Towards Lower Emissions and a Sustainable Supply Chain
With the global developments moving towards sustainability, Oman and UAE have both pledged net zero emissions by 2050, whereas KSA, Kuwait and Bahrain have committed to zero carbon emissions by 2060. The largest player in the GCC, the Kingdom of Saudi Arabia (KSA), established the Middle East Green Initiatives (MGI) to achieve the target of net-zero carbon emission commitments made by countries of the GCC region. Launched in 2021, MGI aims at reducing GCC emissions by more than 60% from the production of hydrocarbon in the region and a reduction of 670 million tons of carbon emissions, both, by 2030. KSA and UAE remain at the top in the establishment of green economy targets, with the KSA investing in reduction of carbon emissions through ‘Saudi Green Initiative’ and the UAE establishing its ‘UAE Governments Net Zero 2050 Charter’ and ‘The National Climate Adaptation Plan’ pushing its movement towards a greener economy. These targets have been followed by investments and collaboration of the public and private sectors to enable renewable energy sources and focus on Carbon Capture, storage, and utilization with better innovation and development measures. With many projects for renewable energy concentrated on solar power, other options like wind projects and green hydrogen facilities are also being explored. With the push from these for a greener economy, the private sector is also moving towards adopting sustainability in its industrial operations, which can be observed in the rapid transformation to Industry 4.0 with digitalization at its heart. This movement can be especially seen in supply chain, where digitalization has been adopted for a sophisticated, convenient, and quicker flow in supply chain with the added benefits of lower costs due to risk mitigation and optimized operations.
Supply Chain Digitalization- A Game Changer to Achieve Lower Carbon Emissions
Some of the key supply chain industry disruptions include digitalization as the game changer that offers a promising future for businesses, in not only improving operational efficiency but also attracting foreign investments and collaborations. These digital technologies have penetrated every process of the supply chain and has a profound impact on the managing and carrying out various activities, from the sourcing of materials to the end of the value chain, and delivery to customers. Some of the key digitalization disruptions are:
Automated Operations: Playing a key role in logistics operations, automation has seen rapid adoption throughout in-house logistics and third-party logistics players. Investments in private sector adoption of robotics and automated machines has increased significantly as companies move towards fully automated operations. These operations are conducted by systems that optimize and maximize logistics capacity, in addition to lowering carbon emissions by promoting efficiency in its model.
Digital Customs and Clearance: The Customs Union of the GCC has standardized procedures for trade related logistics operations amongst which, electronic customs were approved, apart from the GCC countries implementing a separate digital customs clearance platform. With the KSA implementing Fasah and Abu Dhabi establishing ‘Invisible Customs’ for quicker movement of trade, efficiency of these services has helped logistics companies in reducing their carbon emissions and paper usage.
Transport and Warehouse Management Systems: GCC Supply chains are moving towards heavy application of transport and storage software for managing and handling goods and products with maximum efficiency. Inventory management, pre-planning, organizational transformations, and last-mile deliveries have seen a higher level of productivity and cost-effectiveness through these digital strategies. Due to this management systems can achieve lower emissions with these systems supporting greener supply chain operations.
Internet of Things (IoT), and data integration: Offering real-time visibility and tracking, IoT plays a major role in improving logistics processes with sensor technologies providing information on the location of goods as well as the temperature they are stored in. By offering visibility throughout the supply chain through automated operations, better resiliency in supply chain and its management improves overall consumption of fuel by ensuring the safety and reducing wastage of goods.
Artificial Intelligence (AI) and Machine Learning: Another breakthrough in the world of supply chain was the incorporation of Artificial Intelligence in its operations. This method of data collection, interpretation and implementation based on collected data has massively worked in favor of better logistics services, with route optimization, digital twins, predictive and prescriptive analysis for lower and better management of risks. These have in turn led to lower consumption of fuels in the supply chain.
Digital Last mile through Drones, delivery robots and autonomous vehicles: Another breakthrough in the world of the supply chain is the ongoing development of delivery robots, drones, and autonomous vehicles. These contactless delivery options not only have the benefits of improving delivery time, but also ensure an emission-free or reduced carbon emissions in the last-mile domain. Currently in its nascent stage, these technologies are expected to be connected and powered by electricity which can have a major impact on deliveries especially with e-commerce and quick commerce growing rapidly in the GCC region.
How Digital Supply Chain Technologies will help achieve National Emission Target?
To be conducted in the United Arab Emirates, the United Nations Climate Change Conference (COP28) will have a major impact. It will hasten the steps taken for net-zero emissions in the supply chain, through discussion of strategies and plans for achieving a green economy. Additionally, it will establish plans of the public and private sectors in highlighting their activities to achieve lower carbon emission in the supply chain, which includes adoption of various digital technologies like AI and machine learning, IoT, route optimization, 5G and BigData. These technologies are aimed at supplementing growth and efficiency in the supply chain with efficient transport and warehouse management systems. This is expected to be assisted by the COP28 program that brings together all the stakeholders in the supply chain sector. The results of this conference will help boost UAE’s efforts in achieving zero carbon emissions by 2050. With commitments and transparency in the activities and plans of businesses as well as the government, the program is expected to encourage and raise better strategies on the part of the government as well as corporations on a platform that can demonstrate UAE’s capabilities globally and improve business and foreign interests and investments. Higher digital adoption and local investments to achieve better efficiency and reduce overall emissions can lead to a business model that supports lower carbon emissions in the long run. With better cooperation of the government and supply chain members, COP28 can also ensure the nation moves together, supporting each other in the journey to UAE’s target of net-zero emissions by 2050.
To learn more about the implications of COP28 developments on your Growth Journey and to speak to Frost & Sullivan Growth Experts, contact Nimisha Iyer at nimisha.iyer@frost.com
