Advanced Manufacturing and Supply Chains

How can we reimagine sustainability in the supply chain?

A car on the production line, illustrating the importance of a sustainable supply chain

Sustainable supply chains are vital and attainable. Image: Photo by Lenny Kuhne on Unsplash

Saar Yoskovitz
Co-Founder and Chief Executive Officer, Augury
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Advanced Manufacturing and Supply Chains

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  • The global manufacturing and supply chain is under pressure to navigate constant obstacles.
  • Efficiency and sustainability are often seen as competing interests in the supply chain, but there are ways that companies can achieve both.
  • Sustainability is not an elusive concept that competes with traditional metrics of profitability and efficiency, but one that can be measured and achieved by using what you have more intelligently.

Supply chain disruptions and inventory concerns continue to trouble governments, businesses and consumers worldwide. Even as supply chain bottlenecks begin to clear up, severe sustainability and supply problems remain due to the amount of waste traditionally produced by retail and manufacturing sectors and the increasingly stringent metrics by which they are judged by investors and consumers.

Moreover, with ongoing geopolitical contention in Europe and Asia, inflationary challenges and increased consumer spending, the manufacturing and supply chain industries are under pressure to navigate constant obstacles.

The interconnectedness of the supply chain

To find solutions, we need to look at the interconnectedness of the supply chain. Factories, for example, play a prominent role in mitigating a host of supply-chain problems and can help lower the impact of inflationary pricing by working more efficiently in several ways. Worn down and inefficient machinery, for instance, slows production, causing bottlenecks and wasting energy and materials.

Furthermore, labour costs increase as more people are brought in to address broken machinery and even more money is lost when the factory line pauses production.

Where does sustainability come in?

Often, efficiency and sustainability are seen as competing interests, but what if there was a way that companies can establish both in their manufacturing processes and support supply-chain efficiencies?

A focus on sustainability on the factory floor can reduce waste (most obviously by lowering costs and increasing yields) while alleviating pressures across the supply chain. How so? When fewer materials are needed to create a product, less mining, harvesting and sourcing of these materials is required, thus involving less processing, trucking and warehousing and minimizing potential pain points in other areas of the supply chain.

And, when machines operate efficiently while producing quality goods, there is also a chance of fewer recalls around issues in the manufacturing process. This, in turn, diminishes the inventory volume of goods travelling back through the supply chain, alleviating another host of problems. These benefits compound; improvements in quality issues boost sustainability and customer service scores.

Running manufacturing assets better and more efficiently can help organizations realize their sustainability goals and serve customers better, while easing supply-chain pressures ahead of the holiday bloat.

To do so, we must consider machine and process health through a predictive lens.

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How is the World Economic Forum ensuring sustainable global markets?

Machine health

There are three key components to machine health: mechanical problems, design problems and operational problems. Every industrial leader must understand how the factory level is performing across these three measurements to ensure production runs smoothly.

Monitoring for mechanical problems includes monitoring temperature, vibration and magnetic data to identify changes ahead of complete machine failure.

Design problems come to the forefront when individual machines undergo extra amounts of stress due to an inefficiently designed production facility. By getting ahead of these issues, facilities can avoid unplanned downtime, delays, bottlenecks and inconsistent product quality, tying back to the efficiencies detailed above.

Operational problems come into play with the human element. Even with a perfectly designed machine, people make modifications and unknowingly create additional issues.

Continuously monitoring machine health can curtail unplanned downtime and boost productivity to new heights that will be felt throughout the supply chain. According to the National Institute of Standards and Technology, running assets more efficiently can also save US manufacturers $3.3 billion in waste caused by downtime, reduce energy consumption by 12% to 15% and avoid up to 6,500 workplace accidents annually.

But machine health is only half of the equation for solving industry concerns. Process health offers a look into the interconnected inputs and elements of a full production system and other contributing factors, which, when misaligned, become part of the industry’s sustainability problems.

Have you read?

Process health

Manufacturing and supply chain leaders are aware of profits left on the table, but that does not have to be an accepted standard. There is a critical measurement that can combat inefficiencies and losses. Enter process health.

According to a report by ARC Strategies, there is an estimated $1 trillion lost due to unplanned downtime in the process industries. To bridge the trillion-dollar gap, organizations can unlock productivity by honing their machine health and optimizing production by 40% and improving energy use by up to 30%. Those are significant markers.

Process health helps leadership prevent losses from occurring in the future by analysing data at every step and level of production. It can also identify optimal process settings and establish connections between dynamic and complex variables. It is a no-brainer for industry leaders who want to see significant improvements in quality, throughput, energy and reductions in CO2 emissions and waste.

Big picture vision

The supply chain is a complex structure that is the backbone of our economy. While there may not be a one-size-fits-all solution to address the dilemmas of late, repositioning our understanding of the interconnectedness – starting at the factory floor – can illuminate opportunities that may not have been as apparent.

Continuously monitoring machine and process health can reveal untapped potential. In fact, it is estimated that 10% to 20% of manufacturing capacity is shadow capacity or production capabilities that exist within current manufacturing lines, but are going unused. Embracing shadow capacity has positive implications for onshoring, productivity and efficiency.

As supply chain obstacles continue amid ongoing geopolitical turmoil, fluctuations in consumer spending and a possible recession, it is high time we rethink the relationship between sustainability, manufacturing and the supply chain. Sustainability is no longer an elusive concept that competes with traditional metrics of profitability and efficiency, but one that can be measured and achieved by using what you have far more intelligently.

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The views expressed in this article are those of the author alone and not the World Economic Forum.

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