Digital technologies play a crucial role in sustainable economic growth – in supply chains and beyond
The annual meeting of business and political leaders in Davos was held at the end of January, where discussions around global sustainability took centre stage at the 50th annual World Economic Forum.
2020 has already observed commitments by many companies around the world to achieve a sustainable future. Microsoft plans to go “carbon negative” by 2030, and supermarket chain Sainbury’s pledged £1bn to cut their emissions to zero by 2040 – particularly from areas such as refrigeration and transport.
Starbucks too revealed three new targets for 2030, part of their long term, resource-positive strategy. This focuses on a 50 per cent reduction in carbon emissions in direct operations and supply chain, and a pledge to halve the amount of waste sent to landfill from stores and manufacturing.
However, as Elizabeth Sturcken from the Environmental Defence Fund said in response to Microsoft’s pledge, “To really shift the needle on climate change, we need 1,000 other [companies] to follow suit and turn rhetoric into action.” She is not wrong – business of all sizes and industries play a part in reducing our carbon footprint.
Starting with the supply chain
A major contribution to the world’s climate change woes are transport and logistics within the supply chain. The International Transport Forum (ITF) estimates international trade-related freight transport currently accounts for around 30 per cent of all transport related CO2 emissions from fuel combustion, and more than 7 per cent of global emissions. As such, you can understand the drive by government to set targets to cut carbon emissions, the continued push to reduce fleet costs, and the increasing choice and affordability of EVs. These trends will only continue.
That said, at the moment road freight transport continues to dominate global freight transport operations. There is therefore mounting pressure on the freight transport industry to address concerns over its sustainability. We need to see more investment in this segment of the supply chain.
Emissions, energy consumption and unused capacity – i.e driving with partially filled trucks from one location to another – are some of the many forms of waste in road freight transport. Each of these factors not only costs a company money but increases their consequential carbon footprint with every mile, whilst also affecting human health and environmental pollution.
Promising interventions are not limited to new transport technologies, but also include changes in framework conditions for transport, in terms of logistical processes. If more companies were to leverage the Internet of Things (IoT) and data analytics to predict demand and optimise availability of assets and infrastructure – we can increase operational efficiency, and positively correlate a more sustainable supply chain, and a greener manufacturing process.
Fusing AI and IoT to drive a sustainable fleet
The fast inroads made by emerging and new technologies have left logistics companies with a lot of catching up to do. In 2019, we saw an increase in an infusion of IoT into existing scenarios – with most of the challenges around adding IoT/sensor capabilities and enabling intelligence on the edge being resolved. This fusion of IoT and artificial intelligence (AI), is more commonly known as AIoT.
While the original purpose behind enabling these capabilities may have been to do with the early prediction of faults or optimising usage patterns for efficiency, the large volume of data now available from these devices and sensors has opened up new avenues of exploration and optimisation.
Due to the evolution of IoT into AIoT we experienced progression in three distinct stages:
- Enabling core capabilities on the edge – these included basic sensor development, integration with available devices, etc.
- Collecting the data generated from these sensors and storing them in a structured form on a central data store or data lake – typically on the cloud
- Realising the synergy between AI/ML and IoT and combining them together into AIoT
Focus in this area has also been evolving along with the core technology itself, as we shift towards interesting applications of AIoT and away from initial device capabilities and integration.
Essentially, while IoT provided access to a large base of information, AI and Machine Learning has enabled the creation of intelligent and energy efficient freight systems, enabling us to excel in energy sustainability, while pursuing our goal of greater supply chain orchestration.
On the road with AI
In regards to logistics in the supply chain, think about the fleet of vehicles involved throughout the supply chain. Using the advances in AIoT, we are in a prime position to evaluate the journey map and determine the most effective routes. Not only that, even more embedded within the process, we can ensure vehicles are full, monitor their weight, temperature (for example when transporting food) and air pressure.
However, the IoT should not just be a collection of sensors and dashboards. The purpose of science and technology should be people-orientated and nature-orientated, especially when it comes to a major contributor to CO2 emissions around the world like the freight industry.
By bringing all data together and processing it in an intelligent way, we can overcome the data deluge from all the devices used in the sector and drive more sustainable approaches for both the future of the planet and companies’ bottom lines.
From data deluge to actionable insights
I am in no doubt that this year will mark a heightened focus on AIoT adoption. This, combined with the ability to move decision making to the edge, will drive a responsible, sustainable and greener approach to energy consumption across industry. But it must be approached in the right way.
The power of IoT is unleashed by not just connecting sensors but by employing advanced analytics models right at the edge, to enable real-time, here-and-now actions. True success in IoT comes only when it is coupled with design thinking to keep the human element right at the centre.
In order to unleash growth and higher profits but also a sustainable approach, transportation and logistics companies need to make bolder and more strategic choices than ever before.
It’s all about the analytics
A good data strategy needs to be the starting point. However, it is important to keep it simple.
There are ultimately three stages of analytics – descriptive, predictive and prescriptive. Descriptive is more the here and now during peak periods, predictive is to identify the future of what may happen, for example, a surge in demand, and prescriptive is what to do about it, in terms of concrete actions.
Many tend to hone in on the descriptive and ignore the other two stages. This is where the problem lies in thinking about sustainability – we are not looking beyond the here and now, but instead seeking quick fixes – which consumers will perceive to be a step in the right direction. To be truly sustainable and successfully mitigate the impact of business operations on the environment, we need to be thinking more long term.
Convergence and course correction
Globally, our ecological system is clashing with human and industrial growth. Crucial steps need to be embraced in order to save our planet. We need to work towards an ecosystem that can fulfil the social, economic and environmental needs of present and future generations.
Globalisation has built a connected world and opened up frontiers for commerce and trade. However, this growth is coupled with challenges in supply chain management, capacity & demand management, freight planning, operational efficiency, and technology adoption for Transportation and Logistics providers.
Driving growth and reducing overhead costs of course will always remain the top priorities of any business. Many business owners fail to connect these two functions to logistics sustainability. The way in which the climate change challenge and sustainability is currently viewed, is to not have a negative impact on the environment. However, what business leaders really need to grasp is that the concept of sustainable solutions in transportation within the supply chain can actually result in better business. It can improve individual operations and movements to increase the bottom line with fast productions, more efficient routes and reduced waste.
For companies around the world to truly make an impact on the battle against climate change, we need to see the convergence and course correction of emerging technologies such as AI and the IoT. The technology, capabilities and knowledge is here, we simply need to harness it and focus on specific challenges to expose and share the right use cases. Only then will we truly be able to achieve a significant reduction in carbon emissions and ignite a sustainable business environment.
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