Capgemini expounds the virtues of a sustainable supply chain

HOW TO MAKE YOUR SUPPLY CHAIN SUSTAINABLE

Capgemini Invent’s

Door van der Wiel,

Senior Consultant Supply Chain Strategy; and Dico van Dijk, Senior Manager Procurement Transformation, talk about supply chain sustainability in the wake of the European Green Deal.

oor van der Wiel and Dico van Dijk both joined Capgemini Invent two and a half years ago. As Senior Consultant Supply Chain Strategy, Door focuses on end-to-end supply chain optimisation and supply chain sustainability, and has helped develop the company’s Supply Chain Sustainability Assessment.

Meanwhile, Dico van Dijk, Senior Manager Procurement Transformation, is helping clients with their procurement questions and advises on the implementation of digital procurement solutions.

With greater pressure on companies to move towards a more sustainable supply chain, Door and Dico highlight three key reasons why sustainability in supply chains is increasingly important. Door explains, “Climate change is the first reason. There is a huge climate crisis happening. We are already experiencing the impact with changes in the weather, flooding, and drinking water becoming scarce. Supply chains account for more than 80 per cent of greenhouse gas emissions, so it is essential that we make sustainability improvements.

“Secondly, we are seeing that consumer requirements are changing. People are more aware of where their products come from and want them to be sustainably sourced. This is becoming increasingly important for both companies and their customers. Research performed by the Capgemini

Research Institute showed that 68 per cent of consumers want information on the amount of waste generated when food and beverages are produced.

“The third reason is the introduction of further official regulations. The penalties regarding unsustainable actions are increasing, which can put an enormous financial burden on companies. In 2021, the European Green Deal was signed, and there are a number of implications. For example, from 1st January 2023, companies are obliged to report their sustainability performance. In addition, companies need to have a sustainability strategy, a risk management system, and a system to collect the data for this reporting.”

On the subject of data collection for sustainability reporting, Dico says, “Many of our clients do not know how to collect this data, integrate it, and what kind of strategy they

can roll out to reduce their carbon emissions. We can advise them from a supply chain point of view. Digitalisation holds the key. We have developed smart tools to collect the data, get all the information together, put it in a dashboard, and help clients on the actions they should take on the supply chain part.”

So, what is the starting point for improving sustainability in your supply chain? Door answers, “The starting point is to have a baseline. Some clients lack insights regarding sustainability, whilst others have the insights but do not have a plan. We have developed a carbon calculator, which can measure the emissions of your supply chain and the environmental impact of all products and services in your company. We are using several databases to make it as accurate as possible. From there, you can easily identify the pain points and start with improving your supply chain by modelling different scenarios.”

Depending on the scope of the client – whether manufacturing, procurement, sourcing or distribution, for example – the

“Digitalisation holds the key. We have developed smart tools to collect the data, get all the information together, put it in a dashboard, and help clients on the actions they should take on the supply chain part”

Dico van Dijk, Senior Manager Procurement Transformation

ON A SUSTAINABLE

FUTURE Why Automation is Key for Supply Chain Sustainability and Transparency

The pressure is growing with regards to Environmental, Social and Governance (ESG) standards, and while many companies are proactively doing their part, the time is coming where taking action will be much less of a choice. Those in the EU are already quite accustomed to sustainable investment regulations, such as the EU taxonomy, the Sustainable Finance Disclosure Regulation (SFDR), and Non-Financial Reporting Directive (NFRD). But mandatory reporting for climate-related risks will soon be a reality in many regions of the world.

YOU NEED THE RIGHT TECHNOLOGY

Automation is an opportunity for organizations of all sizes to reinforce their green credentials by reducing CO2 emissions. When you look for finance and procurement automation solutions, they should not only enable you to eliminate paperbased processes, but also allow you to track and benchmark your carbon emission savings from that over time. A sustainability dashboard in Basware’s analytics solution shows customers their average CO2 index per invoice, enabling them to benchmark and improve their index over time or against other organizations in our Network. This helps you tie your automation project back to your company’s green initiatives. These emission savings are mainly from gains through enabling remote working, the elimination of paper and the impact this can have on your supply chain practices.

WHAT CAN YOU DO?

Eliminate paper: Getting rid of an overreliance on paper means you can reduce your contribution to CO2 emissions while reaping the benefits of cost savings and efficiency. Leverage automation: A digital process means you can encourage some of your teams to work remotely for a day or two per week. Working from home decreases emissions from one of the costliest contributors to the carbon problem— transportation. Use SaaS solutions: Cloud computing means less infrastructure is required to power your business from a hardware and IT perspective so fewer servers and less equipment are needed, decreasing CO2 emissions. Automate procurement: Efficient procurement processes enable bundled orders and shipments, creating less pollution from deliveries and packaging materials. Business networks: Connecting to a business network means you can identify new sustainable suppliers and source goods and materials from companies that share your values. Reinvest savings: Fund other sustainability initiatives from the cost savings you realize by going digital.

AUTOMATION ENABLES TRANSPARENCY

Automation also brings transparency to the actions of all parties within your supply chain and while it does not prevent risk totally on its own, it does add a layer of insight that provides increased, proactive visibility into areas where risk could be lingering. But you can’t possibly expect to keep track of all the nuances of your supply chain manually. With all the working pieces, digital, intelligent technologies are a surefire way to properly manage and identify risk and fraud. With a comprehensive supplier management solution, companies gain visibility into 100% of suppliers and spend, enabling exceptional risk mitigation. With the right automated tools built specifically to improve supply chain visibility, your company can: 1. Decrease business disruptions: Prepare for supply chain disruptions before they even happen. When your supply chain operates with a strong foundation on data analysis and open lines of communication, you decrease supply chain bottlenecks and even avoid disruptions entirely.

2. Drive your business with data: Manually updating supplier information leads to obsolete data, potential risks, and wasted time. Basware solutions deliver 100% visibility into your entire supplier base, delivering the benefits of complete supplier data. Processing this data through Basware empowers you with the insights you need to make smart, data-based decisions that will lead to supply chain excellence.

3. Team up with the right suppliers: Your suppliers are an extension of your brand. So, it’s important to ensure you’re doing business with the right suppliers who align with you ethically, meet your price requirements, offer the right experience, can meet your orders, and are financially stable. The right technology helps you ensure your suppliers check all those boxes.

BASWARE SUPPORTS GREEN INITIATIVES AND SUPPLY CHAIN TRANSPARENCY

Many organizations overlook the impact paper-based processes have on the environment. Basware’s procure-to-pay (P2P) solutions, powered by the largest open business network and advanced AI and Machine Learning technology, connects you to all your suppliers (even the long tail) and automate deep into the workflow so you can remove paper-based and manual tasks and collect more data for insightful analytics.

LEARN MORE

Learn more about important trends such as sustainability, supplier diversity, global regulations, and more procure-to-pay trends impacting 2022 and beyond in the ebook.

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Capgemini team creates a roadmap together with each individual client, prioritising which ideas they wish to implement first and highlighting the benefits of the different opportunity areas. Dico says, “The roadmap is important to help the client see what they can do, while also making them aware of the regulations in place and those coming into effect in the coming years in order to reduce carbon emissions. The ESG topic is smaller items from different large platforms, but they are realising the environmental implications. There is definitely a trend for more localised supply chains.”

Capgemini works with several software companies, such as Basware, to ensure clients are able to have full transparency of the sustainability of the products they source. Dico explains, “Basware has included

“Capgemini considers every client to be unique. The Supply Chain Sustainability Assessment identifies the pain points and opportunity areas for all areas of ESG for each client”

of huge interest to our clients. We can perform an assessment to see where they score high or low, and advise on what actions they can take.”

Capgemini considers every client to be unique, from the local food producer, to the manufacturer, to the retailers and distributors. They all have their own sustainability related pain points and opportunity areas to look into. Dico adds, “There is a huge footprint associated with shipping products from China and people are becoming more aware of this. Consumers are ordering many a questionnaire in their sourcing solution, so suppliers must answer questions on sustainability. You sometimes need to go deeper into your supply chain to ensure all companies involved are compliant. There could be unwanted labour conditions in level 1, 2, or 3 of your suppliers, for example, and the supplier is not even aware of it. Basware’s solution helps mitigate the risk by making the supply chain more transparent.”

Basware first entered into partnership with Capgemini last year on the procurement side.

“As a company, we want to be seen to be innovative, so we joined forces with Basware because they have a strong focus on providing an end-to-end solution, as well as the emphasis on sustainability”

Dico elaborates, “As a company, we want to be seen to be innovative, so we joined forces with Basware because they have a strong focus on providing an end-to-end solution, as well as the emphasis on sustainability. We are still developing the program and have a couple of certified Basware consultants implementing the product. We collaborate strongly with Basware and are aligned with them on supporting each other.”

Sustainability improvements have previously been associated with high costs, but Door argues that this does not have to be the way. She says, “An optimised network with more local sourcing can reduce transportation by as much as 15 per cent, leading to cost reductions alongside emission reductions. If you can say to customers that your products are locally produced or locally sourced, it will also boost your sales.

“The same applies to manufacturing. The Green Deal stipulates that by 2030, all packaging material should be recyclable, which will have a big impact on supply chains. If you are optimising your packaging in order to make the production process more efficient, this leaves room for opportunities with packaging reductions. In a previous project for a large FMCG client, we changed the shape of ice cream tubs, significantly reducing the plastic used whilst also bringing sustainability and financial improvements.”

Capgemini has a high-level framework for sustainable supply chains consisting of three pillars:

1. Sustainable procurement –

topics include designing and developing low carbon products, designing circular products and services, supplier ESG assessment and implementing sustainable procurement strategies.

2. Green Lean Digital

Manufacturing – topics include transforming factories to be efficient in their energy, water and

material usages by leveraging digital technologies, taking into account the six R’s; Reduce, Reuse, Recycle, Recover, Redesign and Remanufacture.

3. Sustainable distribution – topics include CO2 emission reduction through Supply Chain Network optimisation and Smart Planning, but also sustainable last-mile strategies. Door says, “The most important thing to make it all work is to have a data platform for monitoring and reporting, so you are constantly aware of the sustainability performance of your operations. You need to be able to model the environmental impact in terms of carbon

“The most important thing to make it all work is to have a data platform for monitoring and reporting, so you are constantly aware of the sustainability performance of your operations”

Door van der Wiel,Senior Consultant Supply Chain Strategy

“With global warming, we all understand that we need to do something, but this is especially the case for production companies. We are innovating constantly and making positive changes internally at Capgemini to bring benefits to our clients”

footprint or product lifecycle, as well as having access to ESG data across the value chain in order to mitigate risks.”

Another regulation of the Green Deal is that 75 per cent of your goods must be transported by either rail or water by 2030. Door adds, “This means you are not just looking at the geographical area of where you are going to source, store and produce your products, but also the transport mode for shipping them.”

Dico says that in the Netherlands, the internal distribution to shops and factories is done increasingly by electric lorries. He explains, “We have a good network of charging stations in the Netherlands, and our clients are increasingly saying that they want to move to

electric vehicles, which will be huge for their carbon footprint. But the infrastructure needs to be there to support it. The Netherlands is one of the top countries for electrifying industrial vehicles, and in the city, more and more buses are electrified.”

Door and Dico agree that collaborating with other companies in order to make your supply chain more efficient is essential, but it can be a difficult road to navigate. Door explains, “You do not want to share all the data you have with your competition, but you cannot look at supply chain from just one perspective. In the end, it will be a win-win situation if you can share at least part of your data with your competition to increase the efficiency of your supply chain.”

Dico’s final word is on the topic of sustainability. He says it is a must-have, gaining traction in the market. Dico concludes, “In the past, we had to bring the subject of sustainability to the table, but now the client brings the subject to us. We have smart tools across the whole supply chain to support our clients in becoming greener. With global warming, we all understand that we need to do something, but this is especially the case for production companies. We are innovating constantly and making positive changes internally at Capgemini to bring benefits to our clients”

For further information on Capgemini Invent, visit www.capgemini.com