Improving manufacturing sustainability
25 July 2013
Sustainability seems to have become a buzzword in the industry lately, as Iconics CEO and president Russ Agrusa describes it: “It seems to be the ‘hot topic’, therefore manufacturers have adopted a ‘we should do it too’ type of attitude.” While many companies already have some sort of sustainability programme in place, often this is a hodge-podge of different elements that don’t add up to a coherent strategy.
Andrew Fanara, OSIsoft’s sustainability strategist defines sustainability as the philosophy, management practices and tactics that maximise the value that the organisation can create over the long term. “It’s important for manufacturers to take that longer-term perspective to create sustainable business value,” he says. “They must also ensure that their sustainability strategy is synonymous with their business strategy.”
While sustainability is an industry-wide imperative that affects and is affected by how manufacturers run their business, there are a number of key factors driving companies’ strategies and programmes. Sustainable manufacturing is top of mind for manufacturers, driven by a variety of factors. “Consumers typically put pressure on manufacturers to become sustainable, with the perception of being green critical to the public opinion of a company,” comments Asheen Phansey, environmental sustainability manager for Dassault Systèmes’ Sustainable Innovation Lab. “They want to know what exactly is in a product, how it was manufactured, and whether these products and processes are sustainable.”
“Energy is being considered a resource like water or any raw material,” adds Alexander Pinkham, Genesis64 product manager at Iconics. “If a can of Coca Cola can be manufactured using a lot less energy in India than in the UK, for example, people want to know why.”
As Pinkham mentions, even greater emphasis is being put on finite global resources, raw materials and energy. With the world’s population predicted to reach nine billion by 2050 (according to the UN Commission on Population and Development) and the uncertain environmental conditions, this comes as no surprise. “Subsequent to the tsunami in Japan there was a shortfall in power, which created an energy crisis in the country,” says Indranil Sircar, worldwide industry technology strategist at Microsoft. “As a result energy management became crucial, with public and private organisations coming together to create smart cities and communities. This extended to the home, with the idea of smart appliances and vehicles, as well as factories, government organisations, utility companies and medical equipment.”
This increasing environmental awareness among consumers is adding pressure on manufacturers to improve not only their only own sustainability, but to ensure that their whole supply chain is engaging in sustainable practices. Eduard Marfa, director EMEA marketing – Teamcenter, Siemens PLM Software, explains: “Manufacturers must have complete visibility of each component that goes into their product, whether it be a raw material, a component they have manufactured themselves, or a product from a supplier or vendor. As well as ensuring the product is produced in a sustainable and compliant way along the entire value chain, the company culture and practices of suppliers and vendors are important here.”
“If manufacturers fail to connect and communicate with their supply chain on sustainability issues, they will be introducing risk into their business,” adds Fanara.
Despite Fanara’s warning, manufacturers are still often overlooking the sustainability practices of companies, as Phansey explains: “We asked a stainless steel clip manufacturer what grade of stainless steel they use. When they asked the supplier they found out they were being provided with the cheapest grade. Not keeping track of what suppliers were sending them was creating risk in the supply chain, as the strength and properties of the metal varied. Manufacturers need to target risk by creating an understanding the environmental impact of all the materials used in the supply chain.”
Another way in which the lack of awareness of the practices of companies in the supply chain can hurt manufacturers is regulatory compliance. According to AMR Research, US$80 billion was spent on compliance programmes between 2005 and 2010. Marfa says: “Manufacturers must ensure they are compliant with environmental laws, which differ according to country and industry. In the electronic and semiconductor business, for example, there are restrictions on the use and disposal of hazardous substances. ”
This is the case for one of Siemens PLM Software’s customers Seagate, a leading manufacturer of hard disk drives. Cherryl McDougall, executive director of Environmental Health and Safety and Global Citizenship at Seagate, explains: “We are able to prove to our partners and customers that we care about people and the environment and we are socially responsible. What we say to our customers is, ‘Here’s everything that we use in our products from start to finish.’ We made a conscious decision to collect data on every piece, every material that’s in our product.”
Manufacturers must also stay up to date about how changes in their business may affect regulatory compliance. Agrusa explains: “When biotechnology company Genentech was acquired by Swiss company Roche Holdings, the organisation then had to comply with the sustainability regulations set out by the Kyoto agreement, which the Swiss government had signed. The company had no previous experience of these regulations, but had to adapt quickly to ensure continued compliance.”
With the variety of drivers including consumer expectations and regulations, and the importance of cutting costs and improving customer service, sustainability is now becoming a major competitive differentiator. “A focus on sustainability will not only positively impact a company’s risk management, but also its strategic planning processes,” says Phil Duff, CEO at Syspro. “Governance, strategy, risk, performance and sustainability have become intrinsically linked, and directors should ensure that the company’s strategy accounts for sustainability issues. Directors have an accountability to shareholders and an obligation to all stakeholders to ensure that the company’s resources are used to ensure the continuing viability of the company.”
“While pressure from regulators, the board and shareholders and corporate image, have all driven sustainability initiatives, manufacturers are now recognising the opportunity for return on investment,” adds Iconics’ Pinkham.
This is again the case for Seagate. “Our efforts regarding environmental care represent a competitive differentiator because in this industry compliance with new regulations can mean first to qualify, and first into a major market,” says Brian Martin, senior director, Product Environmental Compliance at Seagate.
Major reasons why a sustainability strategy can provide competitive differentiation include improved operational efficiency and cost savings. Incorporating sustainability into a business can boost the bottom line for manufacturers by enabling them to deliver on lean manufacturing initiatives. “By maximising energy usage, minimising waste and using the right equipment or right material (and the right amount) for the right process, manufacturers can work in a more sustainable way,” says Hadrien Szigeti, strategic development leader for DELMIA at Dassault Systèmes. “Running the production line efficiently, improving shipping processes and cutting down on travel by implementing collaboration solutions can also help.”
And, according to OSIsoft’s Fanara, many companies’ sustainability strategies have evolved from being solely focused on green manufacturing to looking at how to make their workforce more productive. “Essential to that is acquiring the knowledge to build an infrastructure for data and business information,” says Fanara. “Businesses also need to develop skills in their employees that will be pre-requisite for the modern, sustainable workplace. They need to be experts in the language of data and be given the tools to make them more productive and data savvy. In addition, sustainable business practices are key in attracting and retaining talent.”
With a focus on data and business process improvements, manufacturers are able to create a greater understanding of what is happening across the enterprise to improve operational decisions and activities in order to increase overall performance.
Fanara explains: “Manufacturers need to create a platform for innovation that allows them to reengineer their business to be more competitive and deal with the uncertainties related to environmental challenges. Initiating a sustainable business model can decrease risk, use less resource and remove regulatory uncertainty. Having an infrastructure for data sharing is a key supporting mechanism in enabling external and internal data sharing in a secure way and allowing manufacturers to pursue compliance initiatives in secure and less labour intensive way. Caterpillar is using the OSIsoft PI system to capture information streams coming from their assets including data such as oil level, tyre pressure and driving characteristics of the driver. This information can be shared securely with suppliers and vendors globally to help them operate more efficiently and sustainably.”
“The right people, assets, confidence in their processes and insight into information is key for manufacturers,” adds Sircar. “This data-driven performance can help companies build forward-looking practices, attitudes and behaviours that embed continuous innovation. Improved processes and management of information provides manufacturers with the ability to execute on requests from regulators, which enables transparency. And new technology enables operational improvements around business analytics, productivity, collaboration and business process management.”
Technology – such as Dassault Systèmes’ DELMIA digital manufacturing solution – can replace the paper-based manual processes that hinder manufacturers’ operational efficiency. Dassault Systèmes’ Szigeti explains why digitising manufacturing processes can help: “By creating a digital continuity between designers, engineers and the factory floors, manufacturers gain a real-time view of what is going on and can introduce changes quickly. They can also check where resources are being over consumed or under consumed (people, equipment, raw material and energy) in order to balance the production line and make better use of resources, as well as cutting costs.”
Predictive analytics is another area that can help manufacturers drive efficiency and sustainability. “Manufacturers can use a predictive analytics model to know in advance where an error may occur,” adds Sircar. “For example, in an assembly line, the supervisor would be able to take action to prevent any stoppages in production and react faster to stop the problem by knowing when it might happen and who will be around to fix the issue. This will optimise process efficiency by ensuring the right resources are in the right place at the right time.”
This is where the Microsoft stack comes into play, as Sircar explains: “SQL Server 2012 Predictive Analytics provides a data mining solution, which enables manufacturers to gain new insights and form a reliable basis for accurate forecasting. Meanwhile, Windows 8 tablets, Windows Embedded ruggedised devices and Windows Phone 8 handsets enable anytime, anywhere access to information without compromising on security or user experience. Microsoft’s social network tools such as Yammer and SharePoint enable better communication and collaboration, both internally, and across the entire supply chain Then through Windows Azure, the data can be delivered to anywhere in a secure and real-time manner. The cloud can also reduce energy consumption by enabling data centre consolidation and running fewer servers and IT systems on premise. Added to that, we have the strength and breadth of solutions from our partner ecosystem.”
One example where Microsoft and partner solutions have come together to create real sustainability on a large scale is at the Microsoft campus in Redmond, Washington in the US. Microsoft initiated a project – known as 88 acres in reference to the land the company chose for its headquarters – to create a smart city within its campus. Instead of spending US $60 million to connect its 30,000 sensor-enabled pieces of equipment in its buildings, Microsoft instead implemented a smart network of intelligent systems that talk to each other across its buildings. The solutions, from Microsoft and partners like Iconics, analyse huge amounts of data to help reduce the company’s energy usage and save millions of dollars a year.
“The project has been so successful that we are promoting it to the entire discrete manufacturing industry,” says Iconics’ Agrusa. “With the huge streams of data, companies can find out what equipment isn’t working probably, as well as predicting when it might fail and providing recommendations of how to fix it. For example, if a company is using too much energy to manufacture a car or make a tyre, the solutions analyse where they might be able to make savings. It’s all about generating the right information to drive sustainable change in the long term.”
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