sustainability, sustainable practices, ERP, cloud ERP

Sustainable manufacturing refers to the ability to manage manufacturing operations “in an environmentally and socially responsible manner,” according to the Organization for Economic Cooperation and Development. If you’re reading this blog in 2021, you know about the increasing importance of sustainability and reduced environmental impact with fires in the western US, excessive flooding in Europe and a recent Canadian heat wave. And, whether you believe these recent events to be the result of global warming – or not – manufacturers are expanding their sustainability and environmental efforts. Consider a few examples:

  • In the beginning of 2021, Apple announced executive bonus modifications based on environmental values.
  • In 2020, Coca-Cola achieved a goal to reduce relative carbon emissions by 25% by 2020, against a 2010 baseline, and is now working on further reductions.
  • Ford highlighted a 40% reduction in their carbon footprint over the past decade through improved energy efficiency and conservation at facilities and in manufacturing processes.
  • In their 2020 sustainability report, Whirlpool announced record low levels of energy and water intensity in their plants.
  • Saint-Gobain highlighted the avoidance of over 10 million tons of virgin raw materials (sand, gypsum), in their 2020 report.  
  • In 2020, Biogen committed to transitioning to an all-electric vehicle fleet by 2025 and joined the EV100 partnership to help catalyze change.

Sustainability Objectives for Manufacturers

We will see the continued adoption of a wide range of sustainability efforts across manufacturing verticals, from automotive to food and beverage to life sciences. The sustainability trend goes beyond businesses that may have positioned themselves as “green” primarily for marketing benefits. Like the companies highlighted above, many manufacturers now have published objectives and separate sustainability reports or incorporate the information in annual reports. The benefits go beyond brand allegiance to include:

  • Improved operational efficiency with reduced waste and costs
  • Increased competitive advantages and access to new customers
  • Enhanced long-term business viability
  • Improved responsiveness to new and existing regulatory requirements

Where Does ERP Come into Play with Manufacturer Sustainability Efforts?

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 sustainable practices and efficiency. Let’s cover just three areas where ERP drives greater sustainability:

  • Responsible SourcingManufacturing ERP systems support efforts to identify responsible, sustainable sources of materials. Increasing numbers of global manufacturers have instituted objectives to boost the number of suppliers that meet defined social and environment standards. Taking Ford as an example from the companies above, Ford is working with key suppliers in China, India, Thailand and South Africa to eliminate over 4,900 metric tons of CO2 and 24 million gallons of water usage over the next three years. As companies include more sustainable sourcing efforts within their procurement and supply chain operations, ERP plays a key role in accurately analyzing, evaluating and monitoring suppliers to ensure the right choices are made to meet sustainability goals and preserve resources. 
  • Waste Reduction – Nobody likes waste, especially manufacturers. It’s a constant area of focus to eliminate waste throughout an organization and drive continuous improvement. Lean techniques have played a key role over the years to improve operational performance and save money. Many ERP systems support lean approaches to drive efficiency and reduce waste resulting in a lower carbon footprint by doing more with less. In other examples, you’ll find ERP provides the necessary insights and metrics, like OEE, to enhance production execution.
  • Supply Chain EfficiencyThe supply chain is another area with room for improvement to advance sustainability efforts. The complexity of global supply chains, lack of communication with trading partners and the rush to meet on-time delivery requirements results in unnecessary greenhouse gas emissions. Consider the effects of excess inventory and unnecessary shipments. Having comprehensive control over the movement of stock and orders helps manufacturers combine orders and reduce inefficient shipments. Practitioners know that inefficient logistics activities increase the supply chain carbon footprint and, at times, cannot be avoided. By improving supply chain collaboration and effectiveness, the number of lifetime miles material or a product travels can be reduced and CO2 emission savings achieved.

Sustainability is a topic of growing importance for customers, investors, governments and manufacturers across the globe. Ultimately, enhancing manufacturing and supply chain sustainability boosts a company’s reputation with the ethical sourcing of materials, reducing waste on the shop floor and across the organization, and showing genuine concern for the environment. And, ERP can – and does – play a strong role. Sustainability drives growth when companies commit to more sustainable practices and establish effective strategies and meaningful objectives. What is the current status of your sustainability initiatives? How would you like those initiatives to progress?

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