Greener supply chains call for IoT innovation

The business case for sustainability has long been up for debate, with many business leaders arguing to prioritise investment into other, high-growth areas of their business.

Today however, it’s no longer an afterthought, as sustainability now receives top billing in the minds of CEOs. In 2022, the issue became a top-10business priority for the first time. This breakthrough has been identified in recent Gartner® research,[i] which also highlighted that 40% of respondents consider environmental sustainability a top factor driving the need for new or improved products. A significant shift in CEO values is reflected in these results, with the sustainability subject having been ranked a top three priority by almost 3 times the number of organisations that did in 2021.

Investors are a key driver of this change. After revenue growth and better profit returns, environmental changes are the most important issue for them. CEOs have no choice but to take note. That’s why I think it’s vital that organisations begin exploring digitisation opportunities to improve manual processes and ensure that their supply chain operations are both more sustainable and more efficient.

Assessing the role of technology

With businesses and CEOs facing demands for environmental change and enhanced revenue growth simultaneously, supply chains need to be revolutionised. This can be achieved by strategically integrating the right systems and sensors to unlock opportunities, especially those that reduce energy consumption and waste throughout product lifecycles.

The Gartner study that unearths the CEO findings is entitled 2022 CEO Survey: Sustainability and ESG Become Enduring Change. It says CEOs are also becoming increasingly aware that new technologies have a crucial role to play in supporting sustainability improvements. Artificial Intelligence (AI) was identified by 18% of respondents, putting it at the top of the list of sustainability supporting technologies, with digitalisation ranking second with 11%. While these findings indicate a growing awareness of technology’s potential to support sustainability, only 4% of CEOs identified IoT-related technologies as a primary example, when in fact it is set to be a major driver. For example, IoT is a key source of the data that drives artificial intelligence (AI), which has the enormous potential to accelerate global efforts to protect the environment.

Deploying dynamic systems and sensors

Tracking products and components using sensor technology enables organisations to gain a more transparent and granular understanding of carbon implications and costs. The effective use of data will be central to simultaneously enhancing sustainability and operational effectiveness. What’s more, the powerful insights unlocked by sensor technology will help CEOs and their organisations to make critical decisions. For example, sensor-driven data insights can allow teams to pinpoint and reduce the use of pollutants and toxic materials.

Not only are sensors able to capture real-time data, allowing for AI systems to run analysis and provide organisations with a detailed and rapid understanding of their existing operations, but IoT-enabled sensors can also be deployed to actively track the status and development of products. Fully equipped IoT systems can be used to optimise the product cycle in its entirety, all the way from materials, to sourcing, to dismantling and to product reuse and waste mitigation. Systems like these can also provide decision-makers with the insights they need to eliminate components or ingredients that have a negative carbon footprint impact.

The application of the right technology can also transform efficiencies, enabling product reclaims from the market and a supply chain that can autonomously handle upgrades, refurbishment, recycling and disposal. Digitising these existing manual processes is a highly effective way to cut down on waste and bring about environmental change, while also improving operational efficiency. At the same time, taking this approach provides the opportunity for staff capacity to be reallocated to more valuable tasks.

Overcoming challenges and identifying opportunities

Targeting both the improved performance of products and a more environmentally sustainable approach, Gartner research finds that CEOs are planning to invest in new or substantially improved products. This outlook is backed by a vast majority of business leaders, with 80% of CEOs stating that they would invest in either approach. Despite this concerted vision, inflation threatens to complicate the pursuit of effective, sustainable approaches, but it may also prove to be an accelerant in the long run.

For example, the growing demand for green solutions like electric vehicles is significantly exceeding the supply. In the case of Ford, the company has been forced to stop taking orders for the electric F-150 Lightning due to orders surpassing 200,000, while the ownership of EVs can reduce energy costs for consumers and corporations alike. CEOs and their organisations need to navigate these potential paradoxical challenges, and doing so will require insight and careful planning.

Optimising the future

Hitachi Vantara is working alongside partners such as Uber and Royal Mail on a project called Optimise Prime. The initiative sets out to provide insights needed to help organisations decarbonise their vehicle fleets by going electric. The bigger picture is that this data-driven scheme can help manufacturers to better understand how to develop their products and processes for greater effectiveness, to meet demand, and to contribute to environmental sustainability.

Guesswork just won’t do. In order to make a full commitment to sustainability and to be able to quantify that commitment, data is important. Optimise Prime is just one example of how it can be used. By understanding how EVs are currently charged and driven, it can help organisations to better understand the carbon footprint involved in the entire product lifecycle. This includes every leg of the journey from raw materials, to disposal or recycling.

Bringing together strategy and technology to overcome double edged challenges will be critical for CEOs seeking more effective, sustainable products, as they strive to meet the demands of customers and investors alike. Data will live at the heart of this, and will give the insights needed to make better decisions about operating in a more sustainable way in the future.


About the Author

Bjorn Andersson is Senior Director, Global IoT Marketing at Hitachi Vantara. Hitachi Vantara, a wholly-owned subsidiary of Hitachi, Ltd., guides our customers from what’s now to what’s next by solving their digital challenges. Working alongside each customer, we apply our unmatched industrial and digital capabilities to their data and applications to benefit both business and society. More than 80% of the Fortune 100 trust Hitachi Vantara to help them develop new revenue streams, unlock competitive advantages, lower costs, enhance customer experiences, and deliver social and environmental value. Visit us at hitachivantara.com.

[1] Gartner, 2022 CEO Survey: Sustainability and ESG Become Enduring Change, Kristin Moyer, Simon Mingay, 6 May 2022.

GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.

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