Sustainability in the Supply Chain in the Digital Age

Supply chain sustainability is an emerging challenge for established businesses, driven by evolving customer preferences, new regulations, corporate social responsibility aspirations, and the steadfast necessity for greater efficiencies. 

The February 2016 Breakfast Series event, hosted by the Pitt Business Center for Supply Chain Management, focused on sustainability opportunities in the digital age. Leading the discussion were two speakers at the forefront of sustainability in the supply chain: Kevin McKnight, ALCOA’s Chief Sustainability Officer and VP of Environment, Health & Safety, and Aditya Sharma, Accenture’s Operational Director of Global Sustainable Operations.

McKnight began his presentation by establishing that a firm’s sustainability program cannot be a separate strategy; it must be integrated within the core business strategy.  As such, sustainability initiatives must meet the economic requirements of an ongoing business concern.  Companies, therefore, are evolving their approach from the introspection phase, which have the modest goal of “doing less harm,” to the strategic phase, where they reach deep into their supply chain and expand to a “Scope 3” analysis that extends beyond in-house operations. Industry is making the shift by analyzing supply chain data, creating transparency, and addressing systemic inefficiencies and areas of risk with sustainable, economic solutions.

McKnight gave several pertinent examples, including how ALCOA’s digitally innovative metallurgical technology plays an important role in sustainability by significantly lowering product weight and thereby reducing energy requirements, which results in lower carbon emissions.  He also discussed the execution of sustainability initiatives within the corporate framework, highlighting the need for leadership to set measureable goals and operating incentives. Digital technology enables on-the-ground data collection and real-time auditing of the supply chain.

Following McKnight’s talk, Sharma gave examples of how the digital age has been a catalyst across industry for creating more sustainable and more efficient value chains for customers.  Sharma echoed McKnight’s point that a business case can and must be central to these endeavors.  However, as the Internet of Things and Machine-to-Machine technologies come online, the availability of data will create vast opportunities for collaboration and coordination that not only increase efficiencies (e.g., predicting maintenance requirements), but also create new offerings that redefine products and services and deliver them in a more sustainable fashion (e.g., resource sharing models as used by ZipCar and AirBnB).   

After the speakers’ presentations, the Q&A session with the audience was engaging and participants left the event with a better understanding of how sustainability is not in conflict with business goals, but instead, how in this digital age, leads to greater innovation, less waste, and lower risk.