The impacts of the COVID-19 crisis
underscore how important proactive
and forward-looking crisis management
is for safeguarding the competitiveness
of businesses, especially with regard
to the supply chain. With the pandemic
outbreak, important suppliers failed practically
overnight. Many industrial companies
waited in vain for urgently needed
raw materials and production materials, or
had to put up with long and costly delays.
The further course of the pandemic also
demonstrated the vulnerability of tightly
meshed supply chains. COVID-19 and its
restrictions disrupted what had previously
been solid commodity flows around the
world. Companies suddenly had to look for
entirely new sources of raw materials and
business partners.
Supply chain management therefore
needs to be rethought. It is not only the
short-term disruptions caused by COVID-
19 that play an role here, but also important
social developments such as sustainability
and the circular economy. The conclusion
to be drawn from these developments is
that companies need to build resilient and
responsible supply chains that prove to be
crisis-proof, but also address the issues
of emissions and incorporate environmental
social governance (ESG) criteria from
the outset. Building such supply chains can
only work if modern technologies and data
are used throughout the company.
Technologies from artificial intelligence (AI)
to the Internet of Things (IoT) to cloud management
and blockchain are enabling companies
to reinvent supply chains to meet their
climate and resiliency goals. In one of our
recent reports, 75% of CEOs indicate they’re
already digitizing value chains to take sustainability
management to a new level. in addition
to gaining more efficiency.
Specifically, using digital twin technology
is a good way to virtually represent
assets, enabling supply chains to be modeled
in real time. In this way, a business can
test scenarios for improving resilience and
reducing emissions while also optimizing
customer service.
But technology without data is useless.
That’s why data is at the heart of any effective
climate action. According to our study,
while four out of five CEOs use technology
to collect and manage company-wide ESG
data, only a quarter of these business leaders
manage their data in an advanced way.
To change this, companies need to accelerate
their move to the cloud. With the
cloud, companies can connect the complex
web of systems and data across multiple
levels of supply chain actors. The cloud
provides the technology and environment
that takes information sharing and management
to a new level.
One example—straight from the field—
that shows how technology and data can
be combined to create ground-breaking
and forward-thinking supply chain management
is John Deere, one of the world’s
leading manufacturers of equipment for
agriculture, construction, forestry, and
other industries. In agriculture—with large
acreages, widely dispersed suppliers, a
global network, and a natural interest in
sustainability—the need for technology and
data is evident. In Accenture’s recent edition
of “The Industrialist,” Wallas Wiggins,
vice president of global supply management
and logistics at John Deere, made
very clear how ESG criteria and technology
are interdependent. Both are already
shaping the supply chain today and will do
so even more in the future.
Data from the farmer’s field is sent to the
customer’s operation center, from the time
of tillage to harvest. This data is analyzed to
gain insights into yield. For example, locations
can be identified where it is worth
sowing more because the yield is higher
there. Deere provides a lot of tools that its
customers can use to gain valuable insights
to reduce costs and increase yields.
ESG
As part of Deere's larger ESG-approach,
one of the key focus areas is reducing
greenhouse gas emissions. For example,
they’re working to ensure all the electricity
they bus is renewable energy. Deere
is also developing a structure that helps
share and match disparate sustainability
expectations with suppliers. The structure
also captures ESG data to make their, and
suppliers’, contribution to sustainability initiatives
visible.
Knowledge transfer
In a world that thrives on exchange and
swarm intelligence, it is important to use
supplier knowledge. John Deere is therefore
focusing on implementing innovative developments
by its suppliers into its own products
and services. In addition, John Deere
also asks its suppliers where they see opportunities
for Deere—an effective measure
that is both informative and collaborative.
Necessity of supply chain
transformation
In addition to the technologies discussed
here, equally important is the development
of appropriate and agile working
methods in dealing with innovative technology.
Combining new ways of working
with a digital-first mindset in supply chain
management creates a better customer
experience, smarter business processes,
and more sustainable products. Especially
when it comes to achieving ESG criteria,
the optimized and digitized supply chain
makes a significant contribution to achieving
sustainability goals. Companies that
take advantage of these benefits have the
potential to leapfrog the competition.
