Manufacturers need to expand dialogues with suppliers and understand what’s in the products they make. Consumers are rapidly demanding that companies track every input, every operation, every application of energy for a particular product, and how those impact the various “scopes” of the global environment or system the business operates in. Design for and with manufacturing is even more important in a circular economy, as well as the ability to procure materials from multiple sources with traceability certification. Now is the time to start looking into these points and building a corporate sustainability initiative. This will require alignment and collaboration vertically and across internal departments, along with external vendors and customers. Waiting for regulations to be released to then react is too late. Be proactive and become a critical participant in the industrial community for designing sustainability and circularity strategies.
With the right foundational elements in place, industry 4.0 solutions can help factories and the supply chains supporting them meet these challenges and get smarter by providing greater operational visibility, the power to predict problems, remain agile and effect control. Fifth-generation (5G) cellular wireless communications leveraging on-machine or edge technology can unleash industrial internet of things (IIoT) devices and sensors to serve as the medium for capturing critical data flows across manufacturing assets – both new and legacy – on a much greater scale. The data generated by the IIoT ecosystem will be quickly processed with machine learning (ML) and lead to AI, generating insights now operationalized by robotic process automation (RPA). The creation of digital twins – software representations of physical manufacturing plants or other assets – will facilitate the simulation, monitoring, testing and modeling of data in a virtual environment to vastly improve real-world key performance indicators (KPIs).²
Maximize renewable and reusable inputs while using or earning profit from outputs
Manufacturers need to more proactively maximize renewable and reusable inputs and minimize footprints and net outflows with smart resource use. For example, if a facility has a solar thermal hot water energy system, the input is solar radiation energy, while the output is heat in the form of heated water. The water does not exit the facility as waste; it is cycled back through cooling to renew as an input for continuous energy generation.³ In another case, distillery grain by-products are remarketed and sold as inputs to animal feed producers.4 Companies that can identify these types of opportunities can make a noticeable impact on their carbon footprint while positively impacting profits. This can be very important when it comes to reducing the scope 1 and scope 2 greenhouse gas (GHG) emissions that organizations have some control over. Scope 3 emissions are the result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain. According to the GHG Corporate Protocol, all organizations should quantify scope 1 and 2 emissions when reporting and disclosing GHG emissions, while scope 3 emissions quantification is not required.5 However, due to customer transparency expectations, more organizations are reaching into their value chain to understand the full GHG impact of their operations.²
In addition to creating a positive footprint with business activity, recommitting to and elevating key disciplines to address increased supply/mix variability is critical. Manufacturing processes will need to be more flexible to deal with a more variable supply. It’s not feasible to simply have more setups or big changes in yield, which also create inefficiencies and increased scrap and losses. Manufacturing systems need strategies to adjust to the reality of supply mix variability.
These areas both speak to the importance of visibility throughout the extended value chain. Are there tools and technologies that can help to better understand traceability, waste, value capture, and value creation opportunities related to sustainability?
Digital transformation tools that already exist enable manufacturers to embed uniform process execution, quality control, recognize waste, as well as enable business partner management for operational scope outside the “four walls” of the business.
The capital allocation that comes with this may be different. For example, recycling plants, reuse, or surplus material remarketing points may be more distributed and owned by municipalities. Manufacturers may need to invest in those and new plants, embed part of their production system and digitally integrate with them. Due to the field-based, multi-stakeholder nature of the opportunity, the reverse value chain and the circular economy are not going to be wholly supplier-driven and -owned. There may need to be cooperative plants or investments. How can so many partners be managed? Procurement leaders are already thriving in agile relationships with key feedstock suppliers and commercial leaders with top distributors. Manufacturing can learn best practice by engaging in conversations with their procurement and commercial counterparts.
Design for circularity topics such as engineering for disassembly; modularity; or upgrade, maintenance and repair, favoring leasing economy business models or single product purchase, and reuse or remanufacture of parts, may be demanded by end customers. Lean in. They may optimistically design something that is indeed circular, but that would be very hard to make with current manufacturing capabilities or available materials. Get more engaged in that process from the start by collaborating to match manufacturer readiness with customer demand. Skate to where the puck will be. If manufacturers must, free-up capital for new plants and partners in the supply chain ecosystem.
Maximize the tools and capabilities already in place
Many manufacturers have invested a great deal of time and effort in becoming lean or earning kaizen and six sigma certifications. These are more than great starting points to building sustainability and creating a circular economy. Existing technology can be leveraged to transfer these concepts to quantify sustainability and circular economy activities. Those in the beginning phases of implementing IIoT technologies may have immediate opportunities in areas such as energy. Jumping into the hype with a consultant and starting on a blockchain transformation journey without a blockchain strategy is not necessary. There are likely three or four other ways to address an issue and have it done at half the cost in a third of the time that can then always be ported to the next technology platform when ready for prime time. Investing in the newest technology without considering current knowledge and solution capacity is a waste of resources and may actually create future problems as a result of inefficiencies with legacy systems or technical debt.
There are always assessments to complete and value cases to build to justify spending significant capital. Start measuring right now. Build a baseline and iterate for the right level of fidelity or data clarity. Building an information baseline will help leadership and operational staff make better-informed decisions faster, and then scale more effectively to system-wide, partner-wide intelligence. Start by aggregating data across multiple clients, recognize commonalities and assign process and language standards to get benchmarks built.