CEO Today Magazine September 2019 Edition

www.ceotodaymagazine.com 26 SPECIAL FEATURES In the current political and ecological climate, there is mounting pressure on businesses to achieve greater levels of sustainability from a variety of stakeholders. Not only do amassive 81%of consumers nowprefer to buy frombrands with a commitment to environmental sustainability, but it has also been shown that environmental, social and governance (ESG) issues are of increasing importance to the investment community, with more than half of global asset owners currently incorporating ESG considerations in their investment strategy. However, the challenge is finding practical ways to work towards becoming a more sustainable organisation, that won’t have a negative impact on the business as a whole. Many have come to associate the concept of sustainability with expense, but this doesn’t have to be the case. In fact, studies from the likes of Deloitte and Harvard have found that companies that have embraced it are financially outperforming their competitors. Fortunately, for businesses looking to reduce their environmental impact, there are a number of steps they can take that will also have a positive effect on profitability and productivity, helping to keep all stakeholders satisfied. One of these steps is ensuring that their end-to-end supply chain and logistics network is truly optimised. using a range of digital modelling tools to work out how to minimise logistics and supply chain costs, while also maximising levels of customer service. This can involve looking at everything from raw material supply through to customer delivery, taking into account sourcing and manufacturing locations, customer service and inventory levels, in order to clearly evaluate all possible network choices. The network modelling tools are used to assess a variety of “what if” scenarios, demonstrating the effects of trade-offs between costs, service, stock, warehousing and transport. They can also be used to assess the impact of completely new, “greenfield” logistics options, compared with retaining some or all of the current facilities. This process enables businesses to diagnose their supply chain’s current state, then identify (and make a convincing case for) infrastructure changes that will ensure their facilities are sized right, and in the best locations to enable them to meet customer demands at the lowest cost for How to achieve network optimisation? Many supply chain and logistics networks evolve gradually, as a result of individual decisions made over extended periods to satisfy specific business needs in a given moment. However, these siloed decisions create inefficiencies that compound over time. Businesses therefore need to make a conscious effort to regularly pinpoint these areas of inefficiency, in order to create a more effective, streamlined network. It’s important not only to look at the supply chain and logistics aspects, but also consider cross-functional involvement that could range across sales, marketing, finance, IT systems, manufacturing and procurement, to ensure solutions are robust and resilient to future business changes. One of the best ways of fully assessing all the potential options is known as supply chain network design, which entails By John Perry, Managing Director, SCALA Network Optimisation: The Key to Business Sustainability?