When it comes to environmental sustainability, many manufacturing organizations start with the obvious: recycling programs, energy usage audits for lighting and equipment, and landfill diversion. With Earth Day 2023 right around the corner, it’s a good time to consider Industry 4.0 technologies and the role they can play in an organization’s overall Environmental Social Governance (ESG) strategy.
Even manufacturing companies that consider themselves too small to have an ESG strategy need to think about ways to lessen their environmental impact, especially if they are suppliers to large global organizations. OEMs and other organizations with Scope 1 and Scope 2 strategies to reduce greenhouse gas emissions are now turning their attention to emission sources outside their scope—such as those associated with suppliers and transportation partners.
Being prepared with environmental impact data and having mitigation plans to offset that impact is becoming an integral part of global supply chain relationships.
Technologies that help identify inefficiencies in plant floor operations can help organizations better identify and quantify their environmental impact so they can pinpoint the biggest and best opportunities for making a difference. They do this through data capture that leads to better supply chain visibility and ultimately, process optimization.
The data to do good. Capturing real-time operational data to establish baselines and monitor operations is foundational for ESG reporting. Production floor data from machine sensors, Andon systems and other in-plant sources provides insight into the health of mechanical equipment and processes that could be draining precious environmental resources. What’s the average machine run-time? How much waste or scrap is generated by individual pieces of equipment? Which machinery experiences the least—or the most—downtime? Where are there bottlenecks that could be adding to the environmental burden? Digital dashboards put the information at the organization’s fingertips, in a format that makes anomalies visible and more actionable.
Eye on visibility. Digital solutions that provide end-to-end visibility across the enterprise provide even greater opportunities for energy savings and waste reduction. Data-driven S&OP, for example, allows companies to improve productivity and minimize their carbon footprint by modeling and following data-driven ideal inventory levels. They can ensure their purchases align current production capabilities with projected sales, helping to reduce excess product and avoid shortages. Industry 4.0 technologies can also optimize transportation routes, and even shift product mixes to prioritize sustainable products to support sustainability objectives across the enterprise.
Industry 4.0 solutions that test a variety of scenarios to optimize the planning, scheduling, and monitoring of the whole supply chain—from distribution to production to transportation—are becoming must-haves in the supply chain management toolkit. What-if analyses allow organizations to change parameters and create different simulated scenarios. The effects of a change on production or distribution can be calculated immediately, allowing the company to determine the best course of action for each potential scenario. Cloud-based APS solutions offer even more flexibility and accessibility across the enterprise.
To best support sustainable enterprise operations, Gartner recommends identifying and prioritizing technology investments that can further the initiatives that are most material to the organization’s sustainability strategy.
Sustainability has become increasingly critical for organizations to remain relevant and competitive in today’s world. A recent survey from Gartner, for example, says 86% of business leaders see sustainability as an investment which protects their organization from disruption. Additionally, 83% said sustainability program activities directly created both short- and long-term value for their organization, and 80% indicated that sustainability helped their organization optimize and reduce costs.
A solid ESG strategy, coupled with Industry 4.0 digital solutions, may be the answer for companies that want to grow…and do the right thing at the same time.
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