Studies show that organisations have not yet made the link between their green strategy and how IT technologies can be used to help them achieve their goals.
“The biggest inhibitors for companies seeking to green their supply chain are firstly, not knowing how to get started and secondly fears that being ‘greener’ will increase costs and impact margins or service,” says Lawrence Chan, President of Infor’s Asia Pacific region.
“However, our research and early projects in this area demonstrate that the opposite is true – that operating sustainably and profitably are often one and the same and that big gains in carbon or energy reduction can be delivered with no impact on cost or service.”
“In addition, software vendors have not yet responded fully to the market needs to develop solutions that lead manufacturers down the path of greener operations. But they will do, and Infor is one of the first off the blocks in this area.”
Chan says Infor’s first initiative in the supply chain has been to assist in carbon reduction programs from the most strategic level – the very design of the supply chain distribution network itself.
“Organisations are now looking at the location of their manufacturing and distribution facilities, their sourcing decisions and the ways they route product along the supply chain to market,” he explains.
“They are asking themselves how they can achieve the same service objectives with a lower carbon footprint.”
“Infor’s Network Design solution helps by incorporating carbon values into a model of the organisations supply chain."
"The system can calculate the company’s original starting point – its initial supply chain footprint, incorporating as many details as required such as manufacturing and transportation sourced carbon. Infor has incorporated a library of carbon values for each transport mode to make it easier to get up and running quickly.”
Using the software, reduced carbon targets or carbon minimisation can be configured into the options for supply chain optimisation which already include capacity, cost and service level constraints.
“The power of the modelling capabilities means that you can quickly find ways of reducing carbon by say 20 per cent with no increase in cost or impact to service,” Chan says. “Indeed in many cases, a carbon reduction is synonymous with a cost reduction.”
Infor is developing solutions across a number of areas of the sustainability spectrum to meet evolving market needs, with the supply chain just one aspect.
“Broadly, you can think of our green strategy as addressing three pillars; energy reduction, carbon reduction and compliance and reporting,” he says.
“In energy reduction, Infor’s EAM Sustainability Edition product factors in energy monitoring at an individual asset level and detects abnormal energy usage, for example in an air conditioning unit or assembly line, and uses that to trigger a maintenance program.
"By properly maintaining energy-intensive assets in this way, the solution can reduce energy consumption by between 8-15 per cent. We also track WAGES (Water, Air, Gas, Electricity, Steam) and deliver a measurable index Infor calls the GAS index (Global Asset Sustainability).”
In compliance and reporting, Chan says Infor is building in the necessary reports to its financial systems to enable organisations to comply with the increasing legislative requirements such as can be seen emerging in the Australia, New Zealand and now UK markets.
“You can wrap yourself in knots if you try to incorporate every source of carbon and some decisions can be seen as counter-intuitive when you consider the supply chain as a whole,” Chan admits.
“However, we should not let lack of data or excessive detail become an inhibitor to doing the right thing.”
“The areas where Infor has made developments include those where measurements are available. In our energy reduction solutions, such as EAM, energy measurement at the asset level is an integral part of the solution.
"There is a need to track the source of energy produced, knowing that some forms of energy generation are cleaner than others so that a more reliable GAS index can be reached.”
“In supply chain, the carbon reduction projects we are typically looking initially at are the sources of high emissions, so that the decisions driven would not be sensitive to reasonable error in the carbon values used.
"In time, accepted standards will emerge – as they are emerging with initiatives such as the GRI – to become an accepted currency for measuring carbon values and systems will evolve to embrace these.”
“We live in an increasingly carbon-constrained world and Governments have made their intentions clear that guidelines and policy will be enveloped into legislation over the next few years,” Chan adds.
“Guidelines have become policy directives, which have become legislative requirements in countries across the globe and businesses will ultimately have to embrace greener practice if only to remain compliant.”
However, according to Chan, other factors are moving the market faster especially for brand leading companies which already have mature environmental strategies and practices.
“Such companies see the opportunity afforded by embracing green practice reflected in consumer buying preferences, and new innovative products which take market share through a focussed approach to reducing waste and energy usage,” he argues.
“Opportunities for new product innovation already abound in energy generation, energy reduction and new packaging. New markets are created, and older ones can rapidly slip away. In such conditions, tectonic shifts in the competitive landscape emerge.”
And if more persuasion is needed, Chan points to two recent reports.
“The first is a statement from Walmart in China laying out its plans for supplier sustainability requirements:
‘Walmart will work with suppliers that fail to comply with the green programme, but if after a period of time the supplier does not improve, we will move our business.’
What greater motivation to develop a green strategy can a supplier have?”
“The second is the release of ‘green’ indices now being measured by respected analysts such as IDC, who are tracking the stock market performance of companies with ‘green’ products against the rest of the market. The report notes the indices of such companies consistently tracking higher than the standard market measures.”
Lawrence Chan is proud of the leadership position Infor has established in developing pioneering solutions across a broad range of sustainability initiatives.
“We aim to extend the capabilities of existing solutions to support one or more of the key sustainability initiatives, but also to deliver brand new solutions in this rapidly evolving market.”
“Infor is committed to developing new products and services that meet the needs of our customers in this area” he says.
“We believe that greener businesses are healthier businesses, for themselves, their shareholders and the environment.”