Next Supply Chain (NEXST), a Reefknot Investments and SGInnovate-backed global supply chain ‘think tank’ today announces the launch of its second Insights paper, a collaborative effort between NEXST and GTR Ventures. Titled “Building a Sustainable, Resilient Supply Chain”, the latest insights paper shares perspectives around supply chain sustainability and how businesses can recover and prepare for a transformed post-pandemic world, as well as how businesses can achieve true supply chain resilience while taking sustainability into consideration.
NEXST is the outcome of a Memorandum of Understanding (MoU) between Kuehne + Nagel, a global transport and logistics company, Reefknot Investments, a Temasek-backed Venture Capital firm, and SGInnovate, a private organisation backed by the Singapore government with a focus on driving deep tech innovation. The three companies were joined by independent thought leaders from the supply chain industry.
“Today’s dynamic macro-economic environment, added to that the impact of COVID-19, has compelled companies to rethink the resilience of their supply chains to achieve optimal performance, both for today’s world, as well as for a post COVID environment. We now have the opportunity to inject the elements of sustainability, enabled by technology and enhanced with business model innovation, while companies are undergoing this rethinking process, to ensure that sustainability is part of the solution moving forward,” explained Marc Dragon, Managing Director of Reefknot Investments.
Not Just Environmental Sustainability: Economic, Social Sustainability Are Just As Crucial For Long Term Success
Sustainability today is about going beyond emissions and the regulatory that corporations have to face today. They need to expand the concept of sustainability beyond the economic viability of their businesses by looking at the social and environmental impact of the overall ecosystem.
GlobalData’s latest report, ‘Sustainability – Thematic Research’, shared that it is becoming hard for chief executives to ignore sustainability and to provide full transparency as the public demands for more action on climate change, corruption, income inequality, tax avoidance, and other social vices.
However, based on the 2019 United Nations Global Compact progress report, 48 per cent of large companies surveyed see significant challenges in maintaining their commitments through their business operations and supply chain, particularly those that operate across multiple geographies. SMEs also indicated a lack of resources as a major challenge towards supply chain visibility and long-term sustainability.
“Improving the overall financial performance of an organization today requires a balanced approach to the economic, environmental and social implications of the business and its supply chain as well as end-to-end data to measure and visualize the impact of our undertakings – complete data is the prerequisite to drive and reach social and environmental improvements in the same way as operational efficiencies and excellence,” says Wolfgang Lehmacher, a respected global supply chain and technology strategist.
Better Financial Performance Among Sustainable Businesses
Based on the Insights paper, businesses which focus on sustainability might become better performers, because they can better optimise their business to produce positive impacts instead of slowly generating a negative environment that could prove unsustainable in the long term. Being sustainable is not just about being environmentally friendly but also social and economic factors vary and should not be just an add-on activity. Some of the case studies include Kuehne+Nagel, Ikea, Starbucks, Amazon, where they demonstrated how logistics companies, consumer goods companies are doing to improve sustainability by working with partners and startups to achieve their goal.
Current technologies such as AI, Internet of Things (IoT) platforms, among others, when applied to industry specific areas, are able to drive not only economic benefits to corporates adopting those solutions, but would also facilitate sustainability. For example, Inventory data proved crucial for retailers and consumer goods companies around forecasting, resulting in 10 per cent decrease in write-offs and up to 9 per cent higher gross margins, per research from Unilever. In parallel these data and forecasting capabilities allows more prescriptive outcomes such as what new units should be listed or removed from an assortment, which ultimately would lead to waste minimization.
Supply chain financing also plays a big part when it comes to sustainability. Small businesses are the backbone of most emerging economies, and for global sustainable development to happen, these small businesses would need to have access to capital to survive and grow. This can be done when all ecosystem players were to combine efforts to all grow sustainably together.
“Innovative companies with sustainability in their DNA could well outperform others that do not view sustainability as an important exercise in the long term. This is an organisational characteristic that may have a profound impact in the years ahead,” added Dragon.
Kelvin Tan, Founder and CIO of GTR Ventures highlights, “For trade financiers, lending sustainably to sustainable businesses means providing liquidity access to the tail end of the supply chain — achieving financial inclusion for SMEs . In doing so, the entire value chain is stronger, robust and more resilient. We advocate new credit models and trade technology which accelerate this outcome.”
NEXST’s second quarterly whitepaper titled “Building a sustainable, resilient supply chain” is available online through Reefknot’s website. The current whitepaper is an expansion of NEXST’s first whitepaper titled, “Supply Chain Digital Transformation: Enhancement of Supply Chain Visibility For the Post – COVID – 19 World”, that provided insights on what supply chain visibility means today, emerging issues and challenges and case studies on how cutting – edge technology, including IoT and AI, could propel firms towards Supply Chain 4.0.
Anticipate more industry white papers and activities organised by NEXST along with its growing list of industry leaders and members as they seek to share relevant insights in the supply chain industry. NEXST aims to help governments, corporations and the broader industry to stay ahead of the transformation, creating a robust and more dynamic supply chain ecosystem for tomorrow.