In the manufacturing industry, enterprises are increasingly examining their production processes and systems to improve sustainability. Specifically, efforts to minimize waste, pollution, and energy consumption are not only growing in popularity with consumers but businesses as well. These efforts also improve operational efficiency, increase a company’s competitive advantage, strengthen brand reputation, and facilitate organizations’ adherence to regulatory guidelines.
Success in achieving these goals will depend on smart manufacturing, which uses advanced technologies to automate business processes, track information throughout product lifecycle, and provide advanced visibility and quality control to enterprise operations. For example, as sustainability is prioritized across the supply chain, organizations will require proper metrics to ensure stakeholders are meeting sustainability goals. Smart manufacturing technologies will help ensure that companies are accurately measuring and tracking their progress against these metrics.
Regulations increase pressure for sustainability metrics
One factor driving the need for manufacturers to implement sustainability metrics is the increasing number of regulations, both domestic and international, requiring companies to integrate sustainability practices into their business operations. This past year, the International Sustainability Standards Board (ISSB), the global body responsible for developing international reporting requirements, issued two reporting standards requiring companies to disclose material information about sustainability and share specific information on climate risks and opportunities. These standards provide a global baseline for organizations to report climate-related issues and impacts on business operations. Though the standards are not explicitly imposed upon organizations or jurisdictions, they do provide a framework for mandatory and voluntary reporting practices.
Domestically, the Securities and Exchange Commission (SEC) finalized its climate disclosure framework this year, requiring organizations to disclose pollution metrics generated by their company through registration statements and periodic reports . This not only entails greenhouse gas emissions produced by the company’s operations but also indirect emissions, such as energy purchased from utilities.
Similarly, individual states are increasingly enacting legislation that requires companies to report and monitor their sustainability efforts. For example, California recently signed a landmark mandate for the disclosure of corporate carbon dioxide emissions. As the number of regulations grow, organizations become increasingly responsible for creating and meeting sustainability standards.
Business advantage to sustainability measurements
Besides the external factors and pressures motivating organizations to examine the environmental impact of their output, there are also internal factors that rationalize implementing sustainability metrics. For example, brand recognition and competitive advantages are additional arguments that support increased attention to reducing waste production and greenhouse gas emissions, improving materials sourcing, and more. In fact, a recent report highlights that 39% of manufacturers reportedly pursue sustainability goals as a competitive differentiator. Improving sustainability efforts not only promotes more efficient processes and decreases waste but also caters to business and consumer interests of sustainably produced goods.
Furthermore, efforts to improve energy management, carbon offsetting, water conservation, waste reduction, and raw material usage all contribute to cost reduction and increased resilience. As manufacturers implement these measurements into their operations, they are also fortifying operations against disruptions, decreasing costs as materials are upcycled and reused, and uncovering new avenues for efficiency and innovation.
How to accurately measure and improve sustainability in manufacturing
Now, achieving these goals will require a robust data infrastructure that allows manufacturers to aggregate and analyze current performance metrics and connect information across systems and machines. This data infrastructure can be achieved by using manufacturing execution systems (MES) and enterprise resource planning (ERP) systems, quality management systems (QMS), supply chain planning (SCP), and the industrial internet of things (Industrial IoT). The following provides examples of how these systems can help company collect information related to waste production, material usage, and quality control:
- Industrial IoT sensors embedded in machinery allow communication between devices to gather insights on equipment performance and provide feedback on machine health. Some can even report on natural resource usage or greenhouse gas emissions emitted during production.
- MES can monitor energy consumption across organizations in real-time, identifying idling equipment or excess material usage. They can also monitor equipment health and provide proactive maintenance suggestions to avoid downtime. Recognizing equipment malfunction is critical to sustainability as it reduces potential wasted materials and energy
- QMS can provide constant analysis of potential areas for improvement and consistent control over production. As such, they can help eliminate waste and identify defects throughout the manufacturing process.
- SCP can forecast demand and inventory, optimize transportation routes, provide sourcing information on potential partners, and facilitate closed-loop systems to recycle products. Accurate forecasting and optimized transportation lead to more efficient material usage and route planning, resulting in lower resource consumption and emission production.
- ERP systems can collect data on energy consumption and material utilization. They can also be used to create customized dashboards and reports to follow key performance indicators (KPIs) to assess organization performance against sustainability goals.
By fostering efficient operations and monitoring performance, these technologies allow organizations to improve planning and execution, which helps them to reduce waste and maximize output. The manufacturing systems described above along with advanced technology—such as smart devices, machine learning, artificial intelligence, blockchain and digital twins—provide real-time data that can be placed into predictive models to proactively predict events such as unplanned stoppages and repairs, fluctuations in energy consumption, and material or resource needs. These technologies can also develop simulations to test different scenarios that may help manufacturers decrease certain environmental impacts. They can also provide efficient tracking of products, components, or materials throughout their lifecycle.
A recent survey found that 65% of manufacturers claim that technology plays a significant role in achieving sustainability goals. Managing sustainable manufacturing practices begins with technology that provides data-driven insights. As manufacturers realize that sustainability goals are not just connected to compliance but performance, they will begin to seek out these platforms that monitor waste production, emission reduction, raw material usage, and product quality. In doing so, they will also benefit from the improved efficiency and increased savings that accompany these sustainability goals.
