We are living in the Anthropocene era, where human activities have a significant impact on our global ecosystems. Every year, the nonprofit Global Footprint Network, which promotes the sustainable use of natural resources, calculates Earth Overshoot Day—the day when we begin to consume more resources than our earth can regenerate.
This year, that date was August 8. Every year, Overshoot Day comes earlier.
Increasing global demand for raw materials has made the prices and supply of the world’s most highly traded commodities increasingly volatile. According to our analysis of OECD data, the prices of these commodities are now subject to swings of more than 30% annually, compared to less than 20% before the mid-1980s.
Just as digital technologies can help to reduce carbon emissions, they can also help companies manage the cost and inventory of raw materials in their supply chain—and balance unpredictability—by reducing waste, improving efficiency, and promoting reuse.
A July 2015 study by the Ellen MacArthur Foundation concludes that “a wave of disruptive technologies and business models” could also help to increase GDP in Europe up to seven percentage points by 2030 by reducing costs and improving resource productivity.
We estimate the world economy must generate US$33 trillion in savings through more productive use of food, water, energy, metals, and generated waste to keep up with resource demand during this period. Digital technologies can create an estimated $1.9 trillion in opportunities to use raw materials and water more effectively in agriculture and food production, forest industries, and the mining, processing, and application of common metals.
Decades of Increasing Resource Volatility
Prices of non-energy commodities with the highest-trading volume, including widely used food crops, forest products, and metals, swing more wildly today than in the past.
Increasing food consumption, shifting trade patterns, and constraints on production make these top-traded food products volatile commodities. Digital technologies, including sensors and real-time analytics, can be used to optimize the planting, growing, harvesting, and transporting of food commodities.
Sawn wood, rubber, palm oil Digital opportunity: $100 billion
Current economic trends, from housing starts to oil prices, impact demand for forest products. But long growth time for trees limits supply, as do environmental factors that are difficult or impossible to control, such as climate and disease. Digital technologies can help companies use these resources more efficiently to reduce waste, redirect unused supplies, and improve resiliency in the supply chain.
Platinum, lead, iron ore, tin, gold, nickel, copper, aluminum Digital opportunity: $1.2 trillion
Prices of metal fluctuate with the global economy, and China is a big influence on price and supply. Digital technologies can help companies improve efficiency throughout their value chain.
Kai Goerlich is the Idea Director of Thought Leadership at SAP. Follow Kai on Twitter @KaiGoe.
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