Growing Imperative of Sustainable Manufacturing

While supply chain leaders across industries and geographies grapple with managing the ever-increasing supply chain complexities and risks, there is an additional demand on the companies to be more resourceful and conscientious of environmental and social needs. The collective awareness around Sustainability and specifically Sustainability in supply chains have increased among the consumers and all the supply chain stakeholders. Along with other factors, this collective awareness has also led to the emergence of sustainability as a critical component of the supply chain process. With all this focus on sustainability, organizations are not only looking to build visibility into their end-to-end supply chains, but they are also looking to leverage the power of data and analytics to run more sustainable supply chains. Manufacturing is a critical component in supply chains; hence, the focus on building sustainable manufacturing capabilities has grown exponentially. This brings the critical role of technology in building Environmental, Social, and Corporate (ESG) governance capabilities to the forefront. Manufacturing is the source of material and resources consumed by the next stage consumer and hence has a major role to play from a sustainability perspective. It provides a rich ground for leveraging data and analytics for building sustainable processes. And hence data-driven manufacturing solutions leveraging Industry 4.0 technologies can play a key role in helping organizations build sustainable supply chains from a manufacturing perspective.

The Growing Business Imperatives of Sustainability

Most organizations consume materials and resources and generate waste — as a raw material used in production, energy consumption to operate facilities, and environmental waste from plants. With greater consumer awareness of the impact of Sustainability, demands for more eco-friendly products and solutions have increased. Subsequently, there is a push for organizations to prove their contribution to these new age requirements. As a result, these organizations are making firm commitments to sustainability through transparency and addressing material issues. Besides the collective awareness, organizations must also adhere to regulatory and compliance guidelines pertaining to the impact their manufacturing and distribution processes have on the environment. Since manufacturing is the genesis of a product or resource, it is the focal point of all sustainability initiatives and hence is a special focus for executives.

Leveraging Smart Factory Capabilities

End-to-end visibility strategy to address the imperatives Organizations plan a strategy to address sustainability goals is to build end-to-end supply chain visibility. This means that they need to have visibility and tracking capabilities across all sub-functions within their supply chain, and manufacturing is one of those nodes within the supply chain. Hence, organizations must have seamless visibility about their complete manufacturing process. The requirement to have near real-time data Visibility into manufacturing processes is built by capturing the process's generated data. This data needs can come from many distinct elements of the manufacturing process. You can capture data elements that were not being captured before and hence not only trace the product's characteristics as it moves through the manufacturing process, but also monitor and capture data on the assets (equipment) involved in the manufacturing process. Leveraging technology to capture the data Industry 4.0 technologies today allow us to trace the product's characteristics as it moves through the manufacturing process and monitor and capture data on the assets (equipment) involved in the manufacturing process. Digital twin technology, which essentially helps us create virtual models of real-world physical objects, can be leveraged to build smart factories. In a smart factory setup, a digital twin of the end-to-end manufacturing process and all involved assets is developed, which then helps capture the granular level of data that we have discussed before. They can then use this data to build more sustainable manufacturing processes.

What Does This Mean for SAPinsiders

Based on SAPinsider community insights and trends on the current sustainability landscape, organizations should develop a strong sustainability strategy as part of their overall Supply Chain plans. Beyond costs, they should consider sustainability as a critical supply chain driver and use it as a competitive weapon. Manufacturing needs to be a key focus area for these sustainability initiatives, and data and analytics solutions, specifically smart manufacturing solutions, can play a key role. However, there are some aspects SAPinsiders need to be aware of: Understand the Sustainability related parameters. It is critical to understand the Sustainability-related parameters of your manufacturing operations. A digital twin may capture hundreds of data points across your manufacturing floor, so you must cull out ones that affect your sustainability goals, like energy consumption. Track sustainability parameters effectively. It is a prudent approach to track sustainability-related data points effectively. A suggested approach is to have a separate section or tab on sustainability in your dashboarding tool. This not only allows you to segregate historical Sustainability related parameters from manufacturing operations but also emphasizes the importance of these parameters for those who use the dashboard. Benchmark your manufacturing sustainability performance. A great starting point to understand where you currently stand is to benchmark your performance against your industry peers, best-of-breed organizations, and your ambitions. This is where defining Key Performance Indicators (KPIs) becomes important so that you can effectively track your progress and keep on raising the bar. Use advanced analytics to look for improvement opportunities.  Digital twin solutions have capabilities to simulate your manufacturing operations. This simulation capability can help you understand if there is a more effective way to run your manufacturing operations. You can also run modeling scenarios that help you evaluate options that will minimize the environmental footprint of your manufacturing operations. Advanced analytics approaches like predictive maintenance also help towards sustainability goals by ensuring that while a facility is operational, they use effectively with no machine downtime.