The recent Manufacturing Leaders’ Summit in Liverpool saw Kevin Kelly, Director at Vendigital, discuss sustainable transformation shifts and new business growth areas in manufacturing. He also looked at the sector-wide challenges facing manufacturing, such as rules of origins, manufacturing excellence, cost optimisation and how to create actionable solutions for a sustainable future. The Manufacturer caught up with him to find out more.
Vendigital, part of Siemens, is a cost engineering, procurement and supply chain business, supporting manufacturing companies to become more cost efficient, secure and to ensure customers can manufacture their products profitably. Kevin commented: “We do this as part of Siemens Advanta, the consulting arm of the business. We also work very closely with the Siemens product business, which specialises in the software solutions, robotics, PLM solutions etc that are deployed within factories. This provides an end-to end product portfolio within the Siemens business.”
Kevin himself is Director for Mobility at Vendigital, focusing on electric vehicles and product manufacturing within this space. He comes at the role armed with a wealth of experience in future processing around sustainable materials, plastics, new e-fuels such as hydrogen, and some of the new, transformative technologies that are disrupting the space.
Keynote topic
On day two of Manufacturing Leaders’ Summit, Kevin delivered his keynote on end-to-end sustainability solutions, focusing on the fact that successful sustainability strategies aren’t about operating in isolation; where a business fixes one related problem and assumes sustainability has been achieved across operations. Not only does sustainability need to be an end-to-end topic within manufacturing businesses, it should also be highly integrated within an organisation, covering each and every part of the entire development process.
“You can’t wait for a product to reach the manufacturing process, and only then decide to make it sustainable”, Kevin added. “You have to consider your design and how you do it efficiently, materials, manufacturing processes, after sales support and end of line – all of this comes into sustainability.”
He stressed the importance of remembering that manufacturing is just where a product gets put together and is the output at the end of a process. However, that is delivered through multiple stakeholders and at multiple stages. During his keynote he covered some of the elements of manufacturing that are perhaps less prominent on the discussion table, such as planning, business improvement and coordinated organisation strategy; all of which are critical to delivering sustainability – it’s not just down to the manufacturers themselves.
Transformation trends
Kevin explained that there are currently two key drivers that are influencing manufacturing’s current and rapid transformation – product and process. The global landscape is changing the products which we manufacture. Geopolitical issues are impacting the supply chain, different materials are being deployed to enhance sustainability efforts, and energy is being used differently.
As for processes, many of these new products require equally modern and updated factories, and significant changes in the implementation of factory layouts. These processes are creating new innovations such as digital twins and vast amount of data and analytics within a manufacturing site which manufacturers can use to help optimise efficiency and create products.
Kevin continued: “Not only are processes around digitalisation, efficiency and supply chain new, they’re also changing. We’ve gone through a lifecycle in manufacturing in the past 20-30 years of being evolutionary, where the industry has gone through the process of making things better. Now we’re in a revolutionary phase, driven mainly by the products that we are actually manufacturing.”
Sustainability shifts
Similar to the drivers behind manufacturing’s digital transformation, there are likewise two key trends when it comes to the advancement of sustainability; namely energy and efficiency. There has been a noticeable move within the sector towards on-site renewables and energy generation, which is changing the way manufacturers are placing themselves in the value chain. Factories are starting to shift from merely giant buildings that focus purely on creating a product, and are expanding to incorporate the creation of the most efficient outputs.
Kevin added: “As Siemens, a big part of what we do is help companies understand where costs and CO2 savings can be made, and from what part of the process.”
Challenges and pain points
Whenever addressing any challenge or problem, the answer often lies in telling people what they don’t want to hear. Kevin added that the main issues he sees manufacturers grappling with during times of disruption and change are not so much associated with the manufacturing process, and more to do with capability and experience.
“We’ve started to come in on a lot of these transformation and sustainability pilot projects”, Kevin continued. “Challenges tend to be around the number of people who can actually deliver projects at scale. All of these transformations create gaps in skills, experiences and real world deployment.”
Therefore, what’s needed is a word often spoken whenever the issue of the future of manufacturing is raised – collaboration. Kevin added: “Manufacturers will have to work across industry, in collaborations to deliver on that critical experience. That’s one of the big things that we do. Of course we have our own factories working on sustainability, along with a very aggressive net zero strategy. So working with players who have actually done it, and have got the experience, is critical.
“Across the world, the agenda constantly comes back to capability and experience behind the actual transformation. The truth is that in the UK currently, transformations are happening faster than we can actually deliver with the number of people we have.”
How can Vendigital help manufacturers?
So, where does Vendigital come in? Kevin added that the company’s focus is on engagement, with manufacturing contacts numbering in the thousands, all of whom have day-to-day struggles and challenges. However, often they are so focused on firefighting efforts, hitting a manufacturing schedule and getting product to customers, they find it difficult, and sometimes cumbersome and annoying, to engage with an external partner, even if they see the value in doing so.
To this end, Kevin added that the biggest gamechanger offered by Vendigital is speed – understanding that offering solutions that will pay dividends in a year’s time often won’t resonate. “For us it’s about asking what challenges have you got in your business right now”, he added.
“We know we can deliver huge value for our customers; we’ve got so much proof around it in terms of our business. However, the challenge is that people are often so stuck in the manufacturing world, in the day-to-day struggle of their job, that they can’t see and implement the value that we can bring. So, engage with us, let us come in and help solve your problem. As a business – whether that’s Siemens Advanta or Vendigital – we give our customers the gift of time.”
The balancing act of profitability and sustainability
All manufacturing businesses want to sell more and become more profitable; it would be naive to think otherwise. However, while a balancing act between profitability and sustainability has to be made, it is untrue to suggest that the two are always in opposition against each other.
Kevin added that while Siemens has a clear and accelerated path towards net zero in 2050, the business is also at a point with some of its new products and processes – and with the end-to-end sustainability effort – where sustainability and CO2 reduction is the best course of action from a profitability perspective.
He added: “We have seen this already, and there are some great examples where you might have more CAPEX on a factory or manufacturing solution, but end profitability is increased. The best example is solar PV. When it comes to the energy market in the UK today, it is cheaper to put solar panels on your roof than it is to buy in the same amount of energy over a long-term contract.
“It costs you more money initially; you may need to factor in an extra £2-3m for battery storage and solar PV, but your overall sustainability is dramatically improved. You will be reducing your CO2 but profitability over time is actually increasing because you don’t have the global fluctuation in pricing around the energy market.”
He added that this means manufacturers can stabilise themselves when it comes to energy as well as take advantage of government incentives that are in place. Money can even be generated from some of these assets. For example, data centres can create revenue from on-site renewable energy and battery storage because they are such high power users. “So actually, there’s a business case that some of these aspects of sustainability can actually generate revenue”, added Kevin.
Of course there will always be imbalances that exist, where profit doesn’t meet sustainability. For example, in the food and beverage sector, consumers are renowned for being reluctant to pay more for sustainable products – often opting for the cheapest option instead – and that’s the reality of some value chains.
Kevin continued: “We’ve seen this in green steel and green hydrogen, which have both had a real struggle in actually putting forward their proposition. However, the longer other industries drive sustainability where it currently makes sense, other sectors where the argument is more opaque will inevitably become more affordable. I completely disagree with people who say that sustainability always costs.”
The future of sustainability in manufacturing
When looking at change around sustainability, this article has discussed new processes, products and efficiencies, along with the implementation and digitalisation – all challenges that need to be overcome with more innovative solutions.
Sustainability creates opportunities for organisations and Siemens is no different. Kevin added: “We’ve made a big push as a whole organisation towards new sustainable products and internal solutions in our own plants and processes. We need these in order to meet global net zero targets. All of that creates new opportunities. Those will create a new landscape for manufacturers to differentiate themselves.
“Manufacturing is in a really interesting place as we’re now moving into Industry 5.0 and the industrial changes we’ll see during the next decade will create the foundation up to and beyond 2050.”
For more articles like this, visit our Sustainability channel.