The Sustainable Future of ERP

A colleague and I recently found ourselves discussing Enterprise Resource Planning.  Whether it’s SAP, Oracle or the niche players, these IT platforms are now a major part of life for most businesses.  When they were first implemented, ERP systems typically replaced multiple server platforms with an integrated solution capable of managing a company’s data and processes from a single system.   As regulatory and environmental pressures grow, companies are now turning to these systems for additional functionality – help in executing and tracking the success of sustainability initiatives. 

It’s an interesting evolution.  When ERP systems first started out, resource planning was about people, bills of material, finances, manufacturing, warehousing, etc.  Now carbon is surfacing as a critical resource that companies must manage for their customers, shareholders and regulatory agencies. 

This shift finds ERP vendors fending off standalone solutions by adapting and building modules capable of providing data collection, project management and reporting functionality related to sustainability initiatives.  These solutions must be robust and accurate enough to meet the increasingly stringent regulatory requirements of global organizations. 

So, are we really there yet?  Not quite. While the need for businesses to provide increasingly accurate reports on carbon footprints, carbon trades and information to support product level carbon labeling is clear, a number of hurdles have to be overcome before their ERP systems can provide the industrialized, automated and accurate solutions they most desire.

Make no mistake, ERP providers are making great strides in building their sustainability offerings.  SAP has received countless awards and recognitions for its sustainability efforts.  Its annual Sustainability Report highlights these achievements, and the company’s recent acquisition of Clear Standards continues to support this trend.  

SAP is not alone in these environmentally-friendly endeavors.  Oracle has teamed with ESS and Zogix , which both specialize in carbon management and sustainability software, to enhance its offerings in the areas of sustainability reporting, planning and management.

While SAP and Oracle are the market leaders in ERP solutions, other options are available to meet the sustainability needs of businesses.  Web-based tools such as Netsuite, Acumatica and Nolapro and add-on solutions like Microsoft’s Environmental Sustainability Dashboard are also available, being marketed primarily to medium-sized companies or divisions of larger corporations.

Large or small, these solutions face similar challenges including the rather tedious task of gathering data.  Sustainability initiatives typically run the full length of a company’s supply chain.  So to really track and report success of corporate sustainability initiatives, these systems require complex streams of data.  We’re talking collecting product and SKU level waste data from manufacturing sites, securing consignment-level emissions figures from transport providers, obtaining “real time” energy consumption information from relevant utilities, etc.

 

One of the challenges in collecting this data is agreeing on scope and data standards.  Interestingly enough, while the importance of common standards is universally recognized, there is no single standards-setting body or process in place today.  Although the International Organization for Standardization is involved, it will be a long time before ISO standards proliferate; in the meantime, there is a need to drive consensus across non-governmental groups to gain critical mass.  Accenture is currently working with the World Economic Forum to address this need with organizations such as the World Business Council for Sustainable Development, the Carbon Trust and Business for Social Responsibility.

Collecting and processing large amounts of data from across the supply chain in real time is what will bring these ERP platforms from the enterprise resource planning solutions they are now to the emissions reduction platforms they strive to become.  Agreeing to common standards is a huge step towards making this a reality.

The quiet wind of change: Integrated transport infrastructure

I recently returned from a trip to Shanghai where I was talking to a retail client about developing its supply chain network to support the significant growth it is experiencing in the region. As I sat in the meeting, every 15 minutes or so, the Maglev silently whistled past the office block. This is the fastest, quietest and most futuristic passenger line in the world.

Reaching speeds of up to 431 km/h, the Maglev hovers 10mm above a special track and uses magnets for lift propulsion and braking. Developed by Siemens and ThyssenKrupp, it does not roll, it flies; it has no harmful emissions, emits no exhaust, and is quiet and very efficient. 

While the Maglev is a great step forward towards a more sustainable solution for passenger train technology, the transport industry as a whole is still a major contributor to carbon emissions.  As other industries move towards reducing their carbon footprint, a significant step change is required by transport and logistics providers to achieve similar negative emissions growth. 

One of the most public debates on the issue of reducing transportation emissions is the future of fuel. There has been a fast increase in the development and use of renewable energy sources during the past few years.  Within the transportation sector, the movement from our oil dependency to a more sustainable fuel source is inevitable, and will probably progress through a phased solution, based on transport type.  For example, since they are continuously replenished by natural processes, biofuels (grown sustainably) may be the short- to medium-term solution for planes and trucks.  More sustainable fuel options for cars, meanwhile, have been more aggressively explored beginning with the introduction of Gasohol in the 1970s to the electric hybrids on the roads today.  Last month, a group of leading car manufacturers signed a letter of understanding agreeing to the development and commercial introduction of fuel cell vehicles within the next six years. 

What does all of this imminent change mean for the logistics infrastructure of the future?  While technologies within the transportation industry evolve, so must the supporting network.  This need for change presents opportunities to revolutionize the way the transport industry operates. 

One of the greatest challenges in transportation is the need for improved intermodal capabilities.  A transport infrastructure that does not sufficiently support these capabilities—that is, provide appropriate intermodal connectors--can impede, if not completely hinder, the benefits of this system.  The London Gateway project is the UK’s response to this challenge.  By combining a modern deep-sea container port with a large logistics park, plans are underway to integrate the road, rail, and sea networks into a more efficient and environmentally friendly distribution system. 

The emergence of such multimode port cities where ships, trains, trucks and planes converge to allow for the virtually seamless intermodal transition of goods could provide logistics companies with the opportunity to streamline the transportation of goods from manufacturer directly to the end user, avoiding distribution centers and potentially even stores.  The result could not only drastically reduce the carbon footprint of the transportation process but also improve delivery times and costs. 

There are no doubt a number of hurdles to overcome before such a vision can become a global reality.  In addition to the massive financial investment required to build these new infrastructures, variations in international standards and the need for more robust cross-border customs agreements also present great challenges for logistics providers to overcome. 

But there is still a lot for logistics companies to take from all of these advancements and technological innovations.  Mode switches are an important part of a distribution network, but are often best optimized when combined with a network redesign.  Networks should be reviewed and, where appropriate, redesigned every 10 years or so to optimize the benefits from changes in technology, policy and infrastructure.  Such redesigns can ultimately save up to 10% to 15% of distribution costs.  In the long term, therefore, transport and logistics providers need to look holistically at the end-to-end supply chain, but also consider the likely evolution in supporting infrastructures.