How to better manage disruption with responsible value chains 

The global pandemic disrupted business operations and exposed supply chains that were fine-tuned for efficiency, but not resilience. Today, the war in Ukraine and the recent lockdowns in China have again put entire value chains under stress.

In this period of constant disruption, investing in technology will give organizations the data and actionable insights needed to enhance business resilience, performance, and sustainability. Companies must also continually rethink how to engage, develop and support their people, and build new networks of collaboration with suppliers and industry organizations to help us uncover solutions that cannot be achieved alone.

It’s this powerful combination of data, a people-first approach, and new networks of collaboration that will drive responsible decision-making across the entire value chain. It will empower the collective business world to make its largest and most important contribution – a more sustainable world for all.

Data transparency is table stakes for any modern organization looking to do business with resilience, speed, and agility. Yet the World Economic Forum reports just nine percent of companies are actively using software that supports data collection, analysis and reporting on their ESG activities. And in an SAP Insights survey, only 21 percent of business executives said they were completely satisfied with the quality and availability of data collected for sustainability.

By embedding metrics that measure climate risk, carbon emissions, and waste and pollution, among others, into business operations and across both upstream and downstream supply chains, organizations can access a continuous view of financial, social, and environmental data that manual processes simply cannot offer. What’s more, effective use of cloud-based data management and analytics, IoT, and AI, can help companies gain the visibility needed to better manage value chain disruption through actionable insights and faster, more responsible business decision making.

The disruption we’ve faced over the past two years has deeply impacted an organization’s most important asset – its people. We’ve coped with health concerns, new ways of remote working, and humanitarian crises, all of which have rightfully prompted leaders to prioritize the needs of their people in new and impactful ways. But there are also longstanding issues – equal access to education and training as well as fair and equitable labor rights – that global organizations must continually address to secure a more sustainable future.

Access to diverse, skilled, and engaged employees is a massive challenge in many global markets. The World Economic Forum predicts that 42 percent of jobs will require wholly new skillsets in the next three years – more than 1 billion workers will need reskilling by 2030. Equally as important, are purpose-driven company cultures with a clearly defined value set for long-lasting social impact. Building a more diverse and inclusive culture, for example, boosts engagement and productivity, drives innovation, and attracts and retains talent.

Today’s worker experiences necessitate a culture of psychological safety and business beyond bias across every workplace touch point, an approach that must go beyond an organization’s full-time employees. As new legislation across the globe requires organizations to more consistently and systematically address human rights issues, business leaders will need to implement new supplier selection processes and policies, and data-based monitoring and validation mechanisms across an organization’s entire value chain, to ensure the fair and equitable treatment of not only employees but also contingent and supply chain labor.

Technology is critical to tackling these challenges. Today’s cloud-based human capital management and digital learning solutions can empower organizations to scale and prioritize reskilling and upskilling efforts, build more diverse, equitable and inclusive hiring and internal mobility practices, and keep pace with changing legislation to ensure compliance of responsible human rights practices for workers both inside and outside of the company.

No one company or technology has all the answers, and we cannot tackle sustainability alone. Cooperation across business networks is required for designing, manufacturing, delivering, and maintaining products in ways that minimize carbon footprints, decrease waste, and help ensure social equity.

Operational networks help companies create and share sustainable business information with supply chain partners, industry associations, regulators, and NGOs to satisfy increasingly stringent corporate reporting requirements.

Purchasing networks can generate social value and environmental stewardship above and beyond the value of the goods and services being purchased – when companies incorporate diverse suppliers like social enterprises, diverse-owned businesses, fair-trade organizations, environmentally sustainable enterprises, or small businesses into their supply chains, they open new avenues for innovation, cost savings, and environmental and societal impact.

Industry networks can help businesses manage the industry-specific data needed to innovate, produce, and bring sustainable products to market that have lower carbon footprints, create less waste, and improve labor and social conditions. Carbon data networks, for example, can help organizations manage Scope 3 carbon emissions, which account for more than 80% of emissions across most business sectors.

Responsible value chains prioritize data, people, and collaboration – technology can help organizations address all three. Greater visibility and intelligence across the enterprise allows for more informed and sustainable business decisions, from ethical and diverse sourcing, labor and human rights, and skills enhancement as well as carbon emissions management, and materials management. Coming together as a community to ensure we address these issues systematically and consistently will help us better manage disruption and lay the foundation for business progress and a more sustainable world for future generations.