According to a recent article at Our World In Data,1 manufacturing is among the top three most polluting industries in the world. It’s behind only buildings (heating and electricity) in first place and transport in second.
With this being the case, it’s no surprise that the sector is setting sustainability goals. Governments around the world continue to extend regulatory requirements. Meanwhile, environmental, social, and governance (ESG) issues become ever more prominent in the minds of companies, customers, and investors. In its 2023 manufacturing industry outlook report, Deloitte paints a picture of a sector exploring a wide range of technologies to increase efficiencies. From artificial intelligence (AI) and machine learning (ML) to cloud computing, these technologies could not only make manufacturers more efficient but also may help them reduce their energy consumption and environmental impact too.
Energy supply is also a pressing issue for businesses in the manufacturing sector. Alongside the demands of the green transition, they face pressure from what the International Energy Agency (IEA) is calling a global energy crisis.
In this article, we’ll delve into the impact of the energy crisis on manufacturing, examine examples of how technology could help in the transition to less impactful manufacturing, and consider some obstacles on the path to increased sustainability within the sector.
How the Energy Crisis is Affecting Manufacturing
According to the IEA report “Global Energy Crisis, a cluster of factors since 2021 have collided to produce a new global energy crisis.
These include:
- Supply chain blockages and shortages as a lingering effect of the Covid-19 pandemic
- Surging demand, caused by the extraordinarily rapid post-pandemic rebound
- Declining investment in oil and gas
- Ageing and inadequate infrastructures
On top of these reasons, the Russian invasion of Ukraine is also a major factor. Russia had already throttled gas supplies to Europe in the months before its February 2022 attack. In the months after, Russia wielded its market power to restrict Europe’s energy supply with even more force. And Western sanctions only increased the pressure.
The energy crisis is causing problems for the manufacturing industry in the forms of material shortages, increased costs in construction, production, and transportation, and more. The IEA report highlights how some manufacturing plants in Europe have had to decrease their production. The energy squeeze also feeds into things like inflation and high interest rates, which hit demand and investment in the manufacturing sector as much as they do all other sectors.
How is Technology Aiding Sustainable Manufacturing Efforts?
Deloitte’s 2023 report notes that ‘US manufacturing (specifically) has demonstrated continued strength in 2022’. And it projects 2.5% GDP growth in manufacturing in 2023. The report does note threats, though. These range from the energy and environmental issues noted above to a shortage of skilled workers and a potential increase in cyberattacks. The risk of cybercrime signals the importance of proper security measures and up-to-date technology.
The report also points to investment in advanced technology as one of the main factors that reduces risk and prepares the manufacturing industry to ride out the economic storm and meet its sustainability goals.
What is Sustainable Manufacturing?
Sustainable manufacturing is precisely what it sounds like: an approach to manufacturing that strives to reduce environmental harm and resource utilisation. Significant improvement is hard to achieve. By its nature, manufacturing means taking materials and transforming them into goods and products. It necessarily involves the extraction and use of resources, and transforming those resources often requires significant amounts of energy.
But success is not impossible to envisage. At the very highest level, sustainable manufacturing would produce more energy than it uses, create more materials than it consumes, produce no waste, and clean more air and water than it pollutes. This is beyond current technologies, but the path forward is to reform and modernise production processes and operations to reduce energy usage and environmental waste.
How are AI and ML Affecting Manufacturing?
Two cutting edge technologies - Artificial Intelligence (AI) and Machine Learning (ML) - have the potential to help companies in the manufacturing sector to meet their sustainability goals in a variety of ways. Perhaps most important, these technologies can allow manufacturers to analyse and harness data on a massive scale, and thus help manufacturers to identify inefficiencies and other areas for improvement. Companies can then target their sustainability interventions all the more effectively.
Technologies like hyperconverged infrastructure (HCI) can help companies get more out of AI and ML by reducing the time and energy invested in administration. An HCI system combines compute, storage and networking using software on to common server-based building blocks on-premises, at the edge, and in the cloud to create smarter and more flexible infrastructure - which makes it far more easy to manage - allowing teams to focus on their AI and ML apps and not on keeping the infrastructure’s “lights on.”
Because HCI uses less hardware than conventional 3-Tier infrastructure, HCI shrinks the physical footprint required to run comparable workloads and can lead to reduced power and cooling requirements. While this figure can vary, one source estimated potential power savings to be just under 27%. In addition, because of the ability to incrementally scale HCI systems on-demand, HCI customers can avoid over-provisioning to account for future growth, leading to better efficiency now and years down the road.
What is the Industrial Internet of Things (IIOT)?
Another rapidly growing technology, namely, industrial internet of things (IIOT), also known as Industry 4.0, also figures to be central to manufacturers’ efforts to achieve sustainability objectives. The industrial internet of things simply means applying the core internet of things principle to the industrial sector. IIOT replaces the old machines that have been used in the industry for decades with ‘smart machines’.
These smart machines can capture much more data, in real-time, and more accurately. They are then connected, and this connection allows the system to aggregate and analyse this data. This can provide an incredible level of insight into production processes. It can also help to accelerate the identification of problems in areas like energy efficiency, as well as highlighting the need for maintenance.
Deloitte reports that 39% of surveyed manufacturers plan to focus on an internet of things platform in the next year. This is not surprising. The potential benefits of IIOT to sustainable manufacturing, especially when combined with AI and ML, are enormous. IIOT systems can allow businesses to revolutionise their workflows in ways that bring sustainable manufacturing closer than ever.
What are the Blockers to Sustainable Manufacturing?
The manufacturing industry has a lot of technology it can turn to make significant strides in the journey to improved sustainability. But the sector has not moved as fast towards implementing sustainable manufacturing technologies as some might have hoped.
The delay likely is due to a combination of factors, including:
- Uncertainty Avoidance
- Prioritising short-term growth
- Struggles with implementing effective smart technology
- Opaque production and logistics processes
- Operational and decision-making structures that prevent effective oversight
- Lack of solid data and absence of the analytics capacity to understand that data
- Slowly implemented ESG strategy
How WD-40 Company Achieved a 41% Reduction in Energy Consumption
One of the most effective ways to begin a sustainable manufacturing program is to look to success stories, including in the data centres that sustain manufacturing operations. . This case study of WD-40 Company, for example, shows how the company reduced computing system power requirements by 41%, along with similar reductions in cooling costs. The way it managed this was simple. The company’s IT team changed its data centre infrastructure, moving from a traditional one-server, one-role approach to a modern HCI platform.
This change also brought the WD-40 Company considerable savings by allowing it to minimise IT downtime. The new system also provided better storage, cutting overhead costs and streamlining engagement.
Technology can support the path to sustainability.
In conclusion, the importance of sustainability is only increasing. The EU is in some ways leading the charge here. Its new Corporate Sustainability Reporting Directive entered into force in January 2023, and it massively increases the requirements on businesses to provide information on their sustainability performance.
The combination of new regulations and broader public pressure is helping to move the manufacturing industry toward sustainability. But forecasters still see some bumps on the road ahead. Technology will form a major part of any solution. From running production to core infrastructure like data centers, technology can provide benefits at all stages of the manufacturing process.
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1Hannah Ritchie, Pablo Rosado and Max Roser (2020) - "Emissions by sector". Published online at OurWorldInData.org. Retrieved from: 'https://ourworldindata.org/emissions-by-sector' [Online Resource]