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What are the main factors currently restricting manufacturers in terms of sustainability and improving their green performance?
One is trying to obtain full transparency for your supply chain – having all of the data from the entire network available to you in order to manage it more effectively; and the second is achieving the correct balance between your cost and CO² emission footprint – trying to optimise the two in the best manner possible. You need to know what your focus is, reducing cost or CO², and how strict you are in that respect?
When choosing where to source materials from, you should consider the energy culture inherent within individual countries. For example, those who actively promote renewable or nuclear energy could significantly improve your environmental footprint.
Do changes within supply chains offer the best means for making significant changes toa company’s sustainability?
CO² emissions are particularly important because manufacturers are typically transporting parts or materials to your facility and/or distributing finished products, potentially over very long distances.
However, it’s probably also the most difficult aspect to change because you don’t have the disciplinary reach. If you have a strong, global supplier with well-established operating procedures and isn’t feeling any regulatory pressure to change, it’s quite difficult to improve their practices; especially if you aren’t the largest company.
Ideally you should form a partnership where you teach your suppliers about your sustainability targets, what you are trying to achieve and what they can do to help you; but unfortunately you can’t force them to change.
Where has this increased environmental pressure come from?
The key drivers are regulations; for example in the automotive sector there’s definitely external pressure in regards to reducing fuel consumption and emissions. There’s also a current push to reduce a vehicles weight to try and meet some of the newer, stricter guidelines.
If you look at Siemens, it has taken sustainability up as a strategic objective; they have defined a green portfolio and have embedded it successfully within the organisation. It has a dedicated sustainability office tasked with coordinating companywide improvements. By linking the office to the company’s EHS (Environment Health & Safety) Officers, energy management, manufacturing facilities, and so on, this top down approach really helps to support Siemens sustainability improvement.
Can you see more companies imitating Siemens approach?
A lot of companies are creating a sustainability plan which is central to the business and not just added as an afterthought. For this approach to work however you must have excellent leadership, clear organisational targets and effective measurement systems.
True sustainability requires a substantial amount of effort and cost, so it must be something that the whole company is committed to. Yet the benefits go beyond simply improving your public image, steps such as reducing energy consumption, using materials or tools more effectively and more efficient processes in general actually helps lower operational costs.
How can manufacturers better understand the environmental impact of their product lifecycles?
You need to have a very clear, analytic approach to create a measurable, useable system detailing your product from ‘cradle to grave’. You need to be able to understand your product in terms of raw materials to the factory, production itself and then distribution. What are the associated emissions throughout that entire process? Importantly, you also need some form of a benchmark to continually compare progress against.
Both ABB and Siemens are very good at understanding the lifecycles of their entire product ranges, but again, Siemens is leading the field. It has actually defined a clear algorithm to judge and measure the environmental contribution of an individual product’s sustainability, providing them with a translatable benchmark, which they are always striving to improve upon with each iteration.
Is it true that for a company to better embrace sustainability, first it needs to change the attitude of its workforce?
For a widespread implementation of sustainability across an organisation, it needs to be embedded within the workforce so people at every level understand what is happening and why, in order to better support the processes being put in place.
One method would be to select one area you can very quickly improve performance and introduce a sustainability pilot project; especially useful trying to motivate your entire organisation.
What performance monitoring techniques/technologies would you recommend a business use to track its progress in terms of working towards a culture of self-improvement?
There is a range of technologies and systems out there, but regardless of which one you choose to implement, the key is identifying the crucial drivers for sustainability, such as the products you manufacture and potential improvements to the fabrication processes.
Targets can really be split across the internal operations (how your business is ran), external operations (how disposable are your products and how easy are they to recycle) and the supply chain.
What do you think is next in terms of innovation in sustainability?
Product innovation is obviously a continuous process for many manufacturers, solving issues such as weight and incorporating new materials, as well as continually increased production efficiencies.
The other thing is this need for transparency across not only the supply chain, but the entire process, in order to better understand the balance between cost and CO² emissions. To this effect, I would really like to see proper reporting being brought in, such as the triple-bottom line criteria which Puma has already successfully implemented.
Currently there is no widespread standard, so a form of universal standard would be hugely beneficial, but would need to be flexible enough to adapt to different sectors. Take for example the environmental effect of the end product of agriculture compared to that of oil and gas. The standard would need to be tolerant enough to accommodate these sorts of differences, yet general enough to be applied to industry as a whole.
PA Consulting Group has recently assessed four global manufacturing companies (Siemens, GE, Alstom & ABB) as part of its second annual benchmarking study of green performance within industry. The focus group were assessed on three key areas –Product Portfolio, Strategy & Organisation and Transparency & Operational Performance.
Siemens were found to be the greenest of the sample for the second consecutive year, with ABB improving on its score from last year to take second place. GE ranked third and Alstom remained in fourth place, however both had made significant improvements to reduce the gap between both halves of the table.
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