A combination of market, social, and regulatory pressures is pushing sustainability to the top of strategic priorities for executives. Discussing sustainability in board meetings is not enough; investors, customers, consumers and regulators are demanding tangible actions and results from these initiatives.
For manufacturers to be sustainable in 2023, they must take actions that drive efficiencies across their value chains while maintaining "eco-friendly" mindsets. Being sustainable in manufacturing elevates the "go green" mantra by incorporating it into every decision across the enterprise in a repeatable manner while continuously optimizing resources and constantly reducing its carbon footprint.
This pushes discrete manufacturers to create more efficient and sustainable products, which require many considerations across their life cycles. The good news is that companies that institute sustainable manufacturing in the increasingly complex product lifecycle will meet these growing environmental, social, and governance (ESG) demands while improving efficiencies, reducing waste, and eliminating costs along the way.
Sustainable manufacturing in 2023 will use principles from the circular economy — a model that eliminates waste by reusing existing materials from decommissioned products for future iterations of new products. Manufacturers embed these "circular" product lifecycles in the early stages of engineering, manufacturing, aftermarket services and the eventual end of life of the product.
Below are three actions for discrete manufacturers to take in 2023 to adopt a circular economy mindset and make products and processes more sustainable across the enterprise.
The engineering department is a key enabler for more sustainable manufacturing as its decisions have significant ripple effects, including upstream through the sourcing of bio-friendly materials from reputable suppliers and downstream where design decisions impact the product lifecycle through manufacturing and service processes.
Engineering has historically been burdened with doing more with less; they're tasked to create better-performing and more differentiated products at lower costs while maintaining quality and performance standards. Adding sustainability as a product specification "must have" magnifies existing engineering challenges and creates new ones.
Discrete manufacturers today are increasingly directing engineering teams to "design for sustainability," with a goal of developing more lightweight, durable, or reusable products. Engineering’s role as the foundation for the product lifecycle is bidirectional in nature, and this holds true for design for sustainability as well.
Evaluating the hundreds or even thousands of parts in a complex product for sustainable optimization opportunities from suppliers is one possible starting point. To enable that, product designers can turn to computer-aided design platforms with emerging AI-driven tools like real-time simulation, generative design, and topology optimization to create and prioritize designs that use recyclable materials and/or less material while maintaining performance. Reducing a product’s weight, even by small percentages, can also have substantial effects on operational performance and costs, which drive key sustainability metrics.
For example, reducing a truck engine’s weight by a few percentage points will improve its fuel efficiency and reduce its carbon emissions. The engine manufacturer could cite a sizable impact on a sustainability initiative by multiplying these efficiencies across thousands of trucks globally.
Manufacturers are also revaluating procurement strategies and their reliance on supply chains with innovative technologies such as 3D printing, which can produce parts and materials locally and reduce CO2 emissions from supplier shipping and receiving.
Engineering is the manufacturer’s starting point for driving sustainable manufacturing throughout the value chain, which includes the product’s operation in the field and impact on the service function. Leveraging product development platforms, engineering can create a higher quality and less power-intensive product, which can reduce its operational downtime and power consumption, impacting sustainability metrics outside of engineering, including its customers' operating statements.
These are a few among many possibilities where sustainable manufacturing principles implemented by the engineering department could extend across the value chain.
Manufacturing processes have traditionally been designed to minimize operating costs including space, machines, materials, workers, and power. For global manufacturers with dozens or even hundreds of plants, these annual costs run into the millions of dollars and the carbon footprint is extensive and under increasing scrutiny.
To address these cost- and energy-intensive operations, manufacturers are looking more diligently at their power consumption and evaluating methods for optimizing their current usage, as well as considering renewable energy alternatives. The increased maturity of the industrial internet of things (IIoT) is providing manufacturing executives with novel operational insights from their production lines and connected machines, including comprehensive data on energy usage.
The bidirectional capability of IIoT enables manufacturers to monitor power usage and to take physical and/or remote action to power industrial systems on or off based on fluctuations in predetermined thresholds. IIoT analytics embedded with artificial intelligence and machine learning can identify bottlenecks that cause inefficient energy usage and provide frontline workers with critical insights on how to correct them.
Manufacturers should look to technologies like IIoT and enterprise data-powered energy and power management platforms as part of their energy efficiency initiatives. Nearly half (48%) of manufacturers are planning to increase their investments in such systems, according to 451 Research's Macroeconomic Outlook: Business Trends, ESG 2022 survey.
Historically, once a product was manufactured and shipped to a customer, the information feedback loop ended, as did the opportunity for value-added customer experiences. This has drastically changed as customers demand novel digital experiences, more durable products, and consumption-based usage options. With the help of new technologies the manufacturer can now be involved in the product lifecycle far beyond the factory.
Service initiatives driving these new customer experiences are both a massive revenue-generating opportunity and a significant cost center. Tracking and optimizing sustainability metrics across the service lifecycle can improve both a manufacturer’s top and bottom lines.
For example, truck rolls for service technicians to maintain product uptime across a dispersed customer installed base can cause significant travel and fuel costs. Leveraging IIoT for remote monitoring and predictive service alleviates this costly dispatch by reducing the need for routine maintenance activities, which lowers CO2 emissions. These remote capabilities can optimize a connected product’s power consumption, capturing additional sustainability gains. IIoT also can complete a critical feedback loop, delivering real-world product usage data to enable engineering to create more efficient future iterations of the product.
Finally, industrial machinery degrades over time. By leveraging data insights, manufacturers and their customers can be more proactive in the decommissioning, disposal and recycling of their products when they reach their end of life, enabling additional sustainability improvements. Being proactive with service also extends the life of the product, reducing the need for the customer to purchase a new one and for the manufacturer to create it.
The current maturity or status of an organization’s sustainable manufacturing initiatives shouldn’t sway stakeholders from pushing for additional change, including the incorporation of such efforts in company-wide ESG initiatives and reporting.
According to 451 Research's Macroeconomic Outlook: Business Trends, ESG 2022, nearly half (47%) of manufacturers do not have a formal ESG program. While longer-term ESG plans are important, manufacturers shouldn’t wait to identify and implement sustainable manufacturing initiatives that drive impact today. The current market trajectory is pushing manufacturers to disclose sustainability and environmental impact data as competitive criteria; sustainability metrics will become a critical item among customers' purchasing priorities and in requests for proposals.
Manufacturers that are evaluating their growth in the next decade need to start implementing sustainable processes as a competitive necessity. Success starts with implementing high-impact and repeatable use cases that address sustainability issues across the manufacturing value chain.....
Understand the current state of sustainability for manufacturers and the most impactful digital transformation use cases