In a recent virtual round table discussion on The Manufacturer Directors' Forum, in partnership with DispatchTrack, leading UK manufacturers discussed the path to continued and improved sustainability, specifically regarding supply chains.
The benefits of sustainability are well documented, not only is it essential for the environment but it delivers measurable improvements in efficiencies and profit.
However, there are practical hurdles that manufacturers face in striving to become more sustainable. This session explored the supply chain and what practical steps manufacturers can take to quickly become more sustainable whilst saving time and money.
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The good and bad of supply chains is that everything must move – but this leaves a heavy carbon footprint. Before manufacturers start implementing better processes to combat this, it’s important that they first:
● Agree on a standard
● Have a plan for progression
Some of the key pain points for manufacturers that were raised in this session included:
– “We are a huge, Jurassic organisation that is very set in its ways. But we, our supply chain and our customers all have to get better, slicker and capitalise on digital driven data in particular. How do we enable this? How do we get this monolithic giant to move forward into something which is going to be very competitive?”
– “We’ve got quite ambitious sustainability commitments as well as biodiversity targets. We’ve got an expansive customer base with global sales operations and global manufacturing. That doesn’t necessarily mean that we’re developing manufacturing locally for our local customers. We shift a lot of heavy metal around the globe, so we need to start thinking about how to establish a supply chain capability to match our customer’s needs, both in terms of innovation and proximity to where our customers operate.”
– “As a plastics manufacturer, we too have some pretty challenging targets towards a net zero goal. We have some 2025 targets on reducing our emissions by 25%. We’re also aiming to be sustainable in all of the areas that we operate within the plastic spectrum. We’re looking at recycling and reduction of waste, which I think are hugely important goals to make sure we retain our world leading position on that, in our field.”
– “We lead the decarbonisation of the aerospace sector – and by doing so we have committed to have a zero emissions aircraft in the skies by 2035. I’m interested in looking at this not only from a product manufacturing perspective, but also want to understand how we can integrate sustainable manufacturing processes in already well established and mature manufacturing systems.
– “The IT strategy around sustainability is fairly unclear for us. But factory plays a key part, and within our factories, I think we’ve got a number of objectives to deliver around reducing utilisation and making process a lot more efficient.”
So what are the major issues faced by manufacturers when trying to improve the carbon footprint of their supply chain?
The issue of ownership in the supply chain is unclear, according to one manufacturer. It’s difficult enough investigating and managing sustainability within manufacturing operations, but looking across the whole of the supply chain, who’s responsible for that sustainability? How can you influence, guide or enforce some of the sustainable actions in the supply chain to help you achieve your goals?
A manufacturer from the automotive industry raised an interesting point regarding their company’s steering business, with over 150 components going into each steering column of a car. “We don’t manufacture all of those components, but we do assemble them all. So, where is responsibility for all that carbon footprint? Where is the responsibility for making sure that we do something to get all of that to be carbon neutral?”
Another manufacturer asked the questions of how does a large business properly demonstrate sustainability in supply chains when they’re so big and complex? Where should they focus their effort?
Further insights from the session included: “I don’t think there is a right or wrong answer. It’s actually just about taking the first step – which is the most important step. This is a long journey. I think you have to think outside the box a bit, and be asking yourself, can I repurpose what we’re doing already? Can we retrofit? Can we use warehouses as stores or vice versa? Can we reuse pallets? Can we reuse fleets? I came across a company in France the other day that log pallets and when they’re dropped off, other businesses can pick them up, rather than throwing them away. It’s essentially like renting pallets. Things like that are really valuable in this road to sustainability. The way to do that is to harness and better analyse your data. Once you can do that, you’ll see where you make those quick savings and those big impacts quickly. Data is absolutely critical within this”
“On the point of ownership of sustainability across the supply chain, as a manufacturer and consumer goods producer, the consumer perception of a sustainability journey is really important to us. Categorising scope three emissions is really important for us to be able to measure what we’re doing throughout our entire supply chain and be able to relate to the consumer. I think for a lot of companies in similar spaces, that’s going to be important.
“The data may well be owned in different spaces, but it’s about the business relationships that come through and ultimately creating that customer perception of how sustainable the products you’re producing are throughout the entire supply chain. Data ownership has got to be more and more built into the procurement process and business relationships. But really, I think the ownership of the product that somebody is buying should be with the manufacturer, to be able to clearly explain the emissions and sustainable journey that got it to their hands.”
“From my experience in the industry that I operate, we’re effectively a converting part of the supply chain. We’ve got very large petrochemical giants supplying us at the front end of the supply chain, and we’re met by some retail giants on the other end. When we’re asked to comply with making sure that we understand our part in that supply chain, I think that it’s driven some consolidation in the industry.
“I think the conclusions that have been reached is that within the supply chain you can really do what’s within your gift to demonstrate your ability to show sustainability credentials. What we use in terms of raw materials, we have enough stewardship to make sure that we maximise our output
from that, and make sure that what we do produce goes into an arena where it can be reused and recycled. So, it’s about working within your gifts, rather than just getting super frustrated about what’s to the left or right of you in terms of your degree of influence.”
The group went on to identify the aspects of the supply chain that have the biggest potential to improve sustainability
Manufacturers are seeing recent supply chain disruptions, some of which they’re still very much in the midst of. They’re also finding that customers are having their own supply chain challenges elsewhere, which is impacting on manufacturers ability to service and support them. The customers are shifting their delivery dates and lead times – they’re pre ordering and over ordering. This is having quite an impact and making supply chains a lot messier and more disrupted. There’s been a lot of focus around supply chain resilience as a consequence. Have those recent disruptions changed perspectives on how to create resilient and sustainable supply chains for the future? One hypothesis is that building in resilience requires you to build in redundancy to the supply chain. If you’re building in redundancy, does that mean you’re not necessarily building inefficiency, but you’re increasing the potential impact that you have from a sustainability perspective? Then consequently, is there a consideration to next shore or design products that are agnostic to where they’re built, and then build them closer to the customer?
Does this mean that to achieve resilience the products should be manufactured closer to the customers that you’re serving by potentially building multiple supply and manufacturing facilities that make the same products, in order to serve different customers, but closer to market?
Some insights from participants included: “When you look at supply strategy, a lot of it is financially and regulatory driven. You work based on what’s going to deliver the biggest net revenue, the lowest cost of conversion or cost of goods sold, based on the networking demands. Those large calculations are frustratingly done far too much on Excel and in people’s heads still. It’s going to have to get a lot more algorithmic, bringing in sustainability as a factor.
“The data that we generate across our supply chains, and make known to our factories, suppliers or customers, has to be one of those levelling factors to say, what is the cost of this sustainably and how does that affect my business? We’re not there yet. From personal experience, if it means a sale, we’re going to air freight it as quickly as possible – forgetting the sustainability factors. We’ll pick it up later through buying credits. That’s got to change, and that’s got to be built into these models with a good level of calculation to facilitate it.”
“Once again, we’ve identified that word, data. That’s several times now that data has been raised as part of this. I think it’s vital for not only to analysing what’s happened, but to potentially get more predictive about what could happen to be able to optimise your future decision making. I think that’s reemphasised the importance of a flow of data in conjunction with the flow of the product through the business.”
“I couldn’t agree more. What gets measured gets done – the abilities of modern-day factory environments and having the development of a digital twin enables you to see the performance of your system, allowing you to organically generate the data required. To the point that was made about Excel engineering spreadsheets to capture power usage, water usage and then using some clever calculation across the product that you’ve manufactured – this just isn’t the answer. Data, digital connectivity and digital backbones are an all-important foundation and one of the key enablers to ensure that we can embrace the sustainability journey.”
What role can technology play in improving the carbon footprint for manufacturers?
The conversation moved on to the opinion that to reduce energy use, digital technologies and digital connectivity must be applied. The vision is an inter-integrated shopfloor or workshop, where machines, smart products and the cloud can communicate to improve productivity and predictive maintenance by detecting equipment wear and tear in real time.
The questions raised included: How crucial could monitoring processes in near real time be to saving energy and reducing waste? How could real time tracking, monitoring and data collection improve manufacturing flexibility? The opinion was raised that the most important route to a truly sustainable way of manufacturing must have a key focus on Industry 4.0.
Insights: “Let’s not forget, that more computing power, more data storage, more connectivity, inevitably increases the carbon footprint of the IT industry. If every non-IT industry suddenly pulls in the same direction we would end up with massive silos which would need to be cooled and maintained. We would need thousands more exotic chips manufactured. While I agree, Industry 4.0 is probably the right direction to be going in, surely that in itself has to be managed and considered as part of your sustainability?”
“An example from the nuclear industry would be the use of technology in welding. If you come to do the final scan and realise there is a defect you have to pretty much start the process again. Whereas with laser monitoring and imaging all done in real time, you can detect the defects instantly. You will end up with a lot of data, but you won’t create any waste and you’ll save time and resources. Welding uses lots of energy, so if you don’t detect problems in real time you waste tonnes of money and it’s not at all environmentally friendly.
“I do see the issues of investing poorly in technology and creating more waste as a result. It certainly has to be really well thought through before you apply anything because it can be expensive to digitise, but in my opinion this must be model.”
If manufacturers put data at the heart of everything they do, both inside and outside of the factory, it’ll give them lots of optimisation and the opportunity to reduce carbon footprint quickly. Exploring partnerships and shared assets when considering your supply chain could be key. Other businesses can be aligned quickly and easily, to make and share assets across the board. And lastly, optimising what you’re doing with regards to your fleet management of the movement of parts and products could be a simple but effective way to improve supply chain sustainability.
● Start now, no matter how small the project/gains seem – something is better than nothing!
● Data is key for optimised decision making – putting data at the heart of all operations both inside and outside the factory will present opportunities to reduce your carbon footprint very quickly
● The need for a holistic strategy across industry – by looking at your supply chain and identifying other businesses that you can align with quickly and easily, and make and share assets across the board, could potentially really help
● Frustration at the lack of industry standards and consistency through individual supply chains
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Click HERE to read the insights of another TMDF discussion.