World Class Manufacturing Must Be Sustainable Manufacturing

In the early 1970s, new ideas emerged about the human influence on the environment and the responsibilities of corporations, especially manufacturing operations.

Incidents such as the chemical disaster in Bhopal, India, and other recognized environmental incidents and concerns led to increased regulations such as the U.S. Clean Air Act of 1990 and stricter Occupational Safety and Health Administration (OSHA) and International Electrotcehnical Commission (IEC) safety regulations. The discovery that the fuel additive methyl tertiary butyl ether (MTBE) used to meet the requirements of the Clean Air Act was a potential carcinogen led to the growing use of corn-based ethanol as a fuel additive. The subsequent impact on the cost of corn-based food products is a reminder of the growing limitations of all our natural resources.

Although not a new concept, sustainable manufacturing has come of age, and has become a guiding principle for many manufacturing enterprises. Sustainable manufacturing is a positive business approach that has as much to do with delivering economic benefits and being a responsible member of the community as it does with reducing environmental impacts.

Traditional growth drivers of research and development, sales and marketing are slowing. Businesses are now focusing on more effective manufacturing operations to drive new growth and margin. Improving manufacturing efficiency, flexibility, responsiveness and availability, while ensuring consistent product quality, have become critical to future success and survival. This is becoming more challenging as we face increasingly limited material, human and capital resources.

As manufacturers continue to expand into India, China and other parts of the less industrialized world, manufacturing and supply chain operations must adjust to even more limited water and other resources. In India, many people receive less than 40 Liters/day of water vs. more than 500 L/day in the United States. China has less water than Canada, but 40 times the population. To put this in perspective, experts estimate that people need a minimum of 50 L/day of water.

Other major concerns of manufacturers in the consumer packaged goods (CPG) industries, taken from a recent survey, include energy costs and usage, the need for higher-skilled workers, and production and supply chain efficiency. To meet this challenge, they are investing in new production management, asset management and quality optimization software solutions. They are also investing heavily in more effective continuous improvement programs and software.

PepsiCo is a good example of a company focused on eliminating waste, improving efficiency and achieving significant reductions in energy, water and solid waste. PepsiCo has added sustainability measures to further accelerate this effort that had been primarily driven by productivity and cost-containment goals. As a result, the company has been applying eco-friendly technology in packaging, deploying solar energy and methane gas recovery technology, and testing hybrid vehicle programs in its delivery fleets. PepsiCo’s sustainability vision is “to continually improve all aspects of the world in which we operate—environment, social, economic—creating a better tomorrow than today.”

Business and regulatory requirements are driving new mission-critical applications into almost every manufacturing operation. Many companies now depend upon new production management and optimization software to help ensure the continuous availability of consistent high quality products and margins. Today, some companies are so dependent upon production management software applications that they will not continue production if they are unavailable, due to the increased risk of higher production costs and increased product variability.

Manufacturing companies should recognize that it will become increasingly difficult for manufacturing operations to drive new growth and margin without considering manufacturing “sustainability” in their business decisions. Manufacturers should also take advantage of the commonality in new business and regulatory requirements to develop a more comprehensive approach to selection and deployment of more automated control and information systems.

John Blanchard, jblanchard@arcweb.com, is Principal Analyst at ARC Advisory Group Inc., in Dedham, Mass
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