PROCESSESE2EOPTIMISATIONACCELERATESSUSTAINABILITYTHEOFOPERATION
JensPROCESSESE2EOPTIMISATIONACCELERATESSUSTAINABILITYTHEOFOPERATIONFath
BUSINESS INTERVIEW
and Jasmin Pennicke from PwC Germany discuss how future business models need to be adapted to prioritise ESG and sustainability.
4 ens Fath is one of the responsible partners for the operations transformation team at PwC, and has a keen interest in how top floor and shop floor play together in exploring possibilities for digitalisation, plus how integrated and businessled end-to-end architecture can support sustainability, as well as digitalisation and IoT. Besides the product complexity and structure, Jens believes processes and how to define them is having a direct impact on sustainability questions. He also considers that we need to prioritise the organisation, people mindset and IT architecture, with strong core and systems of differentiation, to form a stable foundation for sustainability.
Jens Fath
Jasmin Pennicke is Manager in the Operations team and looks after PwC’s sustainability offering in the operations practice, coordinating and bringing together all operations functions in terms of sustainability. She explains, “Looking at our service offering, how can we leverage that in terms of ESG? It is applicable to the entire value chain, so you cannot look at ESG in a silo. It is important to link all the functions in order to reach your goals. My role is to bring all the people together, and link our services offerings to our colleagues’ offerings, so we can have a full view.”
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Jens and Jasmin believe it is essential for companies to address the topic of ESG and sustainability
“WE ARE IN A LEARNING CURVE BECAUSE ESG AND SUSTAINABILITY IS SUCH A NEW – BUT HIGHLY RELEVANT – TOPIC. IT FEELS SIMILAR TO DIGITALISATION WHEN IT FIRST CAME TO THE FORE. THE IMPORTANT POINT TO REMEMBER IS THAT WE WILL ONLY ACHIEVE SUCCESS IF WE ARE DOING IT END-TO-END AND INTEGRATING PRODUCTS, PROCESSES, ORGANISATION AND IT”
6 in order to be successful and future-ready. Jasmin says, “Sustainability appears to be the next big trend, but we think it is more than that. Companies need to address it because it is mandatory for us as a society. On the regulatory side, following the European Green Deal, there will be a lot coming up in the next few years. Also, customers want to have sustainable products, and investors want to see green investments. A lot of companies see it as their responsibility to create new business models and new solutions, gaining new market fields, because there are new possibilities arising from So,that.”what does Jasmin anticipate will be the impact of ESG and sustainability on businesses in terms of their future business models? She answers, “ESG and sustainability will have a big impact on how decision making will be carried out in the next few years. Before sustainability, you had to address costs, time and quality in your processes. Now, you have to consider new factors and how to apply them. It is more than just putting a sustainability label on your products, but reshaping your business model, because you can only be successful in terms of sustainability if you reshape your business in total. It is not only the reporting part, but rethinking how your products work, how you want to introduce them to the market, and how you balance ESG factors with previously relevant factors such as costs etc. It is a big opportunity for new business models.”
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Jens adds, “In my opinion, ESG and sustainability are an accelerator for the optimisation of operation processes – considering customer, suppliers, and internal operations processes the same way – especially how to engineer and build a product. If we were to combine production and logistics with sustainability, the result would be that the sustainability story would be accelerated. Whether talking about the external business model or the internal ways of working end to end, they all go PwChand-in-hand.”outlinesfive essential pillars in the area of operations as far as the entire value chain is concerned in the context of ESG. Jasmin continues, “First of all, when talking
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Automation Enables Companies to Meet Sustainability Objectives
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3. Automation solutions reduce carbon footprints. With process mining, software obtains available data about what is occurring in a process, and then transforms the process data into visual workflows. From there, companies can accurately view where there are bottlenecks that can be streamlined. Companies can also reduce their carbon footprints by: • Decreasing computing energy • Saving paper by restricting excessive printing Automating and streamlining supply chain operations • Digitising purchase orders and invoice processes
1. Automation helps organisations reach environmental, social and governance (ESG) objectives. To accelerate such goals with automation, organisations should: Identify goals and metrics related to environment and sustainability Pinpoint processes that can be automated Tweak processes to support ESG goals Gather data and track progress to aid in overall ESG reporting
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2. Automation speeds up green initiatives. Although Robotic Process Automation (RPA) is not the only way to reach sustainability goals, it can help accelerate the process through innovation and enhanced efficiencies. RPA can be easily deployed to: Streamline auditing procedures Collect data from various applications and systems Support data management and simplify complex data through automating data visualisation tools, dashboards, and reporting Track and report on progress against specific environmental targets, such as carbon emissions
In this way, architecturebusiness-ledisplayinga key role in successful ESG. Jens elaborates, “It is playing a key role for ESG, for digitalisation, and, not least, for developing sustainable “I THINK ALL COMPANIES ARE CURRENTLY UNDERGOING COMPLEX TRANSFORMATIONS. THE FIRST IS TRIGGERED BY DIGITALISATION, THE SECOND BY THE MARKET AND POLITICAL SITUATIONS, AND THE THIRD IS TRIGGERED BY ESG AND SUSTAINABILITY” Jens Fath
a sixth and crossrelevant pillar in architecture management. He adds, “For me, business-led, integrated architecture management is important because ESG needs products. How do you perform a circular product lifecycle portfolio management and product design for sustainability? You really need to consider your supply chain, how it is connected, and how to optimise it in terms of efficient transport management and sustainable value creation – building sustainable factories, optimising production processes, and gathering all the information from the value chain. On the technology enablement side, data and transparency. If we are not collecting the right data out of the right processes and analysing it with the right technology, we will not have the transparency that we need for developing our sustainability topics.”
9 about the entire value chain, it is important to look at your footprint transformation, not only in terms of climate change, but your network – your suppliers, your production locations and supply chains – because they have so much implication on ESG factors. There is the strategy part concerning all operations functions, but you need to look at your research and development functions in terms of sustainable how can you collect all the data, establish the required IT architecture, and perform the right analytics to drive and optimise operations in terms of JensESG?”mentions
10 towards making it more sustainable, with integrated processes and transparent data.” So, how can thefirstcomplexcompaniesjourney?managementtransformationsupporttheESGJensanswers,“Ithinkallarecurrentlyundergoingtransformations.Theistriggeredbydigitalisation,secondbythemarketand companies, together with our customers. New innovations need an integrated architecture that is business-led, and not only IT-driven. It should be based on the business capabilities that companies have today and will need in the future. If you know that the world must be more sustainable in the future, one of the key capabilities for architecture is therefore helping
11 political situations, and the third is triggered by ESG and sustainability. Transformation means things are moving, and one of the main topics we should not forget is the people dimension. Transformation management means we need a clear, structured program that is organising the transformation journey and helping the enablement of change for taking our people with us, raising their understanding of what is behind the topics. Visible value is the key to Ifsuccess.”youwant to have people acting on sustainability topics, you first need to convince them by telling them the goal and why the change of behaviour is needed. If you cannot convince the people, there will not be the required acceptance. Jasmin adds, “A lot of people already know the goal of sustainability in total, but the next step is understanding what they can do in a company to take positive action. They need to be able to fully participate and feel their impact in order to motivate them to follow these PwCambitions.”hasits own ambition to lead in ESG efforts. For instance, through the validation of PwC’s targets to reduce greenhouse gas emissions by 50 per cent by 2030 through the Science Based Targets initiative (SBTi).
Jasmin continues, “We are providing transparency on our own sustainability activities and leading by example. We are developing and enhancing a lot of our existing service offerings, as well as developing new
12 service offerings, to help our clients derive strategies and set up roadmaps in terms of ESG. We have created many of our own digital solutions to enable companies to gain transparency on their footprints and KPIs. Together with our partners, we have a lot of solutions available, and every project in our landscape has an ESG aspect, even if it is not labelled as such. The topic is Iseverywhere.”digitalisation the key to achieving the targets companies have set in terms of ESG and sustainability? Jasmin says, “It is important to collect data and create transparency along the value chain, giving a baseline foundation. The next step is then to set up ESG KPIs or measurements that are important to make production plans and build strategies and corresponding roadmaps. By connecting data from different systems, decision making processes are facilitated, as well as supporting management and reporting processes, so it all goes hand-in-hand.”
“SUSTAINABILITY APPEARS TO BUT WE THINK IT IS MORE THAN NEED TO ADDRESS IT BECAUSE AS A SOCIETY. ON THE REGULATORY THE EUROPEAN GREEN DEAL, COMING UP IN THE NEXT FEW
COMPANIES BECAUSE
Jensprocesses.”highlights the fact that we should not take ESG as a separate entity. He explains, “Companies have to do digitalisation, and if we combine ESG topics, the initial investment is not as high as it might seem. In our opinion, ESG saves money, raises efficiency, supports lean operation processes, and the payback besides Jasmin Pennicke NEXT BIG TREND, THAT. IT IS FOR US REGULATORY SIDE, FOLLOWING DEAL, YEARS”
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Jens adds, “I think the back loop of the data is key. If we are collecting data automatically and analysing it, it is our chance to push it back to the shop floor, logistics or engineering where people need a signal, such as a view on the transparency, or a change in the product due to reoccurring problems. By using the data and looping it back into other departments and systems, you can then talk about use cases like considering energy management in production planning, for example. Digitalisation is therefore helpful in collecting and analysing the data, but the main value comes from looping it back into other
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14 reaching sustainability KPIs will be very quick.” Jasmin elaborates, “We have a lot of clients that focused on energy efficiency some time ago. They wanted to have their own energy supplies, and estimated a payback of between five and 10 years. In these times, it is paying back in just one or two years. Times are changing, and the payback periods are getting shorter and Jasminshorter.”shares a couple of use cases to illustrate how sustainability strategies are gaining momentum. She says, “We are setting up roadmaps with a lot of Tier 1 automotive suppliers and manufacturers in terms of ESG. You need to focus on what is important for your company, your clients, and find the right topics. We are now looking at Scopes 1, 2 and 3 in terms of CO2 emissions, deriving roadmaps for how companies can be CO2 neutral in 2050. Having a roadmap with dedicated measures on fuel switch and the change of energy mix, for example, is now becoming even more prominent. Furthermore, we are working with a lot of companies from the process industry because of the greater focus on Scope 3 emissions, deriving strategies focusing on their raw materials, how they are sourced, their supplier network, and how they can integrate their suppliers into their strategy. It is absolutely a combined effort with your suppliers.”
For further information on PwC Germany, visit www.pwc.de when it first came to the fore. The important point to remember is that we will only achieve success if we are doing it end-to-end and integrating products, processes, organisation and IT.”
Finally, Jens stresses that sustainability must be one of the main topics when developing business strategies for companies and their customers going forward. He concludes, “We are in a learning curve because ESG and sustainability is such a new – but highly relevant – topic. It feels similar to digitalisation
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16 www.pwc.de/en