Majority of CSCOs are willing to sacrifice profit for sustainability

sacrifice profit for sustainability

Chief supply chain officers (CSCOs) are keen to make their supply chains more sustainable and resilient. 51% say they are willing to sacrifice an average of 5% profit to do so. They want data and new technologies to help them achieve this goal. Meanwhile, 53% see digital supply chain transformation as their most significant area of competitive advantage in the next three years, with 74% regarding hybrid cloud integration as crucial to enabling that transformation.

CSCOs recognize that hybrid cloud, artificial intelligence (AI), process mining and execution management all play a critical role in coping with the disruptions that have occurred in the past two years, according to a study of supply chain resilience by IBM and Celonis. Nearly three-quarters (72%) of those surveyed plan to automate processes and workflows in the next three to five years, and 69% want to accelerate cloud adoption to improve real-time data access.

Key challenges

The large majority (80%) of CSCOs identify demand volatility as their biggest challenge. Other key challenges are the increased cost of transportation and logistics (77%) and the availability of transport and logistics (76%). All these issues lead to missed business opportunities. For example, 71% of the respondents indicate that lower inventories of raw materials and finished goods have caused stock-outs and lost sales. 60% of those surveyed have had to expedite product shipments for customers, resulting in higher transportation costs.

Sustainability over profit

For 66% of the CSCOs surveyed, sustainability is an essential element of overall business value, and 51% claim that they would be willing to sacrifice an average of 5% profit to improve their sustainability outcomes. In this context, various specific actions are planned over the next three years. For example, 47% are redesigning the lifecycles of their materials and products, 44% intend to improve the energy efficiency of products and services, 35% are developing new products and services based on renewable energy components, and 30% expect to develop new zero-waste products and services.

Benefits of sustainability initiatives

Complying with environmental regulations, reducing reputational risk and driving new innovations emerge as the top three expected benefits of sustainability initiatives. However, according to the authors of the report, these benefits cannot be realized without a meticulous process of monitoring a distinct set of sustainability targets. In this context, more than half (55%) of the CSCOs surveyed expect to implement real-time monitoring and reporting on environmental and social sustainability in the next three years.

Eliminating inefficiencies

“Eliminating inefficiencies from core supply chain processes represents an enormous opportunity for reducing carbon emissions at scale,” comments Janina Nakladal, Global Director of Sustainability at Celonis. “Chief supply chain officers know they need to adapt, and in many cases are, but they often don’t have the insight they need to truly understand where changes need to be made – and lack the toolset to drive the change. Our research shows that currently available technology – process mining and hybrid clouds – can give CSCOs this insight to wholly transform their supply chains.”