Technology-Enabled Manufacturing: Creating a More Sustainable Supply Chain
As part of Solutions Review’s Contributed Content Series—a collection of articles written by industry thought leaders in maturing software categories—Misha Govshteyn, the CEO of MacroFab, explains why technology-enabled manufacturing can help companies create a sustainable supply chain.
In the rapidly evolving business landscape, sustainability has become crucial for companies across all industries. The pursuit of environmental, social, and governance (ESG) compliance aligns businesses with customer—and sometimes governmental—expectations but also presents significant growth opportunities. A 2020 McKinsey report found that products with ESG compliance pledges have seen a 28 percent cumulative growth rate since 2015, outpacing products without this commitment by 8 percent. ESG compliance is more than just a buzzword; it’s necessary for long-term business success and viability.
Product manufacturing and shipping can have adverse environmental consequences without the right processes, jeopardizing ESG compliance and customer relationships. The electronics manufacturing industry, responsible for a significant portion of global energy consumption and resource utilization, faces unique challenges. The production of semiconductors, in particular, contributes substantially to the industry’s carbon footprint due to reliance on fossil fuels and water-intensive processes.
Technology-enabled manufacturing has the potential to revolutionize supply chain sustainability for the electronics industry, enabling nearshoring, minimizing waste through on-demand production, and improving operational efficiency. These outcomes improve ESG performance for manufacturers, as well as their customers.
The ABCs of ESG for Electronics Manufacturing
Environmental criteria focus on minimizing negative impacts on the environment. This includes reducing carbon footprint, greenhouse gas emissions, waste generation, energy consumption, water usage, and overall ecological impact. By implementing eco-friendly manufacturing practices and embracing renewable energy solutions—i.e., solar or wind power—companies can significantly reduce their carbon footprint and contribute to a sustainable future. Additionally, through the Inflation Reduction Act, manufacturers can take advantage of investment tax credits as high as 70 percent for qualified projects, resulting in substantial potential cost savings.
Social criteria encompass a company’s impact on society, including how it treats employees, customers, suppliers, and communities. Prioritizing optimal conditions for employees, and being responsible for end-of-life management for electronic products, builds trust, enhances reputation, and strengthens relationships with stakeholders.
Governance criteria refer to a company’s management and decision-making processes. Transparent and accountable governance practices ensure responsible and sustainable operations, mitigating ESG risks such as regulatory compliance and corruption. By addressing governance criteria, companies can enhance transparency, credibility, and financial performance.
The Value of Technology-Enabled Manufacturing for ESG Initiatives
Technology-enabled manufacturing holds immense potential for electronics manufacturers to enhance their Environmental, Social, and Governance (ESG) plans by embracing energy-efficient practices and curbing electronic waste. By integrating technology-enabled manufacturing into their operations, these manufacturers can unlock various benefits contributing to a greener and more sustainable future.
One significant advantage of technology-enabled manufacturing is its ability to reduce the carbon footprint associated with traditional manufacturing processes. Manufacturers can optimize production schedules, streamline resource allocation, and minimize material waste through cloud-based platforms. This optimization saves valuable resources and helps mitigate the negative environmental impact of excessive production and inefficient resource utilization.
Furthermore, adopting technology-enabled manufacturing allows electronics manufacturers to enhance operational efficiency across their entire supply chain. With real-time data sharing and analytics capabilities, cloud-based platforms empower manufacturers to make informed decisions, identify bottlenecks and optimize production workflows.
By incorporating technology-enabled manufacturing into their ESG strategies, electronics manufacturers can pave the way for a more sustainable and responsible industry. Adopting energy-efficient practices, waste reduction measures, and streamlined supply chains align with environmental goals and positions these manufacturers as leaders in sustainability.
Nearshoring: Reducing Environmental Footprint
Simply put, nearshoring relocates manufacturing operations closer to end markets. Businesses can significantly decrease their carbon footprint by minimizing long-distance shipping and reducing transportation-related emissions. Technology-enabled manufacturing facilities are available across North America, so companies have more opportunities to establish local manufacturing operations, reducing environmental impact and optimizing ESG compliance. By embracing nearshoring through technology-enabled manufacturing, manufacturers can contribute to sustainability goals while enhancing the efficiency of their supply chains.
On-Demand Production: Minimizing Waste
Conventional manufacturing can cause overproduction and excessive inventory, resulting in excess waste. In contrast, technology-enabled manufacturing facilitates on-demand production through connected technologies, provides increased visibility, and enables a seamless manufacturing process using available capacity across multiple locations. This approach minimizes waste, maximizes storage efficiency, and promotes a more sustainable utilization of resources. Companies can enhance sustainability by implementing an on-demand production model while driving efficiency and cost-effectiveness.
In today’s business environment, where sustainability is paramount, electronics manufacturers must prioritize initiatives that enable them to achieve ESG compliance while maintaining operational efficiency and customer relationships. Technology-enabled manufacturing presents a transformative approach that empowers businesses to adopt sustainable practices throughout their supply chains. Companies can minimize their environmental impact, reduce waste, and enhance ESG compliance via nearshoring, on-demand production, and improved efficiency.
Technology-enabled manufacturing can help electronics manufacturers drive sustainability goals, attract environmentally conscious customers and secure a competitive advantage in the marketplace. Embracing the power of technology-enabled manufacturing is a strategic move that contributes to a greener future and propels electronics manufacturing companies toward long-term success.