Information Systems for Environmental Sustainability

IT, Resource Productivity, Environmental Preservation, and the Fourth Industrial Revolution

Financial Times: IT Enables Sustainable and Efficient Supply Chains

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A recent article in the Financial Times “Sustainability: Green Companies Tend to Crack Efficiency First” argues that supply chain information systems such as ERP, BI, and forecasting tools enable firms to be more efficient and green. Driven by various factors, such as consumer demand (in consumer goods sectors),  efficiency (in manufacturing), and legislation, firms are using IT to become more responsive, save supply chain costs, and reduce their CO2 emissions.

“The reason efficient companies are green companies is attention to detail,” says Steven Barr, a supply chain expert at PA Consulting Group. “And it is efficient companies that tend to be green, not green companies that are efficient.” Those businesses that have invested in IT, to improve service or drive down costs, are those that have tools they can adapt to improving sustainability.

Meanwhile, the software companies are working on standardisation, so it is easier to exchange environmental data across a supply chain and to trace the eco-footprint of a given bill of materials. Managing the end of life of a product – through so-called “reverse logistics” – is potentially a big prize for supply chain technologists, as more markets set out to reduce post-consumer waste.

And, as raw material and energy costs both rise, such tools become more attractive to industry, suggests Guy Battle, a partner at Deloitte, the professional services firm. “It is the rising costs of resources coming through the supply chain that increases the incentive to recycle. [more]

While it’s clear that many IT-enabled efficiency initiatives pave the way for IT-enabled sustainability improvements, the reverse is also true. For example, last week I hosted a webinar for the Carbon Disclosure Project, and one of the insights they shared was that voluntary sustainability questionnaires can serve as a collaboration tool to get different firm constituents on the same page and drive sustainability initiatives by exposing performance differences with peer firms. The drive to improve relative to peers can drive IT-enabled sustainability initiatives which lead to or include IT-enabled efficiency initiatives.

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Author: nigelpm

Associate Professor of Information Systems, Stephen M. Ross School of Business, University of Michigan - Helping organizations to navigate digital transformation.

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