ERP plays vital role in sustainability trend

Sustainability is now a major focus for industries, thanks to new requirements for carbon reduction, an uptick in consumer demand, and growing attention from the investment community.

In response, businesses are looking for ways to reduce waste in manufacturing, develop greener supply chains and use more sustainable raw materials. Enterprise systems like ERP, enterprise asset management (EAM) and field service management (FSM) could be at the core of some of these efforts because they process the data needed to set and measure sustainability targets. At least that's the bet IFS, which is based in Linkoping, Sweden, is making.

IFS offers the IFS Cloud platform with industry-specific functionality for ERP, EAM and FSM and has made sustainability a corporate priority.

In this Q&A, Darren Roos, CEO of IFS, discusses the correlation between a healthy business and a sustainable business, and the role that ERP systems can play in enabling companies to develop sustainability initiatives.

How can ERP systems help facilitate a company's sustainability efforts?

Darren Roos

Darren Roos: From talking to our customers at IFS, we recognize that so much of this data goes through the existing ERP system. We know what their supply chain looks like, we know what the materials look like, we know what the distribution network looks like, we're working with customers on route optimization and the cost of their materials, because all of this data sits in some form in their ERP, FSM and asset management solutions. So the question is, is if the data is sitting there, how do you enable them to more effectively report on that data? Because if you can report on it and measure it, you have the ability to set targets and manage that sustainability agenda more effectively.

You mentioned how sustainability can lead to a healthy business. Does healthy mean both the business health of the company and its physical health?

Roos: Yes. We also recognize that there's a third healthy, which is the communities in which we operate, considering the environmental impact of the pollution, the noise pollution, and so on. But most businesses today want to do better, whether it's because they're being compelled to do it or whether they just realize it's the right thing to do. They want to run a healthier business that's softer on the planet, that gives back more, and has a better place in the world. Once you accept that that's the kind of business you are, and want to clearly understand the impact that you have on the planet and on the communities in which you operate, then it's critical to be able to measure and manage that impact.

How can enterprise systems like ERP help companies take part in this sustainability trend?

Roos: Gathering and reporting on the data that you need to understand the impact that you have across all ESG [environment, social, governance] aspects is a pretty onerous task. It's very fragmented and once you've gathered the data it's already outdated. So you need to enable the ability to collect the data more readily and have systems to automate the collection, then you can set the parameters and measure and manage against those parameters. The objective is to make it easier and cheaper, rather than paying consultants to go collect data, which is a fairly archaic way of doing things.

Taking on something as big as sustainability at an enterprise level can be challenging. Are there areas where companies can get started?

Roos: This is very business specific. From an application perspective, you want to focus on data that's already in the enterprise, and then leverage that data to have an impact. That's usually things like raw materials and energy consumption data. For example, the energy that companies are consuming, what it costs, what's the output productivity and so on. Every company today has to think about how they are making a difference rather than how they can be perceived to be making a difference. There are great examples of companies that have saved thousands and thousands of tons of carbon emissions just by doing little things in their business to make their business run better. Companies should look for those efficiencies that are low-hanging fruits -- don't wait for the big program or bring in consultants to come in and plan the whole thing before you do anything, because every business has that low-hanging fruit.

What has been the impact of COVID-19 on sustainability?

Roos: COVID has had a dramatic impact on many levels. As human beings, being placed in a position of vulnerability has opened our minds to the idea that the worst case scenario can happen. Before COVID, the idea of environmental collapse or cataclysmic climate change seemed like something that a future generation would be able to fix or deal with. So a lot of people thought of it as a future problem and the impending doom seemed to be an abstract concept. COVID is a different kind of crisis, but it's brought this concept to our doorstep today and the idea that we can face something as serious as this has been brought to the fore. We've seen the impacts on the environment of less travel or flights, and we've seen that we can manage without those things. There are many more layers to it, but all of those things have contributed to a much greater awareness of the importance of doing something now.

Jim O'Donnell is a TechTarget news writer who covers ERP and other enterprise applications for SearchSAP and SearchERP.