Net-Zero Emission Supply Chains by 2050 – How Do We Get There?

For decades, supply chain design prioritized cost optimization over resilience. As a result, even before the pandemic, supply chains across the world were under pressure from rising e-commerce rates and customer expectations for inexpensive, personalized, fast delivery. The COVID-19 crisis delivered the final blow leading to major disruptions and highlighting the necessity for executives to focus on building resilient supply chains. Resilient supply chains enable greater responsiveness to disruption, demand changes, and uncertainty. 

But executives have another factor to consider, sustainability. Sustainability, as the 'E' of an organization's environmental, social and corporate governance (ESG), is no longer an easy-to-dismiss buzzword. Instead, it is a key priority in our industry, and, in fact, many sustainable supply chain solutions can also improve resilience.

So, what are the next steps to build zero-emission supply chains? Here's my take on the four priorities for leaders:

1. Technology investments, e.g., sustainable fuels, alternative propulsion systems, electrification

Today, we have low emission technologies such as sustainable fuel (80% lesser emissions) that are gradually scaling up and becoming more mainstream. However, the real impact will happen when we are able to move away from carbon-based fuels to non-carbon fuels that are emission-free. Lots of investment and efforts are also currently ongoing to commercialize the next generation of technologies such as solar-powered electric propulsion aircraft, electric and hydrogen-powered trucks, and electric last-mile delivery. We as leaders need to act on it either by planning to re-fleet or take this into account when selecting suppliers.

2. Data-driven visibility, efficiency, and agility, e.g., Network optimization, real-time visibility, and technology-led agility

Intelligent data use helps supply chains become more efficient, transparent, and agile, which helps reduce waste and emissions. Today, we already carry out network optimization and modal shifts to reduce emissions. We're also seeing more and more digital freight platforms that create end-to-end visibility for both upstream and downstream emissions for the consumer. 

Lastly, we are looking at the next generation of data use with digital twins and AI that have the power to collectively make supply chains agile and reduce emissions. Such technology will separate physical data flows from real-time data. This will bring real-time optimization and dynamic re-positioning to the next level.

3. Revision of resource usage/operational models, e.g., Near shoring, circular economy

Nearshoring is another example of how supply chains can be more sustainable. Through near-shoring, the high volume of tonne-KM is reduced significantly, thereby reducing the overall emission footprint of products. For example, imagine airlifted cargo traveling from Asia into Germany vs. rail-based transport of the same goods from Poland to Germany. 

The other idea is circularity which refers to the 5Rs (rethink, redesign, reduce, reuse, recycle). By shifting how we produce, consume and recycle, the lifelong emission footprint of products can be significantly reduced.

4. Measuring our CO2 footprint across the value chain - providing full visibility and green choices

By creating KPIs that are as important as financial KPIs, we can create transparency for companies to make investment decisions that support emission reduction on the one hand and help bring visibility of emission footprint and green choices to the customer on the other.

The Future of Supply Chains...

The supply chain and logistics industry is rapidly transforming. Staying ahead of the curve requires one thing: relentless innovation. All major industry players in supply chain and logistics are looking to invest in the most promising developments – from digitalization and automation all the way to sustainability and new ways of working.

But what do you think? Which areas do you think will have the most impact on supply chains of the future? What innovations do you want to see? Let me know in the comments!

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