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Integration of Sustainability into Corporate Strategy of an automotive…
Integration of Sustainability into Corporate Strategy of an automotive company (BMW
Supply Chain
Completely paperless production
100% cloud architecture (ERP, integreated cloud MES, analytics), e.g. SAP Digital Manufacturing Cloud
100% green energy
Real-time visibility and end-to-end product traceability (trace every piece of material from the shop floor to the top floor).
predictive maintenance (monitoring of temperature, vibration, torque progression, energy consumption)
big data and AI
Sustainability Council / Sustainability Management team has a
strategic focus
(what are the strategic priorities) on issues/challenges and acts as a critical, independent adivsory board for the company + assesses current initiatives and their implementation
sustainable mobility
environmental protection
e-mobility, reducing dependance on fossil fuels, accelerate
decarbonization
social responsibility
integrity
future of work
digitalization
circular economy
diversity
(product range, individualization, management (gender, age, qualification))
Strategy: "sustainability takes a comprehensive holistic perspective". Prioritize (<--> e.g. SDGs: 169 sub-goals, no priorities) - How do priorities change over time
i3 introduced in 2013. Constantly looking how the customer takes that offer. There's a big difference between people’s statements about sustainability and their actual buying behavior (intention-behavior gap) --> Main goal: Profit margin --> understanding customer's buying behavior / market behavior (customer segments, changes over time) --> product development, production strategy, marketing strategy has to stay flexible. BMW has 196 markets (one is the European market --> already comes with huge differences)
Industry 4.0 - Cloud Architecture / Intelligent factories
Laws
Supply Chain Act
(Bundesregierung 2021)
Fit for 55
(55% reduction in CO2 emissions (from 1990 levels) across all industry sectors by 2030)
Benefit/Value
Academia Perspective. Question: Affection of sustainability issue to performance drivers of the company?
Simple Answer: short-term scenarios
Keep the lisence to operate (policy regulations) -> Operational risk (would lead to litigation risk - Gerichtsverfahren)
Reputational risk --> more attractive to customers and employees (job market)
Cost reduction: material efficiency (e.g. due to less waste production -> disposal costs, better material usage -> less resources) and energy
More attractive for investors due to new market creation (all-electric vehicle)
reduce energy usage in production due to heat recovery --> save emissions and money
Komplex Answer: long-term, complex causal chains/scenarios. Which competences do I have or have to build up?
preparing for carbon legislatives that will take place in 5, 10 years from now in any given country for manufacturing plants --> carbon efficiency
other actors: Governments, civil society, voters
drivetrain (BEV, Hydrogen, combustion engine), design, regulations
The BMW approach for sustainability
1973: Implementing Sustainablility Officers
Today: Leading compared to all other carmakers. But: Sustainability is differently perceived in any part of the world (manily through mass media and governmental narrative: Beijing/China: Product expereicne, Copenhagen/Europe: Ethical+Safety, L.A./United States: Performance, Brand Image). What stays the same for every market: precise information about the footprint of the product
Collaboration with charging infrastructure, city operators, supply chain, digital service providers.
Challenges of cooperations: (from Academia perspective): Customers care, media cares, if there is a big scandal. E.g. Dieselgate: relevant for the entire industry -- Brand image lost for all German car makers. Same with supply chain issues (e.g. Airbags Toyota), standards for labour conditions (batteries) --> Makes sense to
collaborate with competitors/suppliers/NGOs and intermediaries to create those common standards
. --> Everybody has a similar level, and then you can focus again on your innovations/USPs. --> Very complex: Regulators, antitrust issues (kartellrechtliche Probleme)
co-created solutions
: e.g. charging infrastructure, park spaces and traffic management. Creating solutions means operating and innovating in an ecosystem
Drivers for Sustainability
Society
Policies
Customers
Finances
Examples for
successful integration
of (a new, and maybe contradictory) corporate strategy/philosophy?
Patagonia (clothing) -> always been sustainable, but just a niche market <--> Compared to H&M with a broad customer base
Disruptive Change, such as sausages/meat producers, e.g.
Rügenwalder Mühle
-> developing alternative business models without a crisis pushing them to (so far meat products are still selling very good, but it's obvious that meat will get more expensive as more biological and less and less people will buy meat) --> offer the customer "Power of Choice"
organic, animal welfare-oriented
What means "acting sustainably" from a profit margin perspective?
It’s acting such that you have plentiful options in the future for markets, and don't end up in a dead-end street
disrupte yourself by having pockets of innovation that each follow a different logic (innovation 1, innovation 2, innoavation 3, ...)