According to
research by McKinsey in 2022, 83% of Fortune 500 companies have corporate targets relating to climate change. A
prior (2020) survey of companies in the US, UK, France and Germany suggested that 88% of publicly-traded companies have ESG initiatives in place. However, research reported by the
Harvard Business Review in 2022 indicates that many organisations are “struggling to deliver on their commitments”: only 27% of companies have any enterprise-wide ESG KPIs in place, and just 3% have a full set in place. Being sustainable – and proving it via objective reporting – is, it’s clear, far from straightforward.
Businesses still have a long way to go to understand and mitigate the risks involved in ESG reporting, such as energy costs, regulatory risks, reputational risk and supply chain factors. There’s no single ‘magic bullet’, so each business department needs to contribute by determining metrics, setting targets, implementing solutions to hit those targets, and reporting on performance against them.
And that’s the context for this post. Because, whether you have formal sustainability goals already or they’re about to come your way, decarbonizing your supply chain can be one of the quickest-to-implement and most impactful measures that will help you become a more sustainable business (and, in terms of the ‘big picture’ outcome from that, help to mitigate climate change).
An Order Management System (OMS) helps you achieve this by streamlining supply chain processes. While you may already be familiar with some of the following functions of an OMS, let’s consider them now in the context of sustainability.
Optimise your inventory management with an OMS
Both overstocking and understocking lead to unplanned and unnecessary transportation, shipping, goods movement and storage. All of these incur both financial costs and, by definition, unwanted carbon emissions associated with your supply chain. An Order Management System, however, optimises your inventory management by providing real-time visibility, automating stock updates, reducing overstock and stockouts, and enabling efficient replenishment based on accurate demand forecasting.
Reduce transportation emissions with an OMS
IHL’s 2022 report on the Order Management Systems market describes the shipping optimisation engine [of an OMS] as “one of the greatest sources of OMS ROI”. An OMS can help you reduce transportation needs by consolidating shipments, reducing the number of trips required, and prioritising local transport. For instance, an OMS can advise you to use a local store to fulfil an order rather than use a warehouse further away. With most transportation still based on fossil fuels, not only will your OMS improve the finances of shipping, but can minimise the carbon consequences associated with shipping.
(IHL’s report also describes shipping optimisation engines as “one of the areas of greatest disparity between OMS vendors”.
Ask us about ours.)
Improve supplier collaboration with an OMS
An OMS provides extensive opportunity for supplier collaboration through the provision of real-time visibility into inventory levels, order status, and delivery schedules. This visibility can be applied to reduce lead times, minimise out-of-stock situations and improve delivery accuracy, all of which lead to fewer returns and exchanges from dissatisfied customers (a double whammy). Again: this helps reduce the carbon emissions associated with shipping and delivery and, hence, contributes to decarbonising your supply chain.
Enable better, data-driven decision-making with an OMS
An OMS enables you to make genuinely data-driven decisions, by providing real-time insights into your supply chain performance. Such knowledge can help identify other areas for improvement, ensure processes ripe for optimisation are optimised, and that waste is constantly targeted for reduction. All resources cost money, and many are still carbon-based – reducing the resources necessary for your operation inevitably has a positive effect on your financial performance and on the carbon footprint of your supply chain.
In fact, decarbonising your supply chain and financial efficiency are one and the same thing
According to the
World Economic Forum, “Global supply chains have conventionally been focused on achieving financial efficiency above all else.”
The good news is that, in seeking out financial efficiencies, your business is already likely to be less carbon-intensive and more sustainable than it once was: many obviously unsustainable practices have a bigger negative impact on financial performance than sustainable ones, and will already have been replaced.
The bad news is that, as a result of these efforts already made, you may find yourself thinking: “But none of the benefits of an OMS is going to make enough difference to our sustainability.” Taken individually, you might be correct. But the modern era is one of marginal gains. There is no longer (if there ever was) one single thing that can dramatically improve performance, but there are many aspects of performance that can be improved by some smaller percentage, resulting in a significant, aggregate improvement in performance.
Back to better news: a singular step – the deployment of an OMS – can help you realise many instances of marginal gains, adding up to significant decarbonisation of your supply chain and improved financial performance as a result.