Why Digital Transformation and Sustainable Manufacturing Goals Should Be Aligned

02 May, 2023

Digital technologies should be viewed as the key to accelerating sustainable manufacturing progress rather than as two opposing forces.

Digital and sustainable transformation have become increasingly critical for companies to remain relevant and competitive.

Digital transformation has dominated boardroom discussions for the past decade. Today, most organisations either have a digital strategy or are working on one. Many were compelled to act because of the pandemic, which saw companies rapidly accelerate their digital investments.

Sustainable transformation has taken a broadly similar path. Sustainability, like technology adoption, isn’t a new concept, but it has swiftly moved from a peripheral concern to a primary focus point. Drivers of this transition include a greater sense of environmental responsibility, new reporting rules and shifting consumer attitudes.

Many see 2018 as being a pandemic-like catalyst for sustainable intent. That year saw Greta Thunberg’s rise to prominence, a strong public reaction to the Blue Planet II documentary series, and the Collins Dictionary naming single-use as its word of the year. 

More significant was the release that year of the Intergovernmental Panel on Climate Change (IPPC) Special Report on Global Warming of 1.5°C. A report that laid bare the environmental shocks and knock-on economic impact of temperatures rising 1.5°C above pre-industrial levels.

With sustainability and digital climbing business agendas, companies are having to undergo two major transformations in parallel. Studies show that despite sustainability and technology now being regularly discussed at board level, relatively few companies are addressing the two in tandem. 

More worrying is less than half of digital leaders (CIO, CTOs, Heads of IT, etc.) think technology has a big part to play in improving sustainability, and a quarter believe it has little to no role to play at all (2022 Digital Leadership Report, Nash Squared).  

By pursuing the two as separate initiatives, companies are missing out on the substantial benefits created by combining them – benefits that can help accelerate and scale progress from the outset.

Data-driven manufacturing sustainability

Advances in digitalisation, connectivity and computing power mean manufacturers have access to more information than ever. A typical factory creates around 1TB (1,000GB) of production data every day. However, less than 1% is being analysed and acted upon. 

Recognising this, manufacturing companies are moving from simply collecting data to harnessing it to improve operational and financial performance. This shift is the foundation of almost all digital transformation strategies.

Additionally, rising investments in digital tools like data analytics, artificial intelligence, cloud computing and virtual models are helping companies increase efficiencies, lower costs and reduce energy consumption. 

Other positive outcomes include streamlined and simplified workflows, reduced stockholding, optimised material and resource use, improved equipment uptime and longevity and more accurate demand planning.  

While these outcomes all help improve environmental performance, this alone won’t see organisations achieving their ambitious manufacturing sustainability goals. For that, manufacturers must place data and digital tools at the core of their sustainable transformation strategies.

Unprecedented access to real-time and historic data enables companies to better measure, analyse and understand their environmental impact, establish benchmarks, track progress against realistic goals and guide future action. 

Insights like these allow organisations to contextualise, prioritise, plan, optimise, and evidence sustainable practices. It also ensures environmental considerations are a guiding principle of all decision-making, not simply an afterthought.

Yet, the full power of a data-driven approach to sustainability is only now being realised as organisations start to assess their environmental impact beyond the factory gate.

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Sustainable supply chain management

Tackling supply chain carbon emissions is the most taxing sustainability challenge companies face. What is referred to as Scope 3 emissions include all those released through a given company’s indirect upstream and downstream activities. These range from material extraction and distribution of finished goods to the use of sold products and waste disposal. 

Scope 3 emissions typically account for more than 70% of an organisation’s carbon footprint, so any manufacturing company serious about sustainability needs to be addressing them. Yet, their breadth and scope make them difficult to calculate and reduce. The complexity and diversity of global industrial supply chains make this even trickier for manufacturers to do.

Leading companies measuring, reporting, and reducing their Scope 3 emissions, including AstraZeneca, Ford, General Mills, Ikea and Unilever, all highlight the integral role of data and digital technologies.

Data gathering and analysis help build an accurate and complete picture of carbon emissions for manufacturers by making previously hidden data visible, breaking down silos across the value chain, consolidating information, and streamlining and simplifying processes.

  • AstraZeneca is working closely with its key suppliers to support the progression to a low-carbon economy. The development of a common data platform enables suppliers to not only submit data for AstraZeneca’s Scope 3 programme but it can also be used with their other customers. This data is also used by the biopharmaceutical giant to create bespoke sustainability engagement plans for suppliers and to share best practices.
  • Bridgestone has developed an end-to-end data platform named CAPPA (Collaborative Advanced Powerful Platform for Analytics) that is used to gain key insights into its operations and informed decisions on current and future strategies. By serving as a single point of truth for decision-making, CAPPA is delivering improvements in a host of areas, from demand forecasting and energy consumption to carbon reporting. 
  • BP is combining digital twins of its complex global assets with artificial intelligence to identify opportunities for optimisation and carbon reduction. Technologies such as these are the only way the organisation can manage the more than 50 billion data points it receives weekly from its operating assets globally. Using digital twins to interrogate past data and predict future data, BP estimates it has the opportunity to reduce emissions by around 500,000 tonnes of CO²e annually. 

But it’s not only data being unified. Digitally connecting assets, workers, suppliers, customers and other key partners provides a clearer end-to-end view of supply chains and what happens within them. It also improves collaboration, communication, accountability and reporting. 

  • L’Oréal oversees 35 international brands and employs more than 85,000 people. Staying at the leading edge of beauty trends requires all those individuals to share their unique perspectives and insights across time zones and business areas. Doing so in the era of hybrid work means providing employees with the platforms and tools to communicate and share knowledge, from anywhere. 

Furthermore, the combination of these tools with cutting-edge augmented technology can also assist companies in meeting their environmental commitments. L’Oréal, for example, is using Microsoft HoloLens with Microsoft Teams to remotely inspect packaging components and troubleshoot issues on the spot. “It’s clear that avoiding travel to the other side of the planet for a two-hour meeting is an amazing use of technology that will help us meet our sustainability goals,” says Martin Motte, Global Quality, Environment, and Health and Safety Director at L’Oréal.  

Accelerating progress of sustainable manufacturing

Digital and sustainable transformation overlap in many areas, including business model innovation, new product development, people and skills, finance and investment terms, continuous improvement, operational efficiencies and future growth. 

Part of the UK’s commitment to bring all greenhouse gas emissions to net zero by 2050, compared to 1990 levels, includes a reduction of at least two-thirds by 2030. That means manufacturers have less than seven years to deliver greater output using fewer resources while producing significantly less harmful emissions.

Successfully meeting these targets requires organisations to align their digital and sustainability objectives, leverage the potential of technology and fully adopt a data-driven culture. In return, manufacturing organisations will become more sustainable – not just in terms of their environmental impact but also more resilient, relevant, productive and profitable with improved staff retention and recruitment.

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