for quality control and risk transfer

One of the major benefits of the digital revolution is that it simplifies processes and eliminates the need for humans to perform physical tasks.

The use of humans in places where machines are more efficient and accurate contributes to an increase in carbon emissions. However, this is still a common practice in logistics, where opportunities for digitization are rife.

In many cases, men still have to inspect the goods many times during the same shipment for terms and quality. This happens between any two carriers – from warehouse to truck, from truck to port, from port to ship, and so on. But this method humans rely on every time to make it right – which mistakes are unlikely to happen.

Even if there are no human errors, goods can be damaged during transport between checkpoints. But the sensors are never wrong and can raise the alert when potentially harmful situations arise instead of the next checkpoint when the goods are already damaged.

But having uninterrupted end-to-end data about shipment status and location will help reduce costs in a variety of ways.

1. Costs for personnel inspecting the safety of goods themselves.

2. Cost of paying insurance in case of loss of goods.

3. The cost of identifying what the problem was and why it happened.

I believe this should be a standard interface not only for shipment owner and recipient but also for logistics companies in the supply chain. Why? Currently, logistics companies are responsible for cargo while it is in transit. They are responsible for whatever happens to the cargo during this time. However, with real-time condition tracking, any change in the condition in which the goods are kept can be corrected before the product deteriorates.

CO2 emissions

Each company is tasked with reducing its CO2 emissions, although some do not even have targets or dates for work.

Furthermore, there is no consistent way of checking the amount of CO2 emissions associated with a particular shipment – something that is important and is becoming mandatory in more and more jurisdictions.

That said, location and status data can help estimate CO2 footprints with very high accuracy; Our calculations show that end-to-end condition monitoring is CO2 positive – a reduction in damaged goods and labor costs across the supply chain.

For example, by implementing technology to track shipments and monitor conditions, the number of damaged goods can be reduced and CO2 emissions can be reduced.

While multiple solutions are available to monitor the exact location and condition of the shipment, they rely on reusable and expensive IoT sensors and are not suitable for all businesses.

Such solutions are usually limited to a logistics operator such as a truck company or container operator, while 95% of shipments are one-way and end customers are rarely able to return anything. In the event that the final recipient is ready to return the reusable sensor to the shipper, this adds an additional labor cost of 10 to 30 minutes, shipping costs, and the associated CO2 effect.

Sustainable future

Our research led us to believe that digitization of the supply chain would not only improve efficiency and be good for the bottom line, but also good for the environment.

We are all on a journey to address these sustainability issues in the supply chain and I firmly believe that disposable IoT trackers are the answer.

Disposing of trackers may seem counterintuitive but the CO2 impact of their production is less than the impact of human labor, shipping costs and reverse logistics associated with reusable sensors where end-to-end monitoring is possible.

It also helps that they provide insight into the entire travel of goods; Since there is no blank space in the conditional data, the labor costs associated with quality control on the recipient’s side can be reduced. Any lack of data, for example, overseeing the goods at the distribution center, leads to the need for full question and answer acceptance on the part of the recipients.

The reduction in CO2 emissions for logistics shipments is greater if combined with location and status data than the CO2 emissions associated with SaaS platforms and disposable IoT sensor operations.

It is for this reason that a significant portion of packaging is disposable – it is driven by durability and economic factors. Admittedly, when you decide to thicken the cardboard boxes to avoid damage, you will have to spend a little more, but you will save a lot in the long run because you will not lose as much material without them.

Businesses should consider applying the same logic to their tracking solutions if they want to achieve sustainability in the supply chain.

Alexa Siniacheva is co-founder and CEO at Moeco,

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