Sustainability has become increasingly important in recent years and is now a vital component of many organizations’ social, economic and environmental efforts. As an example, look no further than Microsoft’s announcement to be carbon negative by 2030 and their commitment of $1 billion towards a climate innovation fund. Other recent examples include Mercedes-Benz’s pilot project for using blockchain to track CO2 emissions and Perrier’s program winners for developing sustainable and circular packaging solutions. While consumer products manufacturers previously led the way for sustainable manufacturing practices, a growing number of manufacturers in other sectors are treating sustainability as an important operational objective to increase global competitiveness.
The Sustainability Movement in Business and Manufacturing
The sustainability trend goes beyond niche businesses that may have positioned themselves as “green” and now includes enterprises of various sizes across multiple industries. Many manufacturers now publish separate sustainability reports or incorporate the information in their annual report including Nexteer, Tesla, Ball Corp., Whirlpool, Saint-Gobain, 3M, Comvita, Medtronic and others. The benefits go beyond brand protection and reputation including:
- Improved operational efficiency with reduced waste and costs
- Increased competitive advantages and access to new customers
- Enhanced long-term business viability
- Improved responsiveness to existing and new regulatory requirements
How Does an ERP System Support Sustainability?
Today, manufacturers view sustainability as a required corporate strategy for long-term business viability and success. And, many of these companies utilize Enterprise Resource Planning (ERP) to boost production efficiency, better coordinate demand and supply, track waste, and strive for more sustainability and effectiveness. Let’s consider just a few areas where ERP helps connect communication gaps between the plant floor, back end systems, supply chain operations and other areas to drive greater sustainability:
- Asset Management provides optimal asset maintenance to maximize asset utilization and reduce material consumption. Similar to a well-maintained car saving on fuel consumption, well-maintained plants and equipment enhance sustainability by cutting energy requirements. When adequately managed, assets last longer and therefore need to be replaced less frequently. Additionally, asset management is boosting efficiency with real-time asset monitoring that sends alerts when tolerances are exceeded to indicate a machine on the plant floor requires maintenance.
- Lean Manufacturing is a business model and approach that emphasizes the elimination of non-value added activities while producing quality products on time and with greater efficiency. Lean strategies have played a key role for manufacturers over the years as a business strategy to drive competitive advantages. While the focus is on delivering continuous improvements in cost, quality, production and delivery, significant environmental benefits often result in the areas of production efficiency and waste minimization.
- Demand Planning allows manufacturers to more accurately identify where, when, and how much future customer demands will affect the business. Improved forecasting accuracy ensures optimal supply chain performance, enhanced material consumption and reduced freight expediting costs that decrease unnecessary greenhouse gas emissions and costs to the company.
- The supply chain is another area with plenty of room for improvement where sustainability can benefit. The complexity of global supply chains, lack of communication with trading partners and the rush to meet on-time delivery requirements typically result in waste. Consider the effects of excess inventory and unnecessary shipments. Practitioners know that inefficient logistics activities increase the supply chain carbon footprint for no reason. By improving collaboration with suppliers, the number of lifetime miles material or a product travels can be reduced and CO2 emission savings can occur.
- Traceability continues to play an important role where customers and consumers are focused on product origins due to avoid fraud, recalls, environmental damage and other factors. From food and beverages to electronics and other products, there is an increasing demand for transparency across the entire value chain. Next generation ERP and advanced technologies allow manufacturers to meet this traceability demand resulting in improved operational efficiencies and reduced waste.
Sustainability is not going away and is only growing in importance for customers, investors, governments and manufacturers across the globe. So, how does your ERP support sustainability strategies today? Are you considering new and advanced technologies like IoT, machine learning, blockchain, data lakes or other technology initiatives to dynamically address changing sustainability demands? Could your organization benefit from a next generation ERP solution that positively impacts supply chain performance, forecasting accuracy, lean manufacturing concepts and other areas that influence sustainability?