Budgeting, Planning & Forecasting

- 2 min read

Driving Sustainability-Led Decision-Making in Business

As society becomes increasingly aware of its impact on the environment, businesses are being required to rapidly evaluate their green credentials. The expectations of customers, employees, and stakeholders are shifting, putting pressure on leadership teams to put sustainability-led decision-making at the forefront of their agenda. To achieve this effectively, complete transparency of the organization is required, which cannot realistically be achieved using a traditional planning, analysis, and reporting approach.

Opportunities for sustainability-led decision-making

There are numerous examples of pioneering organizations paving the way to more sustainable operations. Leading fashion retailers such as H&M have introduced initiatives to reduce waste, removing harmful chemicals from production and finding more sustainable logistics methods. Forward-thinking grocers have launched programs to cut plastic packaging from food and make use of unsold stock to generate green power. Global technology companies such as Apple have reached 100% renewable energy usage in production and are using an increased percentage of recycled materials product ranges.
What all these organizations have in common is a dedication to making strategic sustainable decisions and the means to monitor their progress and outcomes across the entire business.

Building the foundation for sustainable decisions

To make a decision on sustainability, activities throughout the supply chain must be scrutinized to understand their effect on emissions and waste. The financial, time, and other cost implications of switching to an alternative method or supplier also need to be accurately reviewed. Above all, there must be a shift in operational mindset, in which business leaders are empowered with the right information to make informed decisions and monitor progress towards them in real time – referred to as a digital boardroom.

Achieving this decision-making ideal requires several key capabilities:

  • An accurate foundation of data – Monitoring your organization’s position on sustainability begins with an accurate dataset. Understanding how many products currently use environmentally friendly materials, what percentage of energy comes from a green supplier, or how much the current plastic packaging costs per unit are some of the many starting points for sustainability initiatives.

    To achieve this level of visibility, departmental data cannot sit in isolation. Silos must be broken down to create one single, centralized source of truth which enables the cross-examination of multiple types of information from across the business. This must be an automated and ongoing process, as the time taken to manually prepare information can result in an outdated and inaccurate representation of the current position. A true understanding of the scale and impact of sustainability-related issues can only be gained through the removal of disparate reports and the unification of data sources covering the entire supply chain.

  • Interactive, visual representations of sustainability KPIs – Once the data has been collated, it needs to quickly and effectively be analyzed and understood. The best way to achieve this is through business intelligence dashboards which provide a clear, visual indication of performance in real time. Representing key metrics at a glance, dashboards make it easy to monitor sustainability KPIs – including showing upward or downward trends and highlighting potential missed targets to help drive awareness and change.

    The interactivity of these dashboards is another vital component, giving sustainability leaders the ability to explore data down to the lowest level of detail. When looking at a high-level plastic usage KPI, for example, being able to drill down to see which products are the biggest contributors to that usage and how many of those products are sold in a typical period provides a useful idea of the scale of change required.

  • The ability to plan, model, and forecast in real time – Once the current position can be effectively monitored, work can begin on planning sustainability targets. To effectively discuss the potential options and come to a strategic decision, the full implications of each initiative must be understood. Using historical performance data as a baseline on which to model and forecast the impact of sustainable choices requires planning and analytics to be unified, creating an inherent link between the entire process.

    This joined up approach is known as Integrated Business Planning (IBP) and is seen as a best-practice methodology.In a sustainability context, IBP empowers executives to interactively stress-test the entire supply chain against different scenarios before coming to a decision. To give an example, imagine a company wishes to launch a new, sustainable product range with a view to replacing a legacy line of less sustainable products. There are a multitude of factors to consider here: where will the new products be produced? How much will sustainable materials cost per unit? Will more people be required to produce the products, and will production time be faster or slower? What would be the impact on the bottom line if the legacy product line was discontinued? Will sustainable packaging have a knock-on effect on warehouse storage or transportation?

    An IBP platform which enables all of these questions – and more – to be simulated in real time helps to provide the full picture by modeling the different scenarios using real business data. Only with instant visibility of the impact of the potential outcomes can leadership teams make a fast, informed choice on which route to take.

Setting the sustainability agenda

For large corporations, making the shift to sustainable practices does not happen overnight. It is an evolution requiring commitment at the highest levels of the business and throughout the entire supply chain too. A unified approach to planning and analysis creates a strong foundation on which to make these decisions, delivering an accurate understanding of the current position, enabling progress to be monitored, and facilitating the testing of different scenarios to find the most viable option.

As pressure to drive sustainability rises, businesses must shift to this digital, data-driven boardroom, giving them the insight required to make the right decisions now for the sake of the future.

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