How The Chemicals Supply Chain is Becoming More Sustainable
How The Chemicals Supply Chain is Becoming More Sustainable
The Chemical manufacturing industry has pledged to be carbon-neutral by 2050. However, heads of supply chain are struggling to meet this ambitious target due to increased supply chain disruption. Other challenges include, the EU’s Emission Trading System, which has increased the price of manufacturing gases, economic volatility and increased taxation.
As ‘greener’ competitors are rapidly increasing their market share, driven by consumer demand and increased regulation, the pressure is on for heads of supply chain to catch up.
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Optimising transportation is an effective way to reduce carbon emissions across the supply chain. From data-led waste reduction to 3D truck loading, transportation networks can be significantly enhanced to drive down output of harmful emissions. Additionally, modifying transportation using greener fuel enables GHG emissions to be drastically reduced. By optimising transportation in the supply chain through these methods, heads of supply chain can greatly reduce the impact that transportation is having on the supply chain’s overall GHG emissions.
Covestro has recently highlighted how fundamental sustainability is to the supply chain. As they drive forward with making headway to their sustainability goals, Covestro will now ensure all suppliers comply with their code of conduct and will carry out full reviews of all suppliers with a purchasing value over €100,000 per year, and are driving down emissions, and reducing waste.
Overall, focussing on supplier relationships can often lead to unexpected supply chain enhancements. With the chemicals supply chain being so complex, it will be imperative that heads of supply chain work closely with their suppliers to ensure they are making their own necessary improvements that align with their organisation’s sustainability goals.
Often, the key to achieving sustainability across the supply chain is access to greater visibility over operational data and processes. Unfortunately, insufficient technology is hindering the ability to analyse data on productivity, energy consumption and waste management. Integrating advanced data analytics can remove siloes and reduce data fragmentation. By gaining insights into current emission levels and measurable supplier data, greater supply chain efficiencies are being discovered.
Accurate demand forecasting should also be a key element in a head of supply chain’s overall sustainability strategy, as it will minimise overall inventory levels. A recent study has found that warehouses account for around 13% of all supply chain related green house gas emissions. A large proportion of this number is coming from the amount of wasted energy caused by excess inventory, and the unnecessary storage of that inventory.
By implementing accurate demand forecasting, heads of supply chain can optimise their inventory, ensure they use the minimum storage facilities required, and reduce the energy waste that many are currently experiencing. Success will, again, hinge on the advanced data analytics capabilities the supply chain possesses, however. Greater visibility across the supply chain will be necessary to gain accurate insight into demand, and the volume of materials to match that demand.
Ultimately, the chemical industry is a large contributor to global GHG emissions, and heads of supply chain must balance supply chain resiliency responsibilities with their ESG obligations. With mounting stakeholder pressure, however, supply chain sustainability must be a focus over the coming years.
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