Digital workflows can help manufacturers improve ESG performance by quickly identifying ESG objectives, ensuring they were achieved, and then measuring the effects for desired impact.
Recording ESG objectives at each stop in the supply chain, passing down spreadsheets, and waiting for data is too slow. Dynamic tracking using automated tools integrated with other systems, on the other hand, allows data to be easily distributed and shared between supplier and manufacturing, helping to fast-track efforts to meet ESG goals.
Manufacturers can do a better job of demonstrating ESG compliance by switching to dynamic, digital workflows that let them track compliance in real-time across their supply chains. On the whole, the supply chain could use a digital boost. McKinsey research finds only a 43% digitization level in the average supply chain, with hardly any executives surveyed giving it importance.
Still, some companies are leading the way. Airbus, which works with 12,000 suppliers, is in the midst of digitally optimizing its procurement and management processes to foster better ESG compliance. Siemens makes use of a digital tool to provide early warnings of potential ESG risks across its 65,000 suppliers.
Going deep into their supply chains to make sure Tier 1 and Tier 2 suppliers use sustainable components will be a significant strength of manufacturing companies in the long-term.
Just take a look at Ford Motor Co., which works with its suppliers to help them implement carbon-cutting measures. By the end of 2021, Ford’s suppliers were on pace to reduce carbon emissions by a half-million metric tons while also saving the H2O equivalent of 837 Olympic-size swimming pools.