Report: 51% of CSCOs would sacrifice profit for sustainability

Business leaders are determined to make supply chains more sustainable, and many say they’d sacrifice profits to do it, according to a recent IBM study.

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IBM’s Institute for Business Value and technology firm Celonis surveyed nearly 500 chief supply chain officers (CSCOs) and found that more than half said they’d sacrifice an average 5% of profits to improve their company’s sustainability outcomes. That equates to $22 billion for U.S. Fortune 500 companies in one year, according to the report, which polled business leaders on a range of issues related to supply chain resiliency.

The CSCOs surveyed identified key actions they plan to take over the next three years in pursuit of their “circular economy” goals:

• 47% said they are initiating full lifecycle design of their materials and products to expand re-use and reduce waste;
• 44% said they plan to improve the energy efficiency of their products and services;
• 35% said they plan to develop new products and services based on renewable energy componentry;
• 30% said they expect to engineer new zero-waste products and services.

The top benefits CSCOs expect to gain from those initiatives are: complying with environmental regulations, reducing reputational risk, and driving new innovation areas. To get there, 55% of CSCOs surveyed said that over the next three years they plan to incorporate real-time monitoring and reporting on environmental and social sustainability within their companies–tasks that will depend on implementing new technology strategies. This is part of a broader effort to digitally transform supply chains, placing greater reliance on technologies such as hybrid cloud, artificial intelligence (AI), process mining, and execution management, according to the study.

“The Confluence of post-Covid-19 challenges, inflation and supply issues, security, and sustainability has led to the most complex operating environment in modern business. This has forced organizations to rethink and rebuild their supply chains to be more agile, efficient, and sustainable,” Jonathan Wright, managing partner, finance and supply chain transformation, for IBM Consulting said in a statement announcing the study’s results. “Technology and data-fueled automation and intelligence are key to not only evaluating current workflows and inefficiencies, but in identifying new opportunities as well.”

According to the study, 53% of CSCOs said digital supply chain transformation will be the most significant area of competitive advantage in the next three years. Nearly three-quarters said hybrid cloud integration is crucial to accelerating and enabling that digital transformation.

See the IBM website for access to the full report.