The latest from World Economic Forum, gives a rundown on how we can handle this new era of digital supply chains.
- Digitalized supply chains offer solutions for addressing sustainability challenges in least developed countries (LDCs).
- Technologies such as AI, blockchain, and IoT can enhance efficiency and minimize waste, but ensuring that LDCs gain from these advancements is essential.
- This study explores successful initiatives in countries including Bhutan, Bangladesh, Cambodia, Ethiopia, Nepal, Rwanda, Timor-Leste, and Vanuatu.
Digitalization is proving to be a powerful tool in helping businesses achieve a “triple bottom line”—balancing economic, social, and environmental goals. By integrating these dimensions into supply chains, companies can improve transparency, meet shareholder concerns, and create more sustainable business practices.
A study on the Impact of Digitalization on Sustainable Supply Chains (Rogetzer et. al 2018) reveals how technologies like AI, blockchain, and IoT contribute to supply chain sustainability, enhancing efficiency while addressing environmental impacts.
Challenges in Least Developed Countries (LDCs)
While digitalization helps reduce waste and environmental impact in supply chains, over two-thirds of the population in LDCs remain offline. This exclusion poses a challenge to ensuring equitable benefits from digital advancements. It is critical to include these populations in digital transformation efforts to avoid a “winner-takes-all” scenario.
Digitalized supply chains have shown promise in addressing sustainability concerns in LDCs. Small steps, such as improving trade facilitation and transparency, are already benefiting small businesses and farmers in these regions.
Paperless Trade for Sustainability
Digitalizing trade processes offers a path toward greener and more inclusive supply chains. For instance, the **United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)** estimates that full digitalization of regulatory trade procedures can save between 32kg and 86kg of CO2 per transaction. In the Asia-Pacific region, this could translate to a reduction of 13 million tons of CO2—equivalent to planting 439 million trees.
In Vanuatu, the introduction of an Electronic Single Window for bio-security certificates reduced paperwork by 95% and physical trips by 86%, resulting in a significant cut in CO2 emissions. Similar initiatives in Timor-Leste and Cambodia have led to substantial environmental benefits through digital trade facilitation.
Digitalizing Business Processes for Sustainability
The digitalization of business processes enhances efficiency and flexibility, directly supporting sustainable business models. In Bhutan, a project by the Food Corporation of Bhutan installed digital infrastructure for potato auctions, leading to increased price transparency, reduced transaction costs, and quicker payments for farmers.
In Bangladesh, the Centre of Innovation, Efficiency, and Occupational Safety and Health Improvement (CEOSH) trains the garment industry on emerging technologies like AI and 3D printing, helping businesses comply with environmental and social norms as the country prepares for its LDC graduation.
Enhancing Supply Chain Transparency
Digital technologies play a key role in improving supply chain transparency, helping retailers and consumers trace product origins. This is especially important for organic certifications, as shown in projects across several LDCs.
In Ethiopia, the Traceability Project uses digital systems to track coffee from smallholder farmers, enhancing trust between producers and buyers. Similarly, Nepal has implemented digital traceability in its tea value chain, increasing product prices and enabling organic certification.
In Rwanda, blockchain technology supports women coffee farmers, improving traceability and boosting the country’s leading export crop.
Towards Inclusive Digital Transformation
While digitalization and sustainability efforts are aligned, there is a need to ensure that these benefits are inclusive. The examples from LDCs demonstrate that small-scale initiatives can have significant impacts. By scaling and connecting these efforts with larger regional projects, such as the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific, the potential for transformative change is immense.
Click to learn more: https://www.weforum.org/agenda/2024/09/digitalization-sustainable-supply-chains-least-developed-countries/
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