How likely is supply-chain technology able to help the region achieve ambitious sustainability targets?
A worrying analysis by HSBC and Boston Consulting recently found that supply chains account for 80% of global carbon emissions and that it would need a whopping USD$100 trillion investment in the coming decades to meet net-zero pledges.
The outlook for the transport sector remains difficult, with supply chain crunches and labour shortages still afflicting the industry. A study by Quincus – a Singapore-based provider of supply-chain technology – and London’s Centre for Economics and Business Research estimated the logjam around last year’s holiday season alone was causing losses of US$65 billion.
Quincus finds it encouraging to see transport firms in the region choosing a more sustainable approach. With a large proportion of more than 700 million shipment transactions on its platform per month achieving partial to full carbon-neutrality, Quincus is well positioned to offer insights around the ongoing developments on the global shift towards a green revolution for the industry.
DigiconAsia had the opportunity to find out more about how the region can enable carbon-neutral supply chains from Martin Dudek, VP of Strategy and Sustainability, Quincus.
How likely are the economies in South-east Asia to hit their ambitious green targets? Why or why not?
Dudek: As one of the fastest-growing regions on earth, all eyes are on SE Asia to achieve its green targets. Home to much of the world’s natural capital and supply route start-points, it has a critical role to play in the global net-zero carbon roadmap. The region has seen strong commitment from the start of this decade but it may lack robust climate action and deterring carbon taxes. Furthermore, SMEs, that make up a large bulk of businesses, often lack resources for systemic change.
A keener focus on agriculture, energy transition, digital innovation and green capital is required to support the shift fully, according to Bain & Co’s Southeast Asia’s Green Economy 2021 Report.
Overall, this will be challenging, as green targets and green technology is in its early stages. However, with more companies embracing the support of modern tech, we predict exponential use of it which would lead to achieving targets.
What impact do the transport and supply chain industries have on sustainability goals and carbon footprints in the region?
Dudek: Global supply chains account for roughly 80% of the planet’s carbon emissions. Given this, carbon-neutral transport and supply chain initiatives are of paramount importance to the region and have the potential to shift the tide in the war on CO2 emissions drastically, with even the slightest change. Innovative tech, supply chain management solutions and AI will play the biggest roles in achieving our ambitious regional sustainability targets.
Quincus is seeing an increasing number of customers, and our main functional focus is therefore sustainability; More companies are making transformative technology their priority – In order to drive not only efficiencies, but to become environmentally friendly.
What are some key considerations in supply chain management that directly affect carbon emissions?
Dudek: Among the key considerations are renewable energy usage and machine learning optimization. These inform the overall supply-chain pillars of demand planning/management, storage, production and transport.
A report by CDP says that 1,000,000,000 tons of CO2 emissions could be avoided each year, if a handful of suppliers increased their renewable electricity by 20%. Overall, however, supply-chain management companies need to set sustainability targets, regularly review their logistics, plan and adapt to shifts in demand & supply.
Companies need to move to renewable energies, electric vehicles. Companies need to utilize assets that are purely available and free in the market in terms of capacity – With the key considerations of consolidation of deliveries and utilization of excess capacities.
Free capacity on average are up to 20-30% including sea freight or air freight that’s currently high demand & low capacity. This will ensure that there is no need to put new vehicles on the road.
How could organizations in the region leverage technologies such as AI to mitigate current supply chain challenges and optimize end-to-end operations?
Dudek: Advanced technology such as Artificial Intelligence has been a key to ensuring supply-chain efficiencies. Among machine learning proficiencies, AI-enhanced tools are being deployed in supply-chains around the world to reduce the blowback of worker shortages, discover safer/less energy-heavy supply routes and optimize floor-to-door procedures. Hence, AI will be an undeniable driving force in 2022 and beyond in significantly addressing supply-chain management pain-points.
Furthermore, AI can deal with the constraints clean energy versus petroleum, it can also support autonomous vehicles. At Quincus, we actively work with customers on electric vehicles and clean energy vehicles which will contribute significantly especially within central business districts.
AI can also remove workers’ pain points. Drivers are better off with optimized routes that cater for late schedules or long lead times on the road.