Many supply chains end with the consumer. Even B2B enterprises are commonly part of a chain that terminates at a B2C link. The modern consumer, therefore, has great influence on the way a significant chunk of the economy operates. And that same modern consumer expects businesses to behave ethically and to respect the environment.
In the Middle East, where the last two COP summits were held, sustainability has become a regional focus. Qatar announced its National Environment and Climate Change Strategy (QNE) in 2021 as a means to fulfil the environment pillar of the country’s National Vision 2030. Saudi Arabia started the National Energy Efficiency Program (NEEP) in 2008 and followed up in 2010 with the launch of the Saudi Energy Efficiency Centre (SEEC) and the King Abdullah City for Atomic and Renewable Energy (KACARE). The UAE government established the Ministry of Climate Change and Environment, which has authored a range of regulations and conventions on sustainability and green practices. And at the Egypt-hosted COP27, the UAE government unveiled its net zero 2050 Charter.
While these moves are admirable and necessary, we would be remiss if we did not acknowledge the challenges manufacturers face in complying. Heavier industries play a huge part in economic diversification, but they face growing material and shipping costs. Fortunately, the Internet of Things is on hand to help. IoT solutions have allowed the emergence of smart factories, where data insights from shop floors and supply chains feed shrewd decision-making at every link in the manufacturing process — sourcing, production, and distribution.
Circular economy
The goals are reductions in materials waste and carbon output, and digital technologies can deliver at scale. But to be clear, these are new technologies. Legacy systems come with inefficiencies, including wasteful use of energy, because of the extensive physical infrastructure involved. Servers use electricity, heat up, and require even more electricity to power cooling solutions. These setups represent a relatively large carbon footprint. The answer is a migration to circular economy models.
The Qatar Foundation already has a plan for the circular economy, Saudi Arabia established the National Center for Waste Management (MWAN), and the UAE set up a Circular Economy Council. Subsequently, we have seen shifts in strategy across these economies as enterprises explore ways to comply. All this motion has opened doors for technology providers that can support sustainability efforts.
It all starts with the supply chain. Cloud-based enterprise resource planning (ERP) solutions can unite with manufacturing execution systems (MES) to offer net-zero compliance functionality that preserves the bottom line. A 2023 Epicor Industry Insights global report showed 96% of enterprises in a range of industries use some variant of cloud ERP. The cloud’s advantages include the ability to expand the use of technology with little to no business downtime, but cloud adoption also leads to lower onsite energy use and enables the remote monitoring of warehouses and factory floors.
Carbon accounting
We have come a long way in our ability to decarbonise, thanks to advances in AI and wireless connectivity. But now, we must go further and dig into our complex supply chains. Integrated ERP systems are ideally placed to analyse supply-chain data and calculate compliance costs. Through such visibility comes the ability to make products both profitable and affordable while complying with the eco-wishes of regulators and consumers. Sustainable supply chains come about through accurate information on product quality, traceability, and repairability. Data insights also arm decision makers against external shocks like logistics issues and inflation, leading to more agile and resilient operations.
The business is reborn. A new culture emerges, one in which carbon accounting — the practice of quantifying direct and indirect greenhouse emissions — is second nature, as is the pursuit of goals to reduce those emissions. ERP has always been a core tool for manufacturers to monitor everything to do with their products and the materials used to make them. Through automation, ERP can work quietly in the background to identify opportunities for improvement. Whether the enterprise is a B2C or B2B operator, it can provide its customers with green-related information that will stand up to scrutiny. Claims like these will be key differentiators in the years ahead.
Cloud-based ERP helps manufacturers drill down into every aspect of the production process and each element of the supply chain to discover the potential impact on the organisation’s portfolio. Visually rich dashboards give at-a-glance overviews of costs, revenues, shipments, and emissions. Seeing the connections between them, business leaders can take meaningful action. Knowing that carbon emissions per shipment was too high in a given period leads to a slice-and-dice of that data to reveal the source, and hence the opportunity for action.
Laundry list of benefits
Over time, a business with this level of visibility and control over its manufacturing process will settle into a global community of sustainability champions with much greater ease than an organisation that is still wrestling with last decade’s systems. Sustainability is a winning proposition with a laundry list of short- and long-term benefits — easier audits, the favour of regulators, a brighter brand, and better business prospects. Profitability today without negative impact tomorrow is as good a definition as any for sustainability. The region is definitely heading in the right direction but those leading the charge are those who use terms like “circular economy” and “carbon accounting” in their corporate literature and in everyday speech. The same pioneers are likely also making liberal use of the phrase “cloud ERP”.
Makers, movers, and sellers will be compelled to move towards sustainable practices, one way or another, or risk becoming irrelevant. Using resources more slowly than nature replaces them is a tough challenge, but fortunately we know enough about what we should be doing to come up with goals that preserve profitability and affordability. All that remains is to measure what we actually do and adjust it until it meets the benchmark. To that end, cloud ERP is our ideal instrument.
Vibhu Kapoor, Regional Vice President – Middle East, Africa & India, Epicor
