Sustainability and the Cosmic Soup

Smart business models

Thanks primarily to the Information & Communication Technology (ICT) revolution, traditional business models are exposed to a whole new global playing field, and supply chain fragmentation is the current opportunity in which resources are dispersed, processing is distributed, ICT is the enabler and knowledge is the currency. Large enterprises can increasingly outsource significant portions of their business functions – not just helpdesks – even manufacturing, distribution and marketing – to a number of smaller independents that are geographically dispersed and with a smaller operating scale. This has the benefits of:
  • Less concentration of activity and possibility of complementing energy demand with local production, leading to lower operating & distribution costs;
  • Lower scale operations centers that are more reactive & are more energy and resource efficient;
  • Possibility of customization of products to address modern-day needs for individuality and to more accurately address specific cultural/regional requirements;
The table below highlights the characteristics of a fragmented supply chain as opposed to a ‘linear’ one.
Linear Supply ChainFragmented Supply Chain
Modus Operandi Each node is independently $$ profit driven and mega-companies own & operate large assets Profitability at lowest environmental cost, mega-companies own their brand, manage the supply chain while smaller independent businesses own & operate smaller OEM facilities
Extraction & Processing Mass production, Energy & resource intense Smaller undertakings, resource efficiency of scale
Distribution Many legs & long trips between manufacturer & consumer Smaller number of exchanges & shorter distances in reaching client
Retailing Large, centralized locations & low price focused Smaller facilities focused on local tastes and demand patterns
Consumption Convenience, cosmetic & cost focus Informed choices
Disposal Consumers dispose into random, unusable garbage heaps Smaller enterprises with alternate utility of disposed products – alternative use, recycling
This concept is perfectly suited to renewable energy business environment, given the constraint that production capacity is fairly limited by the currently available commercial technologies; i.e. most facilities are relatively small producers in the energy supply chain. Commercialization is rapidly gaining momentum for renewable energy production (solar/wind etc), consumption (electric cars, heat pumps etc), in recent times storage (NaS batteries), and also transportation & distribution (e.g. Hydrogen, pressurized water). But in order for it to revolutionize the energy industry (the same way ICT transformed traditional business models in the past 2 decades) then it’s also in the “stringing together” of the fragmented supply chain that will create value for all stakeholders and will ensure mainstream adoption of these technologies.