When businesses explore the possibility of reducing their environmental impact, they often associate this initiative with increased costs. Yet, there are many instances within a supply chain where a reduction in environmental impact actually correlates with a reduction in costs. Cost savings can be achieved by optimizing the areas of a supply chain that produce the greater amounts of waste and carbon emissions.
Let’s take, for example, a business with high dead stock (excess inventory) levels that may be using more warehouse space (or more warehouses) than they theoretically need. Operating additional warehouses increases costs along with its carbon footprint since more resources such as gas, water, and electricity are used. Additionally, extra vehicles must be routed too and from each warehouse, further increasing carbon emissions. Consistent high dead stock levels may force a business to drive up its costs to store the excess inventory, which drives carbon emissions up even higher.
While removing excess warehouses in their current state may not be feasible, utilizing SAP to optimize inventory levels can help reduce dead stock. This capability in SAP allows users to change parameters and understand how each change affects inventory levels. Through the consistent use of this SAP function, a business can reduce dead stock levels to near zero. Depending on the initial state of inventory, a business may be able to remove a storage facility, cutting out a portion of their carbon footprint alongside reducing their costs.
On a granular scale, business can reduce carbon emissions through optimizing forklift routes in a warehouse. By analyzing the most moved inventory items and slotting those materials to optimal locations, the business minimizes travel distance and time. This is just one of many ways to reduce travel among forklifts – and consequently, gas consumption – in a warehouse.
To see how environmental stewardship works in the real world, consider the Trinchero Family Estates, family-owned and operated in the heart of Napa Valley since 1948. During the last few years, Trinchero Family Estates faced challenges that are likely familiar to many organizations, supply chains and people around the globe. In the face of monumental disruptions, they asked themselves: How can we work together to ease the time and effort required to have a data-driven conversation that would drive decisions including energy-saving initiatives that would, in turn, drive actions that would flow across cross-functional teams?
The remedy was to increase service levels, operating efficiencies, data integrity and cross-functional communication using Reveal’s oVo®, an internationally validated, value-driven business methodology, as a catalyst for change. oVo®’s three-phase approach empowers businesses in a very practical way to turn their SAP investment into a business asset. As a result, new learnings and governance processes became deeply embedded into the culture and adopted as the “Trinchero Way.”
The subsequent result – sustainable improvements in flow velocity, reducing non-value-added work for team members, and leveraging the value of the teams beginning to work from one single source of truth (SAP) – led to a plethora of benefits.
Within the realm of energy savings, Trinchero Family Estates achieved 2.9 million feet of picking distance saved to date. That’s the equivalent of 5,280KWH and 9.404 miles of on-road driving – a huge carbon footprint reduction.
Every Business Has the Potential to Reduce Their Environmental Impact
Trinchero Family Estates is just one real-world example. Every organization can do its part in moving towards sustainable benefits and SAP is often the key. While Warehouse Management (WM) in ECC has limited functionality in warehouse mapping, Extended Warehouse Management (EWM) in S/4HAHA enables greater optimization in assigning warehouse orders and built-in slotting. With multiple warehouse visualization features, the result is powerful! The new features spark more extensive insight into the functionality of a warehouse and make it easier to optimize warehouse operations. By evaluating and optimizing the organizational layout of a warehouse, a business can reduce the time and costs of forklift operations by reducing gas/electric consumption, which in turn, reduces carbon emissions.
It’s time to ask yourself: what can your business do to reduce its environmental impact along its supply chain without incurring additional costs? The answer often lies in careful evaluation and effective utilization of SAP. If utilizing full functionality of SAP is a challenge, it may be in your business’s best interest to seek assistance in using SAP to attain sustainable improvements, while incorporating Environmental, Social, and Corporate Governance (ESG) efforts into the products and supply chain.
By doing so, you can attain greater integration and optimization and an improvement throughout the supply chain. With people caring more about where their products come from, how they are manufactured, and their environmental impact, the time to do so is now, not later.The best part is that many efforts do not have to be made at a cost.