230413 The Realists Sustainable Supply Chains

Product Information: The Realist’s Guide to Sustainable Supply

Chains

The Realist’s Guide to Sustainable Supply Chains is a
comprehensive resource that provides guidance on turning
sustainability vision into action and driving meaningful change. It
is designed to help businesses understand the current state of
sustainability and navigate the challenges associated with
operating sustainably.

Specifications:

• Product Name: The Realist’s Guide to Sustainable Supply
  Chains

• Author: Celonis

• Website: celonis.com

Product Usage Instructions:

Section 1: Under pressure – The current state of

sustainability

In this section, the guide highlights the importance of
operating sustainably in today’s business landscape. It emphasizes
that sustainability is no longer limited to financial performance
but has become a business-critical imperative. The section
discusses the rise in pressure from various fronts, including
regulations, inflation, and scarcity.

Regulations:

The guide emphasizes that strict penalties will be imposed on
those who fail to meet sustainability standards set by regulatory
authorities.

Inflation:

The guide explains that tackling inflation requires thoughtful
business practices that are sustainable in both the short and long
term. It highlights the benefits of emissions and waste reduction,
cost and time savings, and revenue increase, which can be achieved
through optimized processes.

Section 2: Scarcity

In this section, the guide addresses the issue of resource
scarcity and its implications for businesses. It emphasizes that
companies need to become more efficient in utilizing available
resources to operate at desired levels.

Examples of resource utilization:

• Raw materials used to make products
• Fuel used for transporting products
• Water used for data center cooling

Section 3: Internal and external expectations

This section highlights how customers, employees, and investors
are holding organizations to higher sustainability standards. It
emphasizes that companies need to disclose sustainability metrics
and improve them if necessary to maintain relationships with
vendors and attract customers.

Section 4: Sustainability stats at a glance

This section provides alarming statistics related to
sustainability issues in the supply chain. It highlights the
significant amount of food waste and garment waste, along with the
water consumption required for producing an average t-shirt.

Section 5: All talk, no walk – Exploring the hurdles to hitting

targets

In this section, the guide discusses the challenges faced by
companies in executing their sustainability goals. It acknowledges
that while ambitious goals have been set, there is a gap between
vision and action. The guide identifies people as one of the
primary reasons for this gap.

Primary reasons for the gap between vision and action:

• People-related challenges

Frequently Asked Questions (FAQ):

Q: Who is the author of The Realist’s Guide to Sustainable

Supply Chains?

A: The guide is authored by Celonis.

Q: Where can I find more information about Celonis?

A: You can find more information about Celonis on their website:
celonis.com.

The Realist’s Guide to Sustainable Supply Chains

How to turn vision into action, and drive meaningful change

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Under pressure The current state of sustainability
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Today, business performance is no longer solely defined by top line or bottom line performance — it’s also about operating sustainably. This third dimension, often referred to as the `green line’, has, in recent years, gone from being a niche consideration to a business-critical imperative. The reason for this shift is a rise in pressure from all fronts.
Regulations
All across the globe, governments are outlining their sustainability visions — the UK’s Ten Point Plan, or the US’s 2050 carbon neutrality plans are perfect examples — and rolling out swathes of new regulations — like the European CSRD (Corporate Sustainability Reporting Directive) and the global ISSB (International Sustainability Standards Board) Sustainability Disclosure — that will affect the products and services organizations buy, the operations they run, and the emissions they generate.
Strict penalties will be imposed on those who fail to make the grade.
Inflation
With the cost of everything increasing, the perception that sustainability practices add cost puts these initiatives at risk ­ whereas sustainability transformation can actually help create more efficient and cost-effective processes.
Tackling inflation requires thoughtful business practices that are sustainable in both the shortand long-term. With the right plan, you see the long-term benefits of emissions and waste reduction, cost and time savings, and revenue increase, but also gain the short-term benefit of optimized processes that help you navigate macroeconomic turbulence and resource constraints.
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Scarcity
This one is simple. We’re using the resources of the planet at a rate that outstrips its ability to replenish them or, in some cases, to a point where we will soon deplete the entire supply. Earth Overshoot Day (the day when humanity has used all the biological resources that Earth regenerates during the entire year) has for the last 40 years (with some exceptions) come earlier and earlier in the year. In 2022, it fell on July 28th.
In the future, this level of overshoot won’t be possible, which means companies need to become more efficient at using the resources we do have to operate at the levels they want to. This applies to everything from raw materials used to make products, to fuel used for transporting products, to the water used for data center cooling.
Internal and external expectations
Customers, employees, and investors are holding the organizations they work with to higher standards than ever before. And many companies now require their vendors to disclose sustainability metrics — and improve them if they aren’t satisfactory — to continue the relationship.
In some instances people are resigning to work for companies that have a sustainability vision they can get behind, and customers are voting with their wallets.
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Sustainability stats at a glance
1/3
of food produced goes to waste. And 80% of that food is wasted in the supply chain.

1 in 3
garments end up in landfill. With the
average t-shirt requiring 2,700 liters of water to be produced.

At least
61M
containers (25% of all shipping containers) ­ are shipped empty every single year.

All talk, no walk
Exploring the hurdles to hitting targets

Companies have responded to these pressures by setting ambitious goals: getting to net zero by 2030, sourcing 100% of their materials sustainably by 2025, reducing 50% of supply chain emissions by 2030.
Which is great, even if the roundness of those numbers points more towards finger-in-the-air figures than actual data. At least they’re setting clear sustainability visions. The problem is, they’re struggling to actually execute on these ambitions.
There are three primary reasons why it’s hard to bridge the gap between vision and action:

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1. People
The problem when thinking about people is twofold. In order to make any meaningful change, you need the buy-in of senior internal stakeholders that are able to drive business initiatives across siloed teams, systems, and processes.
And getting that buy-in means convincing those stakeholders there’s business value to sustainability, and that green-line wins aren’t going to come at the expense of bottom- or top-line wins.
Additionally, most companies are suffering from a scarcity of experts. Sustainability talent is currently in high demand and in low supply.
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2. Data
If you have managed to clear the first hurdle, and have alignment from internal stakeholders, you’re almost certain to hit a data roadblock. The data you need to improve your sustainability performance is spread out across siloed systems and stored in spreadsheets, so you don’t have a single source of truth for reporting, let alone taking action and measuring results.
To make matters worse, the manual, often retrospective ESG reports most people use are too high level, so you miss many of the roll-your-sleeves-up opportunities to actually improve sustainability. In the age of real-time reporting, we’re still stuck with carbon reporting practices at the same stage as financial reporting was 40 years ago.
3. Action
The third ­ and most critical ­ element is actually creating and implementing an action plan. Without data-led insights, it’s incredibly difficult to prioritize from your long list of sustainability initiatives. And because we’re treading in uncharted territory, it’s often unclear what the best course of action is in order to actually move the needle towards the target with your sustainability metrics.
Right now, only 36% of businesses have some sort of measurement in place for their sustainability efforts, and only 17% are using that measurement to optimize based on results. If we want to get to a point where sustainability is more than just a nice idea, we’re going to have to get better at measuring, prioritizing, and acting.
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It’s `roll your sleeves up’ time Getting practical

The secret to making the transition from vision to action starts with identifying the areas that can have the greatest impact on the scope of emissions you’re targeting.

Scope 1, 2, & 3 emissions

Scope 1 | Direct emissions
Any emissions produced by the creation or distribution of your products or services. Think of the fuel used by trucks, the gas burned to fuel on-site manufacturing.
Scope 2 | Indirect emissions from purchased energy
Any emissions created by purchased energy. Think of the coal burned to create the electricity used to power your office.
Scope 3 | Indirect emissions from the value chain
Any emissions created either upstream or downstream from your company. Think of products and services that your company pays for, or the emissions created once your products or services leave your ownership.

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Many companies still focus their sustainability efforts on Scope 1 & 2 emissions and use traditional, laborious means to count them. There are two issues with this approach. Firstly, even if the reporting is accurate, the current carbon accounting approaches make it incredibly difficult to take operational action on these insights.
And secondly, 70-90% of an organization’s emissions will come from Scope 3. Scope 3 is, without question, the hardest of the three to crack, but also provides the biggest opportunity. Make significant reductions to your Scope 3 emissions, and you’re really moving the needle.
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How to make tangible change

Here at Celonis, we’ve spent years developing a simple but powerful framework for optimizing core business processes, and have found that using the same approach for sustainability helps our customers move from vision to action. It’s a three-step process.

1. Data
Everything you need to get a real-time view of your Scope 3 emissions is hiding in your transactional data. Step one is to extract the transactional data from all your relevant sources ­ from your Excel sheets to your ERP systems then supplement it with sustainability data.
2. Intelligence
Once you’ve unified all your data, apply software like process mining to the data to conduct an MRI on your processes and reveal hidden opportunities to improve business performance and decrease carbon emissions. You can then quantify the associated sustainability impact, generate to be’ process models, and compare them to youras is’ processes to simulate the results from making any changes.

3. Action
Finally, you execute targeted actions against your sustainability goals to operate at your highest level of efficiency and sustainability. This can be manual action, or automated triggers based on business needs.
Then sit back and watch your sustainability KPIs improve, in real time.

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Let’s get specific
What change looks like in supply chain
In our experience, the journey from vision to action usually happens in three phases.

Phase 1
When customers get started, they typically use Celonis to:
Eliminate manual data collection Build continuous and automated measuring mechanisms Discover low-hanging, high-impact value opportunities
Let’s look at a few real-life examples:
Shipping Emissions Reduction
One of the most practical areas to target are your outbound, inbound, and intercompany shipping emissions.
You can take advantage of real-time detection and quantification of emissions across all shipping practices, then drive process improvements to increase carbon efficiency, such as:
Bundling orders to maximize capacity Reducing rush orders to avoid air freight or empty trucks Improving routes to avoid unnecessary freight
Returns and Cancellation Reduction
By reducing the risk of human error and improving order accuracy and cycle times, you can minimize returns and cancellations — reducing waste and transport emissions.
Sustainable supplier management
By combining process mining and external ratings, you can intelligently evaluate and prioritize your suppliers based on their sustainability metrics. This allows you to drive sustainable spend and lower your Scope 3 emissions.

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Phase 2
Once customers have nailed the first phase, they tend to dig a little deeper:
Waste reduction
By getting insight into which of your raw materials and inventory are expiring, you’re able to maximize asset efficiency, reduce obsolescence and cut down on scrap. Which not only makes a dent in food waste figures — depending on what your stock is, obviously — but also makes an impact on your working capital because of better asset utilization.
Material emissions
By measuring the emissions from the production of materials you use, you can source more environmentallyfriendly options and build a more sustainable carbon profile for your products. This not only lowers your scope 3 emissions, but adds a sustainable edge to differentiate your products.
Phase 3
Once a customer has advanced beyond phase 2, not only do they get a massive sense of satisfaction, they also move into the realm of innovation. Which typically looks like this:
Process-level product footprint
By working together with Celonis to create custom reporting, you can accurately measure the carbon footprint of a specific product across the end- to-end value chain. With this insight, you can identify opportunities to improve the product, take action to enhance the product, and share your performance with external stakeholders like your customers.
This will help to meet future regulatory requirements, as well as with brand boosting.
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Want to dive a little deeper and see what this looks like in action?
By using Celonis you can leapfrog a number of the hurdles that are currently holding you back from moving from vision to action. It becomes easier to get objective, accurate data, prioritize initiatives based on projected impact, and get buy-in due to lower barriers to entry and compelling business cases. So you can actually get to work, while everyone else still has their finger in the air.
Check out our Sustainable Order Management demo.

Value opportunities lie hidden in and across your processes. Celonis helps you find and capture this value, fast. Our purpose is to make the world’s leading companies more efficient, more profitable, and more sustainable.

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References

• Process Mining and Execution Management Software | Celonis
• 4 key sustainability regulations you should know about in 2022
• Sustainable Order Management
• Earth Overshoot Day home - #MoveTheDate

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