Mathematical optimization for sustainable value creation
How can value chains be designed in an optimal and ecologically sustainable way?
This year, the German Earth Overshoot Day was already on May 3. The day on which we used up the natural resources for the year 2025. If everyone in the world lived the way we do here in Germany, we would need three Earths to sustainably cover our resource requirements. These figures once again highlight the urgent need for a rethink.
High time for a rethink
The growing scarcity of resources and climate change call for a transformation of our economy: away from our „throwaway society“, in which we produce, consume and dispose of waste, towards a CO2-neutral, ecologically sustainable and pollutant-free economy. Not least the current crises have highlighted the shortcomings of resource planning and value chains.
Sustainability as a sales argument
Climate change and environmental protection are issues that are becoming increasingly important both in our society and in politics. Customers are increasingly opting for sustainably produced products instead of cheaper options. Co-decision-makers and shareholders want a positive image. And last but not least, the number of legal requirements in favor of environmental protection is constantly increasing. It is time for companies to operate sustainably.
And they shouldn't wait much longer. Anyone who has not yet addressed the issue of sustainability should start as soon as possible. Companies that seize the opportunity to reposition themselves in good time will be able to significantly increase their competitiveness with an additional strong sales argument and also tap into new economic potential. Sustainable management therefore pays off in many respects!
Value chains are complex
Even without taking sustainability goals into account, value chains are extremely complex. From the procurement of resources and production to the end consumer, the number of participants in modern value chains is constantly increasing. Complexity is growing at the same rate. Many costs arise within this network that influence overall profitability. At the same time, the value chain has a direct impact on the ability of companies to meet the enormous diversity of customer requirements. If the sustainability aspect is added to this, the planning of value chains becomes even more difficult. Ultimately, the question arises as to how value chains can be optimally designed with regard to overall profitability and how sustainability goals can be achieved at the same time.
Transformation of the value chains
The current predominantly linear economy of producing, consuming and throwing away is based on ever-increasing resource consumption and is therefore already reaching its limits. Sooner or later, every company will have to decide whether the transformation of value chains from a linear economy to a circular economy is the best way or even conceivable, or whether the aspect of sustainability can be taken into account in existing processes.
From linear to circular
A transformation to a circular economy is, of course, the ideal path to modern value creation. The aim of circular value creation is to use all products in such a way that resources are not wasted and there is little or no waste left over at the end. The raw materials contained in the products should therefore be recycled as optimally as possible or incorporated into the circular economy in another form.
The transformation from linear to circular value chains is not only imperative with regard to our environment, it also holds great potential in global competition. As a first mover, the potential losses of the strengths of linear value creation can be compensated for in this way - acting quickly can pay off.
Sustainability also increases the complexity of linear value chains
However, taking the sustainability aspect into account does not always require a complete transformation of value creation from linear to circular. However, if sustainability is added as an additional variable in business decisions, the planning of linear value chains also becomes more complex.
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Mathematical optimization and OPTANO for sustainable value creation
The energy and climate crisis as well as changing market conditions are making the value chain increasingly complex. To make this manageable, it is advisable to use analytical methods such as the mathematical optimization. Planning software such as OPTANO creates the necessary transparency, offers alternative courses of action and enables them to be compared in order to support data-driven decisions.
OPTANO helps to identify the right measures
The transition to sustainable value creation is a complex transformation process that requires a coordinated approach. This is because the restructuring of supply chains and the introduction of new recycling technologies are major challenges that this transformation entails.
Companies often have to weigh up new production technologies with different energy requirements and emissions or different wastewater and waste generation for different production sites. In both procurement and distribution logistics, alternative transportation options and routes must be considered to reduce CO2 emissions.
With analytical optimization software such as OPTANO, you can find the optimal solution even for conflicting target values. One example of this is the choice of production locations: on the one hand, high costs for production facilities and emission certificates speak in favor of centralized production. On the other hand, a decentralized distribution of production sites means short transport routes and shorter distances to customers.
With the help of a mathematical model The measures that reduce energy consumption, achieve the desired reduction in emissions and at the same time reduce costs and thus take overall profitability into account are identified. In this way, all planned sustainability measures can be evaluated in terms of their impact and cost implications - and implemented in the next step.
Postpone Earth Overshoot Day
„I am more interested in the future than the past, because I intend to live in it.“ This quote from Albert Einstein shows what is really important. Our decisions in the here and now determine our future and that of our children and grandchildren. In addition to the „big“ decisions made by politicians and industry, we can ensure on a „small“ scale that Earth Overshoot Day is postponed to a later date.