Sustainable Manufacturing: Do the Opportunities Outweigh the Challenges?

Supply chain resilience is the top business priority for manufacturing companies in 2021. This finding is no surprise as investors have been putting more effort into implementing sustainability programs. Kemira’s Senior Vice President of Global Supply Chain, Jori Fabricius, states that “no company today can say that sustainability does not have a role in their business strategy.”  

There is pressure on the manufacturing industry to ramp up sustainability efforts not just from an environmental standpoint, but in terms of readiness and continuity. This article provides an overview of the opportunities and challenges in four key areas related to sustainability — green manufacturing, digitalization and technology, smart factories and talent management.

   

Green Manufacturing  

 

According to Fictiv’s 2021 State of Manufacturing Report, 40% of respondents are increasing investments in sustainable manufacturing to reduce carbon emissions and slow down future environmental degradation. The spotlight is on companies with textile-based products, where the environment bears the brunt of unsold inventory. Here’s an alarming statistic: 20% of the 100 billion garments produced annually are buried, shredded, or incinerated.  

Fortunately, companies like Vestre want to prove that sustainability is not only necessary but profitable. 

“It is possible to operate a profitable manufacturing firm in Scandinavia. It is possible to build a business based on longevity and sustainability. It is possible to self-generate sufficient solar power for all operations. It is possible to phase out materials that are harmful to the environment.”  

 

Opportunities:

• Lean manufacturing is the gateway to zero-waste operations, using AI and IoT to transform green considerations into lean initiatives. For example, the Saturn Kanban implementation saved General Motors 17 tons of air emissions and eliminated 258 tons of solid waste per year.  
• On-demand manufacturing makes supply chains shorter and more efficient by eliminating unnecessary production and reducing harmful waste. Also known as cloud manufacturing, the market is predicted to reach $112 billion by 2024.  
• Circular economy frameworks extend the lifecycle of products and can be applied to every stage of the value chain. IKEA leverages AI and data analytics to identify the best locations for returned items so that they can be recycled and sold instead of ending up in a landfill.  

Challenges:

• Hurdles in traceability and transparency throughout the supply chain, as well as different definitions of sustainability across cultures, can jeopardize sustainability efforts. Organizations need to communicate their sustainability goals with suppliers and partners alike.  
• Lack of education among consumers on the environmental or social consequences of their purchases can render sustainable efforts useless. 
• Missing infrastructure stands in the way of sustainable efforts. Replacing an entire supply chain is a mammoth task and does not happen overnight. For example, shifting from oil-based materials to bio-based ones. 
• Sustainability is a costly investment. Therefore, leaders must implement change management carefully, considering regulations and investors’ needs.  

   

Digitalization and Tech Investments  

 

A study by IBM and The Manufacturer states that 67% of manufacturers have accelerated digital investments due to COVID-19. Digitalized processes provide real-time information and relevant metrics to help manufacturers with decision-making. Smart tech adoption has been delivering strong results in terms of cost savings, waste reduction and productivity. The top five technologies according to manufacturers are cybersecurity, advanced data analytics, automation, IIoT and AI.  

 

Smart Factories  

Smart factories are the heart of smart and sustainable manufacturing. No smart factory is alike as the combination of technologies differs by manufacturing approaches and industry. Therefore, smart factories are hyper-flexible, self-adapting and scalable manufacturing entities.  

Examples of notable smart factories are HP’s Smart Manufacturing Application and Research Centre (Smarc) in Singapore and the U.S’ Clean Energy Smart Manufacturing Innovation Institute (CESMII). Both factories are fortified with technologies such as 3D printing, robotics and analytics to develop new solutions and standardize processes across a global network of operations.

 

Opportunities:

• End-to-end operations visibility allows traceability of products from manufacturing to delivery. This also allows for real-time and remote asset monitoring.  
• Machinery utilization management with maintenance predictability reduces downtime. Equipment and products can be tested for malfunction and quality control. This results in fewer errors and human intervention for machine repair.  
• More efficient planning for consumer demand with accurate material flow and assembly line processes made possible with machine-driven data collection.  
• Safety and optimization of working environments are improved with robotics and remote tasking. Automated processes allow operations to continue despite workforce disruption during unprecedented events like COVID-19.

Challenges:

• Manufacturing is struggling to adopt smart technologies within the supply chain. The top five barriers that stand in the way are time and resources, securing funding, company culture, implementation and finding the right technologies.
• In terms of data collection and analytics, manufacturers are still working on finding cost-efficient options that fit their organizations.
• Factories that use digital twins as part of their existing processes have to mitigate challenges in the five natural laws of digitalization —  people, lean methods, master data, connectivity and open ecosystems.  

 

“These are the five challenges that you have to master before you can even take the next big leap with AI. Without that, even a digital twin is useless. If there is no basis for this, then the digital twin is lost.” — Johann Hoffman, founder of ValueFactoring® at MR Maschinenfabrik Reinhausen GmbH.  

   

Talent Management

 

The manufacturing industry has been majorly affected in the last 18 months and work arrangements are unlikely to return to what it was before. According to Deloitte’s 2021 Manufacturing Industry Outlook, manufacturers are finding ways to reshape the workforce and their tasks to manage disruption and uncertainty. An agile and skilled workforce is a key element of a sustainable manufacturing organization.  

 

Opportunities:

• Manufacturers can develop a talent ecosystem to incorporate digital capabilities in the workforce. A talent ecosystem allows collaboration with external partners to build stronger talent pipelines for manufacturing. For example, a partnership between a manufacturer and a technical school with train-to-hire programs and role-specific training. 41% of manufacturers have already started forming new relationships to develop robust talent ecosystems.
• Retraining and upskilling programs for existing employees to fill ‘middle skill’ roles that demand expertise in robots, cobots and other forms of automation. These programs will help manufactures reduce furloughs and increase employee retention and engagement. 

Challenges:

• Unwillingness to change may be one of the pitfalls for traditional manufacturing companies. From the factory floor to top-level management, the adoption of new skills and their importance must be addressed. 28% of manufacturing executives state that building new skills to match evolving work environments is one of their biggest challenges.  
• The number of specialized nonstandard roles will increase as in tandem with the organization’s digital capabilities. These roles will require advanced flexibility and problem-solving skills. Manufacturers are struggling to fill these roles, as evidenced by the average monthly job postings of 400,000 in the U.S. alone.  

 

Do the opportunities of sustainable manufacturing outweigh the challenges?

 

The answer is a hard yes. Supply chains are still reeling from the impacts of the pandemic and face new hurdles every day. Sustainable manufacturing is a viable solution for resilience and readiness, offering a much-needed ray of hope to manufacturers around the globe.