Could COVID breathe new life into supply chains?

As the coro­n­avirus cal­en­dar pass­es the six-month mark, ideas of what con­sti­tutes a sus­tain­able sup­ply chain in a post-pan­dem­ic world have changed, for the bet­ter. Gone are the ear­ly days of dis­rup­tive con­sumer des­per­a­tion, pan­ic buy­ing toi­let rolls and search­ing shop by shop for flour. Now, we can ques­tion what we real­ly want from the big reset.

The all-too-real threat of cli­mate risk means decar­bon­i­sa­tion and net-zero tar­gets remain on the table for any sus­tain­able sup­ply chain. So too do protes­ta­tions around pol­lu­tion, as images of ocean plas­tic found in washed-up marine mam­mals will not leave the pub­lic con­scious­ness, or con­science, any time soon.

So, what has coro­n­avirus actu­al­ly done for sup­ply chains? There are two dif­fer­ent answers to that ques­tion: the prac­ti­cal one revolves around the spec­tac­u­lar spike in ecom­merce and the more philo­soph­i­cal answer embraces the regen­er­a­tive pow­er of ecosys­tem-led resilience.

Either way, the sus­tain­able sup­ply chain of the future ought to be dif­fer­ent, by design and by choice, says Kevin Quigley, com­mer­cial direc­tor of food-waste recy­clers War­rens Group.

Busi­ness own­ers shouldn’t be in a hur­ry to get back to pre-COVID per­for­mance with quick-fix solu­tions. They need long-term sus­tain­abil­i­ty goals,” he says. “This is a rare moment in our his­to­ry when there is an oppor­tu­ni­ty to rebuild on a clean path of growth.”

Making sustainable supply chain a strategic priority

To act fast, but think long term, is a tough ask. Sus­tain­abil­i­ty is there­fore a strate­gic play, to be backed by invest­ment and inno­va­tion, says Mike Landry, glob­al sup­ply chain ser­vice line leader at dig­i­tal trans­for­ma­tion experts Gen­pact.

“COVID-19 has forced sup­ply chain lead­ers to focus on short-term pri­or­i­ties in 2020, imple­ment­ing agile respons­es to glob­al dis­rup­tion. But now is not the time to pause sus­tain­abil­i­ty efforts; longer-term, sys­temic threats will still be there once dis­rup­tion eas­es, along with con­sumer pres­sure to solve them,” he says.

For many organ­i­sa­tions, giv­en a boom in ecom­merce, deliv­er­ing the sus­tain­able sup­ply chain has tak­en on a very lit­er­al mean­ing. Com­pa­nies pio­neer­ing inno­va­tion in green­er logis­tics include Liv­ing­Pack­ets, that offers pack­ag­ing that can be reused 1,000 times, with dig­i­tal address dis­plays to facil­i­tate returns.

Also dri­ving sus­tain­able, dig­i­tal change is the ORION plat­form, employed by UPS. ORION uses advanced algo­rithms, arti­fi­cial intel­li­gence (AI) and machine-learn­ing to opti­mise deliv­er­ies and reduce car­bon foot­print, sav­ing UPS about 100 mil­lion miles and 10 mil­lion gal­lons of fuel a year.

For trace­abil­i­ty and trans­paren­cy, from prove­nance to chain of cus­tody, inde­pen­dent third-par­ty val­i­da­tion also helps under­pin brand cred­i­bil­i­ty, mit­i­gat­ing risk, says Ruth Ren­nie, direc­tor of stan­dards and assur­ance at the Rain­for­est Alliance.

“Sus­tain­abil­i­ty stan­dards and cer­ti­fi­ca­tion focus busi­ness­es on nec­es­sary actions and mea­sur­able require­ments,” she says. “This key data on risks and per­for­mance, updat­ed through reg­u­lar ver­i­fi­ca­tion, is crit­i­cal for busi­ness­es to con­stant­ly adapt their strate­gies for build­ing more resilient and sus­tain­able sup­ply chains.”

Digitisation of supply chain management

The influ­ence of digi­ti­sa­tion on the busi­ness of sup­ply chain man­age­ment began long before COVID-19, promis­ing mul­ti­ple sus­tain­abil­i­ty gains. Ini­tial­ly, though, when the pan­dem­ic broke, fears sur­faced that a reac­tive ecom­merce surge might rel­e­gate envi­ron­men­tal con­cerns down the list of pri­or­i­ties.

As sup­ply lines and mar­ket con­fi­dence recov­er, how­ev­er, so too will appre­ci­a­tion of the deep­er green mer­its of dig­i­tal, says Reid Fair­bairn, busi­ness man­ag­er at DG Inter­na­tion­al.

“Dig­i­tal­i­sa­tion of the sup­ply chain means more over­sight into how deliv­er­ies are being made, with sup­ply chain man­agers able to make more informed choic­es based on sus­tain­able cre­den­tials,” he says.

Vis­i­bil­i­ty is an issue, though. A recent study of UK busi­ness­es by smart pro­cure­ment advo­cates Ival­ua found almost four out of ten firms iden­ti­fied poor data qual­i­ty as the biggest bar­ri­er to mit­i­gat­ing envi­ron­men­tal con­cerns in their sup­ply chain.

Much as dig­i­tal solu­tions might promise a dou­ble div­i­dend for sup­ply chains, enabling sus­tain­able growth, while increas­ing effi­cien­cy and reduc­ing waste, improved data on its own is insuf­fi­cient, accord­ing to James Mac­Gre­gor, envi­ron­men­tal econ­o­mist at Ram­boll.

“There are ques­tions about the val­ue of data, plus the cost of col­lect­ing and analysing. We live with a mantra for accu­rate, up-to-date and dynam­ic data, to opti­mise effi­cien­cies, under­stand pros and cons, but we are blind­ed to how this impacts or trick­les down to true sus­tain­abil­i­ty,” he says.

How to feed a nation during a pandemic

Food secu­ri­ty, and by asso­ci­a­tion food waste, became a key focus for sup­ply chain per­for­mance, with fierce media atten­tion and pub­lic con­cern, dur­ing nation­al lock­down. Feed­ing a nation effec­tive­ly under siege involves big num­bers. Indeed, data sci­en­tists at dig­i­tal sup­ply chain plat­form Blue Yon­der pre­dict­ed the UK’s top eight gro­cers could cut £144 mil­lion a year in food waste by using AI and machine-learn­ing in their sup­ply chains.

Address­ing the risk of a full-blown food cri­sis, there­fore, opened up oppor­tu­ni­ties for dig­i­tal to deliv­er, in every sense. Order­ly, for exam­ple, worked with UK super­mar­ket Mor­risons to imple­ment a direct-to-con­sumer offer­ing in only six days.

Not sur­pris­ing­ly, then, a sus­tain­able sup­ply chain is essen­tial­ly agile, says Order­ly chief exec­u­tive Peter Evans. How­ev­er, he is also keen to point out there is more to sus­tain­abil­i­ty than just effi­cien­cy and opti­mi­sa­tion mea­sures, such as stream­lin­ing jour­neys to cut air and road miles, or just-in-time local pro­duc­tion to save on ener­gy-hun­gry ware­hous­ing.

“The social con­tract between busi­ness and cus­tomers is chang­ing,” he says. “Sus­tain­abil­i­ty is no longer an after­thought, but a must. The pan­dem­ic has opened up the public’s eyes to how we must band togeth­er for the greater good and strive for con­nec­tion.”

Supply chain efficiency is no longer enough

Ulti­mate­ly, though, for resilience to be regen­er­a­tive, where the envi­ron­ment and local ecosys­tem are enhanced, not harmed, the only true reset is cir­cu­lar, says Louise Kjellerup Rop­er, chief exec­u­tive of Lon­don-based change agency Volans.

“Over past decades, the pur­suit of effi­cien­cy has squeezed resilience out of sup­ply chains. So, high­ly effi­cien­cy-dri­ven glob­al sup­ply chains must be dis­man­tled to ensure not only resilience, but also sus­tain­abil­i­ty,” she con­cludes. “For a start, we need to stop think­ing of them as sup­ply chains and shift to a cir­cu­lar econ­o­my mind­set.” This is the real big reset.

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