How energy management and AI pave the way to climate neutrality
While resilience is already a buzzword throughout all industries, sustainability is also gaining more importance. ERP and digitalization are the perfect match to achieve a more sustainable business. Artificial intelligence and smart energy management are also moving the next item on the agenda into reach: carbon neutrality.
Sustainability as the key to economic growth
High resilience is one thing. But there's another item that ranks high on the management's agenda: sustainability. According to a Bitkom survey, 45 percent of the companies want to be carbon neutral by the year 2030, and another 37 percent by the year 2040. Digitalization will play a major role in this development as every company that follows a certain sustainability strategy (52%) or plans to do so (37%) integrates digital technologies. To a quarter (24%) of the respondents, digital technologies are a key element in the realization of their sustainability goals.
Another Bitkom survey reveals that eight out of ten companies in Germany share the opinion that a digitalized industry (buzzword: Industry 4.0) contributes to a more sustainable production. This puts the spotlight on the supply chain: companies will only be able to act sustainably if they can track their products, from the procurement of the raw materials to production and warehouse keeping through to the delivery, including all transports in between.
Combined with smart solutions for energy and carbon management, ERP systems play a key role when companies want to determine and reduce the carbon emissions in their production processes.
Next is the topic of sustainability, to which mid-market companies should pay special attention, as regulations of the EU and Germany require companies with more than 500 employees and a certain revenue to disclose sustainability reports as of the fiscal year 2023. The Corporate Sustainability Reporting Directive (CSRD) of the European Commission was submitted in April 2021. New regulations have been presented in June 2022. SMEs will be obligated to submit such reports as of 2026. This is when the threshold as of which a sustainability report has to be created will be lowered to 250 employees. An opt-out will be possible for SMEs during a transitional period, meaning that they will be exempted from the application of the directive until 2028.
Smart ERP for a more sustainable supply chain
How can future technologies ensure a more sustainable supply chain? ERP is a decisive factor in the industry: With a carbon management tool deeply integrated into the ERP system, the backbone of the added value, companies can work themselves toward their goal of carbon neutrality. As the single source of truth, the ERP system lays the groundwork for all analyses and measures related to an integral carbon management and eventually carbon neutrality. This includes:
- Continued carbon tracking
- Development of reduction strategies
- Implementation of reductive measures
- Monitoring of the development of emissions
Comprehensive carbon management relies on the standard connection to all relevant data points and the integration of further analysis applications like business intelligence solutions. The basis is formed by the data generated from ERP, MES (Manufacturing Execution System) and TMS (Transport Management System). A system specialized in carbon neutrality can then provide extensive initial analyses of the carbon emissions.
Various software providers that have specialized in carbon tracking prepare these data to a great extent. The carbon emissions are then calculated on the basis of standards like GRI, DNK, SBTi and EU Taxonomy. This finally yields the carbon balance and carbon footprint. For this purpose, proALPHA's portfolio features the modular solution of one of its group companies, ENIT, a specialist for energy and carbon management.
The ERP system is then used to reduce the carbon emissions across all significant areas, including supply chain management, materials planning, product engineering, production planning, sales planning, vehicle fleets, transport systems, and all sales activities.
Companies that want to become more sustainable can benefit from innovative technologies in many other ways, too: an AI-based ERP system can also be used to better control machines and plants, to manage their maintenance, to add more agility and to adjust their utilization to the actual demand situation. This increases the overall efficiency in production. Surplus production will become a thing of the past as sales planning and material requirements planning are improved.
Companies that want to tackle resilience and sustainability and that have an appropriate ERP system can expect many advantages:
Manufacturing companies all over the world are facing enormous problems that cause massive disturbances in the global supply chains. They therefore have to be strengthened in the long term. For this reason, the digital backbone of a company, the ERP system, should be equipped with AI. Only then can the company become and stay carbon neutral.