Integrated digital insights can help industry cut waste and embrace the circular economy
Image credit: Tsung-lin Wu/Dreamstime
Analytical tools that have been around since the 1990s could be the key to boosting sustainability by giving businesses an overview of the massive amounts of data their operations generate.
Industries across the world are aware of the impact of their consumption. The production of waste has correlated with the release of emissions into the atmosphere. The UN’s announcement that responsible energy consumption should be the default approach makes sense to industries keen to protect the planet and avoid reputational damage.
The circular economy model is right at the heart of the solution: a process in which waste is eliminated and the constant use and recycling of resources is encouraged. But this approach must bring clear business value if it is to be implemented across whole industries, and relied on through thick and thin.
Sage research shows three-quarters of manufacturing and distribution organisations have a circular-economy strategy already; their prioritisation of green processes is a strong first step. Now, they should look to technology to strengthen their approach to waste, through reducing costs and bringing benefits to the business that make the circular economy a value-added and irresistible model for industry.
One of the persistent challenges of boosting business sustainability has been the sheer complexity of modern organisations. Decision-makers have a vast treasure trove of data and insights to draw from, produced by incredible numbers of IoT-connected devices installed across production lines and supply chains. However, most business leaders lack the time and resources to properly analyse this information.
Large and fragmented data infrastructures only make this problem worse. When data environments are siloed and not connected together, precious insight loses its value. A connected sensor could detect and report waste or inefficiency at a particular plant or factory – but if this information isn’t collated and shared, a business is powerless to stop it.
This is where ERP (enterprise resource planning) comes into play. ERP is a form of software that connects every aspect of business process. From supply chain through to customer relationship management, inventory to human resources, all core business data can be captured in one system. ERP could be considered the nervous system inside a business’s digital body. It connects all systems together so they can provide more value, and for longer.
Traditional ERP software has been in use since the 1990s, but more recent cloud-based systems have dramatically improved the speed, flexibility and affordability of these solutions. ERP systems can now connect, exploit and provide visibility into every business system and part of the supply chain, courtesy of the cloud. It’s this potential that is encouraging manufacturers to increase their spend in ERP to record amounts – predicted to peak at $14bn by 2024.
The potential for ERP to improve industrial sustainability is enormous. Business leaders will have an unprecedented understanding of their organisations, with tools and analytics capabilities that help them identify waste and inefficiency fast and effectively. This could be anything from overproduction at a facility to excess power consumption by a single machine or application. Once the problem has been discovered, managers can move quickly to resolve it. In this way, ERP-driven visibility is crucial for sustainable manufacturing and distribution.
Of course, it isn’t just the environment that benefits from lower emissions and reduced energy consumption. There’s a false dichotomy between sustainable approaches and business success. Indeed, it’s estimated that businesses globally could save $26 trillion by 2030 if they adopt more sustainable practices. Reeling from the disruption of the pandemic, manufacturers are focused on cost-cutting and efficiency, prioritising core activities and trimming the fat from operations. Less waste and reduced energy consumption can only minimise costs across operations as manufacturers spend less on materials and their energy bills.
ERP-driven operations also contribute greatly to business resiliency. The experience of the pandemic has shown us that supply chains can break, and all too quickly. But with ERP, manufacturers and distributors are able to see where supply chain issues are emerging, and can rapidly pivot to source from different suppliers to mitigate the disruption. ERP also holds great potential for deploying future AI technologies. These solutions require immense quantities of data to function properly and drive value – but a centralised ERP platform, collecting data from across the organisation, can deliver it. ERP not only optimises, it future-proofs.
Sustainable yet profitable business is not some hidden panacea; the technologies, processes and drive to achieve it exist today. Getting it right in a way that aids business goals relies upon IoT, ERP and automation working holistically together to drive visibility, accessibility and efficiency. Manufacturers and distributors have an unfortunate reputation for waste, but this needn’t continue. Technology has created an opportunity to eliminate waste and fight climate change; manufacturers and distributors must seize the opportunity, now.
Rob Sinfield is VP product manufacturing and operations at Sage.
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