How to Conquer Sustainability in the Supply Chain

To tackle disruptions caused, for instance, by the energy crisis, the pandemic, climate change, or geo-political tensions, sustainable supply chains are vital. In addition, consumers' changing awareness and expectations for sustainability in supply chains pose challenges for businesses. Dr. Kerstin Höfle from Körber Supply Chain was a guest in our podcast and gave first-hand industry insights into the most pressing challenges and emerging opportunities in logistics.

The importance of sustainability in the supply chain

Sustainability is one of the most pressing topics in logistics and supply chains. Along with growing consumer preferences for sustainable goods, there is an increasing call for businesses to adopt sustainable practices to make their entire supply chain process greener. As challenges for the logistics industry rise, there is a greater need for innovation to provide better value to the end consumers with increased expectations.

To tackle challenges such as climate-related risks or supply chain disruptions, companies should increasingly focus on adopting sustainable practices and processes. A sustainable supply chain should focus on the triple bottom line: people as a whole, environment, and economic aspects.

Companies adopting sustainable practices in their supply chain should aim to benefit the people involved in their process by fully incorporating ethical practices such as fair labor policies, anti-corruption policies, and considering the human rights of all parties involved. Similarly, the environmental aspects of a sustainable supply chain should focus on environmentally friendly practices, which include proper waste disposal, pollution control, reducing carbon emissions, and using recyclable materials. The final aspect of the sustainable supply chain involves analysis of all practices to make the company more efficient through sound financial management focused on earning sustainable profits and lowering costs with minimum social and environmental impact.

Industry insights from Körber Supply Chain

In our Innovation Rockstars Podcast, we talked with Dr. Kerstin Höfle from Körber Supply Chain about emerging trends and opportunities in logistics, including the hot topic of sustainability, and how they are tackling these at Körber.

Körber Supply Chain is part of the Körber Group, an international technology group with about 12,000 employees worldwide that consists of five business areas: Digital, Pharma, Supply Chain, Tissue, and Tobacco. Körber Supply Chain offers services to smoothen the supply chain complexity through digital technologies, automation, and material handling solutions. Future and responsibility-driven, the company focuses on technological transformation, trying to stay one step ahead of others.

Dr. Kerstin Höfle, Vice President of R&D and Product Management at Körber Supply Chain, is focusing on logistics management. She’s responsible for the product portfolio, consisting of software and hardware, and its future viability. In her role, she has to keep up with the latest developments in the logistics industry to stay ahead of the game. In the interview, we discussed with Kerstin the impact and future requirements of sustainable supply chains.

Challenges in the logistics industry

Supply chains and the logistics industry are currently in focus. Not only are there some specific disruptions the industry must deal with, but also changing customer expectations and the overall challenge of identifying new trends and emerging technologies to drive impactful innovation.

1. Drivers of change impacting supply chains

When asked about the hottest trends the logistics industry is facing at the moment, Kerstin stated that everything around sustainability and energy efficiency is currently on top of Körber’s agenda. According to Kerstin, the key drivers for the adoption of sustainable solutions in supply chain networks are the global energy crisis and the associated rise in energy prices, as well as growing awareness of sustainability among society and consumers. In Kerstin's opinion, these factors will be most determining for innovations in the logistics industry in the future. Another trend driving innovation is labor shortage. The lack of personnel in warehouses or at production sites requires the automation of processes to substitute human labor. She further pointed out that technologies like artificial intelligence, machine learning, or blockchain, will play a key role in future innovations.

Kerstin also emphasized the need to focus on the entire supply chain when thinking about how to address sustainability, for instance, when considering how to measure greenhouse gas emissions or how to reduce energy consumption. While it may be difficult to implement these changes quickly, their long-term benefits outweigh the costs, in Kerstin’s opinion.

2. Managing changing customer expectations

Another challenge crippling the logistics industry is managing end customers’ expectations, which have changed dramatically in the past years. One area where innovation urgently needs to happen, in Kerstin’s opinion, is last-mile delivery. The complexities in supply chain management are rising due to the increasing volume and frequency of packages delivered to end customers, along with multiple sellers. Moreover, there is an increasing awareness among customers when it comes to sustainability. The demand for more transparency in supply chains is high, which was reinforced by the COVID-19 pandemic and the current energy crisis.

3. Keeping up with the latest trends and technologies

Innovation is a team process that requires smooth communication. When asked about the challenges of keeping the team updated on the latest trends and technologies in the logistics industry, Kerstin discussed the hurdle of aggregating ideas and creating a structured process that fosters direct exchange. A few years ago, Körber Supply Chain attempted to start scouting activities dedicated to a specific technology and industry, but the approach could not foster results. Identifying new technologies and trends related to sustainability, such as adopting energy-efficient technologies in cold chains and dark warehouses before they become mainstream, can be challenging without an efficient approach. Kerstin highlighted that sustainable supply chain initiatives were identified many years ago, but companies that could not act upon them have struggled to adopt them quickly today.

How to tackle challenges in logistics

As highlighted above, businesses operating in the logistics industry have been facing challenges that require innovation in order to meet changing customer expectations. To the question of how Körber Supply Chain stays up-to-date on market developments and new technologies, Kerstin replied that her team takes a very hands-on approach. She described the following practices that work well for Körber to understand customer requirements and solve problems:

1. Continuous research and internal processes

For Kerstin, being very close to the market and the customer is most important to understand actual problems. What helps them to get relevant insights is classical research using, for instance, trend reports, publications, social media, or podcasts.

Crucial and yet the greatest challenge in this process is to connect all the internal research activities and aggregate information from different departments across the organization. There are a number of ways companies can aggregate information from different sources, and each company has its own processes that work best. A digital platform, for instance, can serve as a single point of truth that prevents the information from being scattered and reduces the time-consuming aggregation of data. For Körber, the key to information sharing and innovation is effective internal communication and fostering direct exchange between different teams.

2. Leveraging an innovation ecosystem

A strong vision of Körber Supply Chain is developing an innovation ecosystem. Kerstin explained that even large organizations could not have all the knowledge and capabilities in-house required to drive new product development and breakthrough innovation. Instead, identifying new market players that use new technologies and collaborating with external partners is the way forward, in Kerstin’s opinion.

She also pointed out that scouting for a specific emerging technology or industry just to follow a trend hasn't worked for her team in the past. In Kerstin’s opinion, innovation starts with a specific challenge or customer problem for which they then look for the right technology that could solve the problem. An open innovation approach can help find innovative solutions for certain problems quickly by involving partners and external knowledge.

Conquering sustainability and emerging technologies in the supply chain with ITONICS

Innovation management software solutions like ITONICS can reduce complexity and help teams keep track of the latest trends and technologies through automated processes. A single point of truth for innovation helps teams to maintain a centralized approach to trend and technology scouting and to foster collaboration and transparency across the organization.

The ITONICS Innovation Management Software provides several features helping businesses to foster technology foresight and innovation in supply chains, for instance:

• Gaining actionable insights into new trends and emerging technologies related to supply chains that have the potential to disrupt the industry.
• Maintaining an overview of disruptive startups to stay informed about the latest developments and to identify collaboration opportunities.

The ITONICS Sustainability Radar highlights which trends and technologies are critical to reducing emissions and creating greener business practices and can serve as a starting point for your company.

As highlighted by Kerstin in our podcast, close collaboration with other internal teams is essential for driving innovation. The ITONICS Radar helps you to seamlessly communicate and collaborate internally to promote knowledge exchange around relevant trends and technologies.

Be prepared for future supply chain requirements. Book a demo and learn more about how the ITONICS Innovation OS can help you develop resilient strategies.