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Supply chain management for a sustainable future

Supply chain management for a sustainable future

Supply chains are under incredible pressure but technology can help to increase productivity, compliance and carbon efficiency.

21 December 2021
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The pressure on supply chains is increasing: shortages in raw materials, workers, equipment and space resulting from by Covid-19, combined with business pressure to do more with fewer resources have converged with sustainability targets to create the perfect storm in the manufacturing industry. To help face these obstacles the industry needs to urgently tackle one of its greatest enemies: waste, the main culprit for inefficiencies as well as pollution.

The manufacturing sector in the US accounts for almost a quarter (23%) of direct carbon emissions, according to the Environmental Protection Agency. In Europe the situation is equally dire: the industry emits an annual total of 880 million tonnes of carbon dioxide equivalents, making it one of the largest emitters of greenhouse gases on the continent

In a bid to meet Europe's climate targets for 2050, the manufacturing sector is introducing several measures to curb waste and pollution, these include: inventory management software, to help keep track of raw materials and components throughout procurement, establishing preventive maintenance systems and schedules, adopting a closed loop manufacturing systems that utilizes recycled materials in the production cycle, reducing energy usage and waste in production processes. Predictive maintenance and 3D visualisation systems can also help reduce error, or intercept it early in the assembly line, before it balloons into a larger issue.

Even before the shortages caused by the pandemic and the pressing calls to become more sustainable, the manufacturing sector was moving towards the implementation of industry 4.0.

Businesses were already experimenting with new automation and data exchange tools by introducing sensor technology and data from the IoT and cyber physical systems. For example, digital twin technology, a virtual representation of the as-designed, as-built, and as-maintained physical product, augmented by real-time process data and analytics based on accurate configurations, can help manufacturers to build a prototype without actually wasting any material or energy powering machinery.

Similarly, just-in-time supply chain management, moves material just before it's needed in the manufacturing process, applying algorithms and predictive traffic flow mapping to reduce the need for storage and ensure materials only arrive precisely when they are needed. Large items, for example, are particularly difficult to store as they may pose a danger to workers on the site or an impediment to operations. Perishable goods, chemicals, biochemicals and components are also an issue as they typically need to be refrigerated.

The precision required to ensure these materials only reach the production site at the right time can be achieved by digitally planning and tracking optimal routes for the delivery of materials. Gathering data on materials requests, multiple delivery endpoints and delivery time performance by using Big Data techniques, then combining this information with plant area layouts, highlights inefficiencies in usual driver routes. Routes can then be optimized via specific algorithms that dynamically suggests the best itinerary to accomplish the delivery missions on time.

Optimized route algorithms, when integrated into the delivery aid software for drivers can reduce lead times making them more consistent with the desired delivery windows. The lead time reduction automatically results both in cost savings and in waste reduction.

The supply chain plays a critical role in helping manufacturing businesses meet environmental sustainability targets and reduce waste.

Supply chain improvements can be achieved in various ways but reducing waste by managing material orders, quantities and delivery time as well as their perishability more accurately is key. Through digital transformation it is finally possible to ensure that the supply chain does not become the weakest link in the route towards greater sustainability and efficiency.

Lorenzo Macchi - Fincons Group Lorenzo Macchi

Fincons Group

Global BU Manufacturing General Manager, Director of Competence Center SAP