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10/18/2022

Industry Ecosystems Power Digital-First, Sustainable Supply Chain Operations

Jeff Hojlo, Research Vice President, Future of Industry Ecosystems, investigates the impact of climate change on supply chains and how this promotes a green, collective ecosystems.

Why Sustainability Is Critical to the Digital-First Organization

 

Digital-first organizations focus on environmental sustainability to reduce impact and empower their business. As we are all aware, climate change is a leading, ongoing disruption that drives supply chain and broader industry ecosystem investment. According to the IDC sustainability index, those organizations that have invested in digital solutions in support of sustainability have greater revenues and are more profitable. These investments in resources are external as well: our 2022 Future of Industry Ecosystems global survey shows that environmental sustainability is the top initiative on which ecosystem partners focus on together. A collective ecosystem approach enables greater agility and resiliency, and the ability to meet customer expectations for more sustainable products and services.

 

With this sustainable pursuit of the digital-first business, it is critical to be cognizant of the triple bottom line: Environmental and social governance standards need to be in place across the supply chain with every business and partner you work with, while maintaining economic sustainability. To achieve this, we think organizations will increasingly adopt digital operations platforms to ensure this healthy balance of agility and stability. From our 2022 Future of Industry Ecosystems FutureScape, one prediction highlights this: By 2024, 50% of G2000 organizations will develop digital operations centers to monitor industry ecosystem capacity, expertise, market, and environmental conditions for 50% faster time to market.

 

Organizations Must Leverage Industry Ecosystems to Address Environmental Sustainability

 

The top initiative in concert with ecosystem partners, according to IDC research, is environmental sustainability, due to the realization that environmental sustainability is too complex an initiative to address alone. Taking a holistic approach to supply chain operations is critical, both inside and outside the warehouse. There are sustainability challenges across product and service lifecycles: design and development, production, logistics, customers, and field service — all of which require an ecosystem of partners to address. A strong end-to-end supply chain network must be in place. When we ask the question in our research, Which ecosystem participants do you consider to be the most critical to enabling and supporting your environmental sustainability initiatives? 

 

Cloud based platform providers of supply chain management are among the most important ecosystem participants. This is due to the power of the cloud as a rapid collaboration environment for supply chains, and the economics of cloud that make it easier to share and co-develop data models and applications within this environment than it is to buy point solutions from multiple vendors.

 

Leading Sustainability Initiatives and Use Cases for Industry Ecosystems

 

The leading sustainability initiatives for industry ecosystem participants to work on together, according to our 2022 Future of Industry Ecosystems survey are improving the efficiency of energy and water efficient assets, and the optimization of logistics – i.e., reduction of CO2 emissions at the factory, and during the delivery of goods and services. We have found that no matter what the industry, ecosystem pillars are shared data & insights, shared applications, & shared operations & expertise. For environmental sustainability, a leading shared data use case is environmental planning & impact mitigation, while for shared applications, the leading use case is supply chain risk mitigation. And with shared operations, the focus use case is on digital IT network optimization – monitoring of industry ecosystem collaboration and leveraging AI/ML for optimal network routing and performance. 

 

Close behind for shared operations is on demand supply chain logistics for visibility and transportation optimization. Our 2022 Global Supply Chain Survey also shows a primary challenge and focus on visibility – that is, and end-to-end view of the supply chain process to ensure on-plan, on-cost, and on-time, all the time. This is inclusive of first, mid, and last mile logistics of course, but also early-stage demand sensing and predictive capabilities that are connected upstream to business planning, product and services development, and production.

 

Digital-First + Sustainable = Supply Chain & Ecosystem Success
 


Leading companies across all industries are taking a digital-first approach, investing in systems, resources, and skills development to enable environmental sustainability with their supply chain operations. This is the right thing to do for the environment of course, customers and consumers expect that products and services will be developed, produced, and delivered sustainably, and our research shows a clear financial benefit to investing in digital for sustainability.

 

These organizations also realize this is too complex to address on their own, so increasingly work with industry ecosystem partners to address this both inside and outside the warehouse — focusing on sustainability use cases related to the sharing of data and insights, sharing and co-developing applications, and sharing operations and expertise. As the Biomimicry Institute once said, “Life banks on diversity and rewards cooperation” — equally true for the digital, sustainable business as well. Organizations that take an open, sustainable, ecosystem-driven approach to supply chain management, powered by a cloud-based digital operations platform, will be more innovative, have greater financial viability, and improve environmental stewardship. 
 

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