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The secret sauce to optimising global supply chains and becoming more sustainable

08 Dec 2022

Bhupinder Singh

President, Asia Pacific & Middle East, Vodafone Business

Today’s consumer wants to know where the products they’re buying have come from, how they were sourced, and how they were transported. 

It’s a point recognised by 63% of ‘Fit for the Future’ business leaders, who believe customers want to buy from environmentally sustainable companies. In fact, in Asia Pacific, 74% of businesses reporting higher profits have a formal ESG program in place.

It’s a challenge with the potential to put global supply chains in a spin.

As such, sustainability must be baked in at every step. Supply chains are the backbone of the entire process – right from the first ‘click’ of an order through to its delivery. Failing to ‘walk the walk’ on sustainability is no longer an option – those with purchasing power will simply vote with their feet and buy from elsewhere.

How can global supply chains respond? Vodafone interviewed industry leaders to shine a light on sustainability challenges.

With guests from Lenovo and DP World, we explored how digitisation is helping supply chains go greener. And with the recently held COP27, the circular economy could be a key route to reducing the environmental impact of global supply chains. Let’s explore this further…

Technology driving efficiency in the supply chain

Artificial intelligence (AI), automation, and the Internet of Things helped Lenovo spot risks in its supply chains faster, as Hawk Xu, its Chief Transformation Officer for Global Supply Chain, told us. He explained how, throughout the global pandemic, these technologies led to quicker responses to issues and a more resilient supply chain. Lenovo’s recovery since the pandemic has been stronger as a result.

Our ‘Fit for the Future’ research echoes this sentiment, with 94% of ‘Fit for the Future’ businesses much more likely to outperform competitors. Embracing change, as well as leaving a greener footprint for a more sustainable planet, are two of the attributes this ‘Future Fit’ class of businesses have in common.

Mike Bhaskaran, Chief Technology Officer for DP World, shared his lessons around digitisation helping to improve their supply chain efficiency. He said digital logistics and routing platforms must underpin physical logistics – such as how AI can be used to highlight the cheapest and fastest routes between points A and B.

Maximising shipping space, combined with an ability to adapt and react to conditions in real time, almost to a degree of autonomy, will support sustainability efforts. For example, technology can be used to spot free space in shipments, which can then be filled with smaller orders automatically and free of paper processes.

The speed and orchestration of these massive amounts of data has real world impacts. Advancements in tracking and tracing, for instance, helped accelerate the rollout of vaccines, by ‘passporting’ shipments through ports in a speedy fashion.

The integration of technology such as mobile private networks can also bring benefits. Reducing the latency between cranes and containers in a port setting saves energy. Another technology, blockchain, brings additional benefits by underpinning processes such as international voice trades and connectivity agreements – thereby cutting waste.

How can the circular economy impact supply chains?

We believe society needs to move to a more efficient, circular economy focused on eliminating waste.

But what is the circular economy? The Ellen MacArthur Foundation, a leading voice on this vision, offers a neat explanation on the differences with the circular economy and our current ‘linear’ economy. Materials are extracted from the earth, products are made, before then being thrown away as waste. But a true circular economy stops waste from ever being produced in the first place.

But how do we get there? For supply chains, embedding renewable energy sources in every process is one clear way wasteful carbon emissions can be reduced and ultimately removed altogether.

The shipping industry produces around 940 million tonnes of CO2 annually, an estimated 2.5% of the world’s total CO2 emissions – or more than the whole of Germany. The International Maritime Organization has set a target to cut these emissions in half by 2050. A complete pivot to a circular economy would increase the impact further by removing carbon altogether.

Meanwhile, collective action is helping to affect change. Hawk Xu said Lenovo, along with its suppliers, has set up its own aggressive circular economy targets which it’s working to hit by 2030. By putting requirements on their partners and suppliers to drive sustainability within the ecosystem, this helps to trigger a domino effect that inspires change across an entire industry.

The sharing of resources, such as using empty shipment space, was one initiative flagged by Mike Bhaskaran that has allowed freighters to aggregate demand. Technology makes this possible, ultimately reducing the amount of energy needed to move goods across the world.

Accelerating the circular economy was the core theme for COP27 these past weeks, so it’s an issue which will set the agenda for years to come.

To rise to the challenge of climate change, all industries must play their part. It’s clear sustainability goals must underpin supply chains of today and tomorrow – the future of the planet depends on it.

Explore Vodafone’s Fit for the Future global Report and APAC report to understand how your business can rise to sustainability challenges.

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