February 16, 2020

How Digitalizing Could Help You Become More Sustainable

Author: Stockpile Reports

Sustainability has become paramount in recent years. Experts estimate that we collectively use 40% more resources than we can replace every year. A scenario where we run out of key natural resources is less a distant possibility and more a foregone conclusion at this point. It’s a challenge to humanity as a whole and industries in particular – historically the largest consumers of resources – are facing.

Arguably, sustainability is the most powerful driving force for industries and corporations today. In this blog, we offer reasons why your business needs to pay extra attention to sustainability in the coming decade. We also provide a possible solution to the impending crisis: digitalization.

Why Sustainability Matters

Sustainability has become more than just an ideal to strive toward. It’s now a ground reality and almost essential if you want to do business in 2020. Here are 5 reasons why sustainability matters to your business:

1. Sustainability is tied to operating efficiency

The depletion of natural resources has created high-demand, low-supply conditions in the market. Prices are high. Businesses need to pay more to continue using the same amount of natural resources – or look for new, improved, and more efficient methods for production and running the business in general.

Many businesses, needless to say, are making the leap to operational efficiency. If they can find more efficient alternatives to traditional processes, they can keep costs down and remain profitable. In today’s low carbon world, it means embracing the clean, environmentally-friendly technologies and methodologies that are being pushed forward. Becoming more efficient makes you more sustainable and vice versa.

2. Investors increasingly demand it

Have you asked your investors what they think of sustainability? A couple of decades ago, they would probably have been noncommittal. If you ask them now, they are likely to be strongly in favor of it. In fact, many will ask leading questions about what your company is doing to make itself more sustainable and environmentally-friendly.

Additionally, according to a recent study by Accenture, companies ranked high on sustainability outperformed the ones low on sustainability by 38% when it came to shareholder returns. To provide a clearer picture, companies that are sustainable are providing better returns for investors than the ones that aren’t. Investors are increasingly becoming aware of this fact. Many will now only invest if they perceive the company as sustainable.

3. It affects your reputation

Would you rather do business with a sustainable business or a non-sustainable one? All businesses, big or small, are facing the pressure to become more sustainable. Businesses that are seen as environmentally and socially conscious score more brownie points with consumers. A sustainability-related scandal, on the other hand, could destroy a business.

Levi Strauss & Co., the popular clothing brand, came under the crosshairs of an environmental group a while back. It was made out to be “Too Dirty to Wear” and accused of causing pollution equivalent to 1.1 million cars – without taking any steps to mitigate the pollution. Levi’s was able to weather the storm and came out mostly intact. A less well-established business may have not been so lucky.

4. It keeps your employees happy

Employees are more conscious than ever of climate change and other environmental issues. They assume responsibility for their personal carbon footprint and how they contribute to it all. They want to know the company they work for is doing “the right thing” and doesn’t have wasteful production processes. Employees are more likely to be motivated and happy if they know they work for a truly “green” company.

As you are no doubt aware, your employee’s morale greatly affects business performance. If your employees believe in your business and company culture, they work harder and care more. They’re more likely to spread the word about your clean operating practices and more confidently handle environmentally-conscious customers. All this goes a long way toward improving the level of trust the general public has in your business.

5. Geopolitics require compliance

Governments haven’t done enough to preserve the planet’s resources, historically. But that’s slowly changing as more and more governments bow to the pressure and make much-needed changes. Many leading world economies are creating and enforcing regulations in an attempt to rein-in less-sustainable industries. The most notable regulations passed recently include Carbon Reduction Commitment and the Environmental Liability Directive.

In the US and OECD countries, polluters are required to pay approximately 2.5% of the country’s GDP as cleanup costs. However, the actual cost incurred is upward of 11% of the GDP. There’s a big gap between the damage and the money being paid to reverse said damage, in other words. With the way the wind is blowing, you can expect higher penalties in the near if you’re not compliant.

The major takeaway message for you to remember is that the economic wellbeing of your business may well ride on its sustainability in the next few decades.

How Digitalization Can Assist in Sustainability

Being sustainable is essential, you probably agree. But how do you achieve sustainability? Digitalization could be one solution. Digitalization, by its very nature, is efficient. It allows you to do more with less – every single time. And while initial implementation costs may be high, digitalization offers a healthy return on investment (ROI).

What exactly is digitalization? It’s the new wave of technologies that are revolutionizing management, production, and entire industries with computers, automation, data gathering, and the internet. Many believe we’re in the middle of a 4th industrial revolution. Some examples include big data, the internet of things, and artificial intelligence (AI). When digitalization technology is applied to traditional work processes, the result is a more efficient process. A more efficient process automatically makes your business more sustainable.

There are countless examples of how digitalization has helped businesses become more sustainable. It’s all about the data, which gives businesses the clarity they need to be more efficient. We’ll share three prominent examples with you:

1. Digitalization in relation to manufacturing

Manufacturing companies are using digitalization to learn more about their unique manufacturing and consumption cycle. These cycles can be wasteful, for various reasons. By gathering data on every step of the manufacturing and consumption process, companies can reduce waste and promote reuse. Philips, for example, used digitalization to learn that customers could extend the lifespan of their equipment by replacing some parts supplied by the company. It helped customers, itself, and also the environment through reuse.

2. Transport is being affected too

The transportation industry is also changing. From a consumer perspective, electric vehicles are in higher demand. With the heightened market penetration of electric vehicles comes the demand for extra electricity. Companies in countries like Norway are using AI and cloud to prepare for the increasing energy demands and make accurate future demand projections. Also, big data in relation to software is allowing for cheaper electric vehicle charging.

When it comes to transporting bulk materials, such as ready-mix, landscape products, and aggregates, companies are searching for ways to make more efficient deliveries, reducing cost and the impact on the planet. Companies are turning to technology to help better manage their inventory, orders and deliveries, and efficiency.

3. AI to combat climate change

When you think “industrial revolution,” you probably think smoke, pollution, deforestation, toxins, and extra chaos. With digitalization, however, the current revolution could be more sustainable than the ones before. Thanks to AI technology, it’s possible to bring sustainability to power generation, land use, domestic resource consumption, waste management, transport, and almost every other industry you can think of. In fact, it may even be possible to reverse climate change.

Stockpile Reports Brings Efficiency to Inventory and Logistics

Our company, Stockpile Reports, provides sustainable inventory and logistics solutions. We gather the reliable data you need to make fast, informed business decisions. Using iPhones, a drone, or an aircraft, you can generate stockpile volume reports in a few hours – a process that usually takes far longer. We also allow you to streamline your site’s logistics onsite, allowing you to fulfill orders on time and never run short on materials. Our solutions can save you time and make your supply management process much more efficient.

There are risks associated with digitalization

As useful and effective as digitalization is, it’s not a miracle pill. It can’t offer a blanket solution for all of a company’s sustainability woes. Not everything can be digitalized and perhaps not everything should be. Further, digitalization is still in its infancy, meaning there are some growing pains. It’s not always as efficient as it’s made out to be. For example, while digital currency is sustainable and accessible, the practice of “mining” digital currency causes a massive uptick in energy consumption and has no real practical application. It’s wasted energy that could be put to better use.

Digitalization, in our books, is one part of the solution, not the entirety of it. Other, non-digital sweeping changes may be required for your business to be truly sustainable. This may involve changes in resource use, power use, land use, production, transport, logistics management, supply management, and even the way you handle your employees.

As one example of the broad, non-digital changes required to bring in more sustainability, our customer LafargeHolcim managed to reduce their net carbon emissions per tonne of cement by 25 percent since 1990. This achievement was brought about through a combination of substitute raw materials, alternative fuels use, and improvements to the energy consumption to make it more efficient! The achievement is significant because concrete – made up of cement – happens to be the second-most-consumed resource on the planet after water. It has a major carbon footprint, which can be hard to reduce.

Conclusion

Digitalization – aka Industry 4.0 – can greatly assist in making you more sustainable. But we recommended that you consider the effect and value of digitalization thoroughly before moving forward. Also, not all changes need to be sweeping or far-reaching. Every little improvement counts. Reach out to our Stockpile Report team to learn more about how we can help you digitalize your stockpile inventory management!