By Lori Mitchell-Keller, SAP
As signs of climate change continue to emerge through changing weather patterns and melting glaciers, 195 countries have collectively explored possible solutions to slow the rate of increase.
These delegates met last month in Paris and finalized a historic agreement, each agreeing to lower greenhouse gas emissions in an effort to limit the rise in global average temperature to 2 degrees Celsius above pre-industrial levels.
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So what does this mean for businesses that exist in these 195 countries?
It means that we all need to play our part in reducing or holding to today’s levels of carbon emissions. We think it’s possible. In fact, recent research by the Global e-Sustainability Initiative and Strategy (GeSI) and SAP found that it’s possible to hold carbon emissions to 2015 levels through transforming business operations using digitization and big data analytics.
In fact, the research found that retail and consumer product companies alone can cut up to 0.5 gigatons of carbon emissions by 2030 by simply focusing on data analytics and digitizing areas such as resource planning, logistics and supply chain planning.
Making The Digital Shift
The world population is growing at a rate of nearly 228,000 people a day. This means that the need for goods and services will only climb. To balance this need with the depletion of resources, businesses must focus on ways to operate as effectively and efficiently as possible. For example, by sharing available inventory and fixed assets across the entire operation, retailers can reduce the amount of inventory needed on-hand, lessening carbon consumption.
By using data analytics, retailers can optimize e-Commerce systems to reduce resource consumption. Optimization allows retailers to gain end-to-end visibility while also improving responsiveness and demand planning. Through big data analytics, companies can also forecast consumer preferences and alter real-time supply chain production to align with changing demand. In the end, the right amount of product is sold and retailers aren’t left with a surplus of unwanted inventory.
Avoiding a surplus in inventory isn’t just good for the retailer; it’s good for the planet. Accurate inventory means less material, energy and water is wasted in the manufacturing process.
But the carbon reduction doesn’t stop at supply chains. Companies can use digital technologies such as real-time traffic management and smart routing to improve transportation methods. By analyzing traffic routes, inventory can be managed through distribution optimization to reduce the number of vehicles on the road and cut fuel consumption. These efforts alone can slash carbon emissions by 1.5 gigatons by 2030.
If industries continue to operate in a “business as usual” frame of mind, the Intergovernmental Panel on Climate Change predicts that temperatures will increase between 2.6 and 4.8 degrees Celsius by the end of the century. By implementing digital processes to optimize supply chains, transportation, logistics and more, retailers and consumer product manufacturers have the prospect of bending the damaging emissions curve — saving 7.6 gigatons globally. So the question business leaders need to ask themselves is not when but how they can start their digital transformation.
Lori Mitchell-Keller is Executive Vice President and Global General Manager of Consumer Industries at SAP, leading the Retail, Wholesale Distribution, Consumer Products and Life Sciences Industries.
