Supply chains: The road to a better future

March 17, 2021 5:15 AM

Sustainable supply chains ensure environmental conservatism

The universal focus now should be to broaden and transform stable supply chain capabilities for an acceptable global stance.The universal focus now should be to broaden and transform stable supply chain capabilities for an acceptable global stance.

By Rajesh Mehta

With Joe Biden coming to power in the US, ‘sustainability’ is bound to be the key area of interest. It’s time when India and South Asian countries level up to create global resilient supply chain networks, as also India-US strategic cooperation. The pandemic has bred rising tensions around environmental anomalies and climate change, among other geopolitical issues. Sustainable policies are new prerogatives for leaders to fix operational performance together with combating the shifting socioeconomic landscapes.

On February 24, President Biden launched a 100-day review of supply chains crucial to national security and public health. It aims to target four key industries: semiconductors, critical minerals, pharmaceuticals, and electric vehicle batteries. The US Senate confirmed Linda Thomas-Greenfield as US Ambassador to the United Nations, strengthening Biden’s commitment to restore relations with the UN. UK Prime Minister Boris Johnson stating climate change as a geopolitical issue convened UNSC members to support vulnerable countries adapt to the needs of climate change.

Companies are realising the need to rebuild on a clean path of growth. Walmart has encouraged its suppliers involving General Mills, Campbell Soup and Unilever to eliminate a billion metric tonnes of greenhouse gas emissions from their supply chains by 2030. AstraZeneca’s Sustainability Report 2020 discloses a 29% reduction in freight and logistics emissions and an 11% reduction in first-tier API formulation and packaging energy emissions since 2015. AB InBev, the world’s leading brewer, with BanQu blockchain technology is rooting transparency in the system by streamlining the process of growing and supplying.

A sustainable future is an admirable idea, but it’s been challenging to realise in practice. Variation in consumer preferences and rising operational costs prove to be key risk areas associated with ecological impacts on supply chains.

The UN Environment Programme’s Food Waste Index conveyed that 931 million tonnes of food in 2019 went directly to the bin—8-10% of global GHG emissions are associated with this unconsumed food. Currently, eight supply chains are responsible for more than 50% of global emissions: food, construction, fashion, fast-moving consumer goods, electronics, automotive, professional services, and freight. Supply chain emissions are, consequently, 11.4 times higher than operational emissions.

Sustainable supply chains ensure environmental conservatism and ethical work practice across the entire value process. Technology is likewise changing the calculus for global supply chains. Industry 4.0 is represented by the integration of digital technologies such as IoT and embedded services and advanced data analytics into manufacturing machines and processes. AI enables data synchronisation and can be used for synchromodality and collaborative shipping.

The AI industry in the supply chain market is expected to grow at a CAGR of 39.4% during 2019-27. However, such digitisation adds cyber risks and threats. Developing sound digital tools in compliance with security norms thereby would be a yielding way out to ingrain sustainability.

India has the fair chance to leverage this opportunity to stand as a prime player. Today, as environmental, social and governance (ESG) criteria gain importance, India should integrate innovative technology with physical networks. It must strengthen its infrastructure foundations to lessen the obstacles attached to its transport system. Indian start-ups should operate in compliance with the standard environmental laws to partake in the global sustainability vision.

With capable young demographic manpower, resource availability and effective macroeconomic functions, India serves to be the investment destination of foreign companies. Rising as the promising hub, India must develop and operate policies inclined towards increasing exports and economic integration.

Creating a green supply chain is a long process that requires support from all parties involved. It mandates for the US and India to come together to share a vision for a greener destiny. Innovating product design to minimise carbon footprints, utilising ecofriendly raw materials, efficiency in functional actions, optimisation of the supply chain, and embracing circular economy principles are some of the key sectors that both the US and India need to look after to appreciate sustainable supply chains globally. The universal focus now should be to broaden and transform stable supply chain capabilities for an acceptable global stance.

The author is an international consultant and columnist working on market entry, innovation and public policy. Views are personal

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