Global businesses, leaders, and consumers are all ready to address the global sustainability challenge. As humanity rallies behind environmentalism and continues to demand more green practices, companies that don’t get on board will risk falling behind.
One sector in particular that has a massive impact on sustainability is manufacturing. Because the field is so broad, its practices have widespread implications.
Manufacturing as an industry has traditionally struggled with environmentalism. In fact, the sector as a whole produces around $8 trillion of waste per year – due to factors such as defects, quality control, transportation, overproduction, and more. What’s further, the move from a linear to a circular supply chain is also a key area of impact for 68% of organizations, but only 10% are ready to implement it.
What this signifies is that the entire industry is weighed down by production challenges, and this goes far beyond individual production lines. More broadly, this sector must consider how it can reduce carbon emissions, and manufacturers should be asking themselves ‘how can we truly leverage the most natural practices to reduce our CO2 impact?’
The events of recent years have produced a new paradigm and set of priorities for supply chain manufacturing, with more than 26% of leaders identifying a sustainable supply chain as their key priority area.
Manufacturing waste reduction is a massive undertaking that will require collaboration and prioritization, but it is crucial for promoting a sustainable future and should be high on the agenda of manufacturers – and several challenges remain.
In many industries, when you are looking to understand KPIs and performance, there is typically a standard of measurement. Consider the IEEE Standards Association, which enables standards development across industries – outlining measurements for everything from Ethernet to Information Technology.
The manufacturing industry lacks a consistent measurement for sustainable characteristics. There doesn’t exist a frame of reference to measure:
- Is Manufacturer A sustainable?
- Why or why not?
- What is Manufacturer A’s sustainability grade or measurement?
- How far is Manufacturer A from being qualified as a ‘sustainable manufacturer’?
When there is a lack of standardization for measuring certain qualities, there also lacks an incentive to prioritize them, often meaning they are pushed to the wayside.
Cost Constraints Block Progress
Another challenge facing this industry is the significant investment required to build manufacturing facilities. Fabrication plants and production facilities cost millions, even billions to construct, and they are expected to last a significant amount of time.
Many legacy manufacturers are operating in older facilities, which are not green-friendly. Consider a legacy manufacturer who invested $20 million into building their factory 10 years ago. This manufacturing company wants to outline new sustainability goals in 2023, only to discover that these goals will require another $10 or $20 million in capital investment between upgrades to equipment, transportation, processing, and more. While the desire of the manufacturer may be to become more eco-friendly, this level of investment may not be a viable option.
This challenge doesn’t exist for modern organizations looking to build a new factory, because they can bake in these options from day one. But for an existing setup owned by legacy manufacturers, it is a significant challenge to overcome.
Why Sustainability Matters
Finally, organizational culture and industry mindset are perhaps the most underrated challenges standing in the way of sustainable manufacturing. Achieving consensus across the organization, instilling a sustainability mindset in leadership, and aligning an entire organization to that priority is a difficult task – and it spreads industry-wide.
The support needed for this level of organizational (and industry) change management is significant but essential. This also includes educating employees and clients on why sustainability is important, why it should be prioritized, and how those changes can be achieved. There is a need to build awareness across this sector of how significantly this industry is impacting our global environment, and why change is necessary.
Overcoming the Challenges
While this may seem like many challenges to overcome, it also shows the exciting opportunity that the manufacturing industry has been presented with to drive true global change – and it has already started.
Many manufacturers have begun taking advantage of new technologies and heavily investing in research and development (R&D). For example, many have started using artificial intelligence and machine learning to identify waste potentials up front – increasing quality controls and limiting waste. Others have begun to investigate ways to achieve the same results by changing their processes to be more efficient and sustainable.
Take automotive for example – it has become a widespread initiative to reduce gas-powered vehicle emissions. This has ushered in a massive electrification movement, with OEMs taking stock of where their materials are coming from, how the materials are manufactured, and where suppliers are procuring them from. This shift from a product mindset to a service mindset, paired with holding the suppliers accountable for the raw materials, shows an increased level of transparency – and that sustainability is being taken seriously as a priority.
From a manufacturing industry perspective, the opportunity for sustainability impact is significant, with many organizations realizing the tools and technologies available to help them on that journey. As a case in point, there are direct and inherent benefits of sustainability for enhancing the efficiency and continuous optimization of the supply chain through data insights-based advance planning.
The shift of environmental protection from an afterthought to an integral growth opportunity and business strategy shows that despite many business challenges ahead, the industry is ready for widespread change.