Future of business 2030: Using ESG to build a supply chain ready for tomorrow

Understanding the external factors shifting the world is only the first step in becoming primed for success in 2030. Building on the environmental, social, and governance (ESG) strategies introduced earlier in our series, these core steps are crucial to balancing sustainability and margins, once a seemingly impossible task.

Minimize costs, maximize customer satisfaction

Customers are shaping products into what they want by requiring companies to make choices supporting their value systems and preferences. Now and in the future, sustainability will be a core component of a successful product because it will impact buyer decisions.

But this means manufacturers have multiple steps to take to ensure a sustainable product is not only possible, but affordable. Supply chain leaders must reimagine their supply chain by connecting data and costs from every third party across the supply chain to find ways to reduce risk and lower costs. They’ll need to look at how much of what is being sold is actually sustainable or recyclable, and if the amount is lower than the goal, new deals with suppliers need to be negotiated.

Use alternative energy and incentives

Global governments have a vested interest in reducing pollution and slowing the effects of climate change. In the United States particularly, there are several ways companies can reconfigure their supply chain to be more sustainable, while benefitting from government-provided incentives.

For instance, executive leaders can decide to use a carbon credit strategy. If emitting harmful gasses is unavoidable at this time, the business can make a pledge to use solar power by 2030. This ESG strategy can improve public perception and fuel demand. In the meantime, to offset the negative contribution to the environment, the company can purchase carbon credits to fund efforts to create and improve carbon-cutting technology.

While it might not affect manufacturing costs, purchasing carbon credits could increase revenue by attracting customers who care about products and the businesses funding climate change research. Companies without sustainability strategies or ways to cater to the evolving, more environmentally conscious consumer will quickly find themselves behind industry leaders.

Consider potential unpredictable, revenue-impacting events

Environmental events like natural disasters can throw a wrench in even the healthiest margins. Using artificial intelligence (AI) to forecast these disruptions enables supply chain leaders to come up with contingencies to rely on different suppliers, manufacturers, and freight providers.

According to an article by Forbes, the paper goods shortage during the COVID-19 pandemic cost retail stores more than $1 billion. While it is impossible to predict a historic surge in demand due to a global event, this frustrating situation for both consumers and retailers underscores the importance of “what-if” scenario planning to create contingency plans.

Better managing supply to fluctuate with demand during times of crisis can offset potential losses, keeping margins better stabilized, even if sustainable manufacturing costs are higher than those of standard operations. Competitors without contingency plans to avoid total supply chain shutdowns won’t be able to keep pace with those who do.

To avoid the impact of major disruptions like environmental disasters or pandemics, supply chain leaders should ensure every third party is providing the information necessary to pivot quickly. With Anaplan, a supply chain team and their partners can share and collaborate using real-time information and forecasting to shift production as necessary.

Put strategy into action

This is the right time to forecast customer demand using AI to balance projected revenue versus updated material costs to ensure margins can be sustained.

The most useful way to connect the entire supply chain to finance and operations is to use a platform allowing what Anaplan calls Connected Planning. Key information is housed on one central platform to look at the supply chain as a whole, without needing to compile what could be hundreds or thousands of spreadsheets from internal and external stakeholders.

It provides total visibility into budgets, planning, demand, contracts, and costs, directly linking cost savings to the source. With the ability to see every dollar, it’s possible to track savings to the bottom line or reallocate funding where it’s needed to balance sustainability and margins.

Conclusion

The future of business 2030 isn’t simply a conversation about sustainable practices or technology. It’s about shifting norms, values, expectations, and relationships. Supply chain teams need to pivot quickly to respond to climate, social, and political change to meet customer expectations and financial goals.

Without the right technology, businesses will quickly fall behind the competition. An agile supply chain strategy is nonnegotiable for a competitive advantage. By moving away from the disparate data spreadsheets and limited visibility and collaboration of piecemeal solutions, companies will find themselves ahead of the pack. With Connected Planning, enterprise supply chains can be proactive in using cross-departmental and third-party data to create informed, accurate projections and forecasts. This unleashes the potential to grow, evolve, and thrive within the changing world using a holistic approach to business operations.