A recent study by McKinsey revealed that two-thirds of an average company’s environmental, social, and governance (ESG) footprint lies with suppliers. For procurement leaders, this finding indicates marked potential for making an environmental impact. For manufacturing facilities, the pressure is on to become the essential link to a more sustainable value chain.
What Forces Are Driving The Demand For Sustainability In Manufacturing?
- Societal obligations — Driven largely by customer demand for brands with stronger environmental, social, and governance (ESG) credentials.
- Government policies & regulations — Particularly those in energy and chemical manufacturing.
- Investor, bank, or stakeholder pressure — ESG efficiency can lead to 10 to 20 percent faster growth and higher valuations (McKinsey).
The good news? Sustainable manufacturing initiatives are well-documented catalysts for better resource utilization, higher profits, and fewer risks. The challenge lies in making smart investments that enable speed-to-ROI without impacting cost or the almighty customer experience.
Identifying Initiatives with the Greatest Sustainability Gains.
Hesitant to go all-in on a sustainable manufacturing strategy, many organizations are watching first-movers to see which eco-friendly initiatives appear to have the least impact on costs, profits, and the customer experience. According to a recent study by AspenTech, most initiatives currently revolve around energy optimization, carbon capture usage and storage (CCUS), and supply chain reconfiguration, including:
- Operating and materials processes
- Supply chain logistics and transportation
However, every manufacturing operation is a unique compilation of processes, equipment, regulations, and policies. Before manufacturers can pursue targeted sustainability initiatives — even those with a proven track record for ROI — they need a thorough and accurate understanding of their current ESG footprint.
A top-down approach to analysis evaluates the big picture and each component affecting sustainable manufacturing as a whole. In doing so, organizations can study how systematic factors affect an outcome and identify areas with the greatest potential for long-term impact.
Prioritizing Technology & Data Provenance.
Supply chain transparency is key to earning ESG credentials, making data the great equalizer among manufacturers — large and small. The growing demand for upstream visibility requires that manufacturers have the technologies to collect pertinent data. More importantly, organizations need processes for tracking and documenting were a piece of data originated and how it was converted into decision-making information.
The majority of manufacturers plan to repurpose existing infrastructure to reduce cost/profit impact (AspenTech). However, all manufacturing organizations will need to continue investing in digital transformation and the expansion of legacy systems, including supply chain management software, artificial intelligence, sensor technology, and other advances tying operations to the Industrial Internet of Things (IIoT).
Creating a Sustainable Supply Chain Management Strategy
The importance of supply chain strategy is access to resources, information, and opportunities. The right supply chain management partner can help manufacturers achieve sustainability goals by connecting them with crucial business relationships, exclusive data, sales alignment solutions, and strategic marketing support.
When vetting potential partnerships, look for the following attributes:
- Omni-channel market access
- Value-driven salesforce
- Sell-through transparency
- Connectivity with innovators in packaging and delivery
- A vast and forward-thinking distributor network
Learn more about how Afflink supports sustainable manufacturing through our affiliate network, technology solutions, online storefront, and culture of personal responsibility. Supply chain optimization techniques can be difficult to understand, but we make it easy. Through a network of integrated procurement experts, trusted suppliers, and local distributors we deliver the savings essential to your facility’s profitability with an environmentally friendly manufacturing process you can trust.