Environmental, social and corporate governance (ESG) has never been more important to organizations than it is now, following the sustainability agreements signed by countries at COP28. But for many companies, complying with ESG regulations feels like an administrative burden rather than an effort to deliver business value.
Nevertheless, as customers become more aware of corporate sustainability and climate-responsible business practices, and as consumers have a growing number of businesses to choose from, manufacturers are struggling to differentiate themselves. Masu. If they want to attract customers and investors and stay ahead of increasing competition, manufacturers need to go beyond simply complying with sustainability regulations to making addressing sustainability issues an integral part of their business models. Must be in portions.
Additionally, sustainability goals are a rallying point for manufacturing organizations to accelerate projects that modernize their processes and supply chains, thereby improving cost, quality, flexibility, and profitability towards achieving their goals. I can.
Vice President and Head of Sustainability Services and Engineering, Cognizant.
The secret to sustainability success
Designing and implementing a consistent sustainability transformation is difficult for many organizations, as different areas of the business struggle with attention and decision-making capacity. For example, a company's sales department may be wondering what environmental claims it can make for various products. Engineers may be wondering what materials they should use to reduce the carbon footprint of their products. Procurement teams are also faced with the challenge of collaborating with suppliers.
Faced with siled information, disconnected systems, and unstructured, low-quality data, many manufacturers find it difficult to answer practical questions about their products and manufacturing processes. . Not to mention optimizing them for sustainability outcomes. Most companies don't have access to the data (although they may exist), decision points, and talent capabilities needed to achieve lasting transformation. There are a variety of factors that influence changes in product strategy, such as flexibility, resilience, and quality, but they are often cost-driven and usually come at the cost of putting additional stress on logistics and supply chains. and impede the manufacturer's ability to do so. To balance sustainability ambitions with revenue and profit objectives.
Sustainability competitiveness requires specific capabilities that companies should prioritize. This includes operational efficiency, responsible materials and supply chain management, and developing circular business models. For example, operational efficiency includes transporting raw materials at the correct temperature, reducing energy waste in the supply chain, and ensuring that production costs do not exceed the cost of the final product. Similarly, circular business models require manufacturers to start thinking ahead about what happens to their products after they are primarily used. For example, electric car batteries often still have 70-80% capacity remaining when they are no longer considered to meet electric vehicle standards. However, manufacturers have the option of replacing it in the car and then reusing it in low-power areas, such as by storing power from the power grid network.
The key to meeting these requirements is leveraging the data, decision points, and skillsets within your organization. But data is often concentrated in a few hands, preventing other teams from making the most of it. To overcome this, manufacturers must develop systems to track data across the organization and use tools like generative AI to help teams find and understand the data they need to do their jobs.
twin transition
Ensuring that companies meet their business needs, such as optimizing resource use and maintaining sustainable business models, while complying with ESG obligations, requires a major overhaul of current processes, systems, and solutions.
Enter “Twin Transition”. The idea is that for organizations to prioritize sustainability, net zero-related transitions and digital transformation need to go hand in hand. One cannot exist without the other, whether it's using data assets to drive better business decisions or prioritizing technology capabilities that enable scalability. It's important for companies to understand where their capabilities are lacking and develop a path to improving those areas.
To begin down this difficult path, manufacturers must first plan for their net zero goals. This includes planning resources and timelines, and defining the responsibilities of various stakeholders in the process. There are then several steps that businesses need to take. For example, prioritizing which ESG indicators a company targets. This could include reducing pollution and increasing social opportunities for workers and communities.
From there, you can define an optimized metrics journey to ensure your company collects all the data it needs to make informed decisions. This can be done through IoT sensors and smart devices, which can be integrated with core financial and production data to enable better business decisions through managed data assets. Finally, companies must prioritize technology capabilities to achieve scalability and establish new operating models for consistent delivery.
For example, manufacturers looking to reduce their products' emissions need to determine how much pollution is occurring during transport of materials to and from factories, during loading and unloading, during manufacturing processes, and in stores. In the past, we often looked for the average amount of CO2 emitted by a delivery van, or the average amount of energy required to develop a product. Instead, by implementing sensors throughout the process, your team can see more accurate data. With this data in hand, engineers can more accurately measure how process changes affect emissions and continue to iterate the model until the desired effect is reached.
This allows us to leverage data and technology to drive stronger sustainability-focused decisions.
Starting green transformation
While we are making great strides within the industry, we are still in the minority rather than the majority. Manufacturers have to make decisions. By deprioritizing sustainability efforts, we may think we are falling behind as the world becomes more sustainable, but Companies that understand the symbiotic relationship between will succeed.
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