How can manufacturers meet growing sustainability demands without compromising manufacturing performance, quality, and availability? How does a data-driven, systematic approach leveraging the digital thread in PLM allow them to operationalize sustainability to meet ESG demands?
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Table of Contents
- Take a Systemic Approach
- 1) Develop Sustainability Requirements
- 2) Focus on Product Sustainability
- 3) Focus on Manufacturing Sustainability
- 4) Focus on Service and Operational Sustainability
- 5) Monitor, Track, and Report Sustainability Progress
- Conclusions / Call to Action
- Acknowledgments
It’s Time to Operationalize Sustainability
Sustainability Dominates Business Strategies
Sustainability is experiencing increased urgency in corporate strategies. Driven by regulation and customer demand, among other drivers, it is rapidly moving from a topic of discussion to a business imperative for manufacturers. Our 2022 survey on executive strategies saw the biggest inflection toward environmental, sustainability, and governance (ESG) action that we’ve seen. The percentage of companies that view environmental sustainability and corporate social responsibility as critical to long-term business success has grown by double digits.
Take a Systemic Approach
Put Sustainability Strategy into Action
Strategy without action doesn’t create results, however, and putting sustainability goals into action is a big challenge for manufacturers today. Manufacturers have difficulty approaching it because the problem is multi-faceted and they struggle to define their priorities. Should they focus on their own sustainability? Their suppliers’ ESG performance? The contents of their products? Or the impact their products have in use by customers? Then where should they start? Beyond defining goals, how will they support and measure the progress of their initiatives?
Manufacturers need to address these questions in a systematic way and make hard tradeoffs to improve their sustainability – and their business. They need to take a systematic, data-driven approach to achieve their goals, leveraging and extending the data in the digital thread to operationalize sustainability.
Focus Sustainability Efforts
Sustainability is a complex topic. For example, greenhouse gas (GHG) emissions alone are typically broken down into three different “scopes” based on their source. And that’s only one aspect of sustainability.
“CO2 is one thing, but not the only thing. We have a push for more circularity, how we get raw materials from the supply chain, and how to ensure the steel we get is sustainable.” – Technical Director, Fluid Transfer Systems Manufacturer.
In a similar way to the GHG scopes, there are many different facets to how manufacturers can improve their sustainability. They could focus on one or a combination of:
- Their direct business (buildings, vehicles, etc.)
- The makeup / contents of their products including materials and the impact of their supply chain
- Their production, including energy, water, waste, consumables
- The impact of customers / users / operators using the product and how it affects their ESG goals
They could focus on anything from green products, to energy transition, to supporting circularity through new business models like product as a service (PaaS). There is no lack of ideas or opportunities. With so many options, where should they start? There are often complex, confusing, and sometimes contradictory ideas and demands from multiple angles. Each company is unique and requires flexibility.
Jeff Stroh, Sr. Director Digital & Information Systems Management for McDermott International, explained the rationale for his business. “We are in a very carbon-intensive industry. We did a study of a liquid natural gas (LNG) facility on scopes 1,2, and 3. We found that the biggest impact we can have, even though we can do a lot different things, is in the first year our customer operates the plant.”
That gives them a focus area to improve that will make a tangible difference.
Take a Systems View
First, manufacturers need to instill a company culture that rewards sustainability. Then, it can take a systems view to navigate the complexity, interrelationships, and tradeoffs required to make meaningful sustainability improvements. They must take into account all of the demands they face, both internal and external, and identify where they can couple doing the right thing with tangible business benefits like cost reduction. At that point, they can set requirements and goals for each. With that, they can take a holistic view to understand how potential actions will impact the targets and other implications they may have across the business so they can evaluate tradeoffs.
Then, companies must monitor and track the plans across the business to fulfill the requirements and achieve their sustainability goals. This eBook shares five different ways manufacturers can improve ESG by taking a systems engineering approach.
Conclusions / Call to Action
Get Started
Sustainability is being driven by customers and regulations and is quickly becoming a high priority in corporate agendas. And, it is just good business.
According to Jeff Stroh of McDermott, “ESG is increasingly becoming a pre-requisite for bid eligibility, with more customers screening contractors such as McDermott for ESG criteria.”
Manufacturers need to develop a culture that values sustainability across the enterprise. Then, they should take a holistic, systems approach, setting specific sustainability goals, breaking their strategic plans down into achievable systems requirements, and defining associated measurements and responsibilities.
Support the Effort
Driving sustainability improvements requires a systems-level approach. It requires manufacturers to move from a document-driven to a data-driven approach, leveraging robust digital threads and digital twins that incorporate data from a variety of sources. The data gathering, collaboration, and decision-making tools to drive new levels of sustainability – whether they focus on products, manufacturing, or operations – must be both comprehensive and agile. There is no “killer app” for sustainability, it requires an integrated ecosystem of collaborators, internal data, external databases, enterprise solutions, and tools throughout the product lifecycle. For example, solutions like LCA can be helpful, but they are often employed too late.
Leverage PLM for Sustainability
Data is the primary foundation for sustainability. Data must be digital, accessible, unified, and centralized. Manufacturers must know their business goals and their product, including cohesive, trusted digital threads and digital twins by variant and configuration. This information must be put into the hands of designers and other decision-makers early to provide decision support, support simulation, and manage tradeoffs so designers can understand the impacts of their decisions at local and holistic levels.
It’s time to take a systematic, data-driven approach and operationalize sustainability to drive strategic ESG improvements. Although there is no single solution for sustainability, the right PLM solution is essential to support this approach. PLM provides crucial product data and integration with design tools where decisions are made. It allows companies to optimize, validate, implement, and trace sustainability decisions using core systems engineering, requirements management, lifecycle management, change control, supplier collaboration, and configuration management capabilities. The PLM solution will need to be open and flexible, however, to go beyond these core capabilities to manage new sustainability data and ESG-related processes and reporting. An open, flexible PLM solution, along with the right company culture and strategy, can help manufacturers reach their sustainability objectives and build a foundation for future improvements.
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