Historical thinking suggests that responding to environmental problems has been a ‘no-win’ proposition for manufacturing managers[i]. Focus on sustainability and hurt your business or focus on productivity to the detriment of environmental concerns. However, being green no longer has to come at a price to businesses. Sustainability can be a catalyst for waste reduction and cost savings, as well as for brand enhancement, innovation, and market opportunity.
Industry 4.0 and smart solutions play a critical role in achieving sustainable productivity. However, investing in new technology may seem risky without a return-on-investment guarantee – particularly at a time of supply chain volatility, global market instability, and rising costs.
The answer, as Adem Kulauzovic, Director of Automation, Domino Printing Sciences, outlines, may lie in servitization – a risk reduction, support-as-a-service model that allows organizations to adopt a layered OPEX approach to Industry 4.0 that enables them to achieve both productivity and sustainability outcomes
How can facilities improve productivity without sacrificing sustainability?
Traditionally, productivity increases may have taken place at the expense of sustainability, with greater output and increased use of resources having a negative impact on the environment. Equally, when demand is high, or the focus is on productivity, sustainability projects may get relegated to the bottom of a manufacturer’s list, given the effort and investment these projects are considered to require. The new school of thought says otherwise. Sustainability and productivity need not be mutually exclusive.
UN Sustainable Development Goal (UNSDG) 12 states “Sustainable consumption and production is about doing more and better with less”. It is a goal that many regions worldwide have embraced, with commitments from many countries to achieve net zero carbon emissions by 2050. Even without regulation, businesses seek to improve their sustainability credentials, driven by investors, end-customers, and employee activism.
From a manufacturing perspective, businesses are most sustainable when machinery works optimally, and efforts focus on creating high-quality products rather than waste. There is arguably no better case in point than in food manufacturing, with the global food system alone contributing to over one-quarter of the world’s greenhouse gas emissions – of which 18% is directly attributed to the food supply chain. When a food product is wasted, all the embedded emissions involved in growing, rearing, and processing all the raw ingredients essentially account for nothing.
To reduce the overall impact of food production, manufacturers should look to optimize food production processes to drive out causes of waste and maximize the quantity of fresh, sellable produce continuing through the supply chain and reaching end consumers. The same is true for any manufacturing environment – effort and energy placed into inefficient processes are ultimately less sustainable in both a business and an environmental sense.
How is OEE improved with Industry 4.0?
The link between sustainability and productivity can perhaps be best illustrated by looking at the three main components that make up one of the world’s most widely used productivity measures, overall equipment effectiveness (OEE): uptime, throughput, and quality.
Uptime is the difference in time between a production line running and being stopped for any reason during a scheduled production run. One of the most common causes of stoppage (or downtime) is product changeovers – any time when a machine is left running and idle while preparing for the next production run. Streamlining and automating changeovers with Industry 4.0 and smart systems can positively contribute to sustainability and productivity by maximizing the time a machine is used to make sellable stock while minimizing unnecessary energy consumption during idle time.
Throughput is the correlation between a production line’s maximum and actual capacity. Production lines that are not operating efficiently, for example, because of a fault which has slowed down one machine on the line, will take longer to produce the same number of sellable goods and require more energy. By utilizing real-time performance monitoring solutions, including cloud-based services, manufacturers can monitor production and intervene at the earliest sign of reduced throughput to keep machines running as efficiently as possible.
Quality is focused on ensuring that each product is produced to a high, sellable standard – and is invariably linked to quality checks. In the case of food products, in particular, this will include the quality of the product itself, as well as the integrity of its packaging to optimize shelf-life and reduce transportation wastage. Any product that reaches the end of a production process and is not sellable must be reworked (wasting energy) or thrown away (wasting both energy and resources) – both of which are suboptimal from a business and sustainability perspective. Automated vision inspection systems remove the risk of quality issues being missed through human error and allow for a far more rigorous check of product lines, enabling intervention at the earliest opportunity to mitigate excess waste.
In addition to reducing waste and minimizing the resources used to create sellable stock, making incremental changes in OEE will enable manufacturers to unlock both time and cost savings which, in turn, can be reinvested into further improvements, innovation, and additional sustainability efforts. For example, investing staff time in training such as Lean Six Sigma; or examining the impact of a new form of sustainable packaging on the production line.
How do manufacturers reduce risk through servitization?
While all manufacturers would welcome the ability to maximize OEE and reduce waste, for some, the outlay on new Industry 4.0 equipment may seem to carry too high a risk without guaranteed return on investment. This may be particularly true for SMEs with limited capital expenditure and dated legacy equipment, especially given current socio-economic circumstances.
Servitization – where clients pay for an outcome or service rather than directly purchasing equipment – may offer a compelling solution to this problem. Indeed, servitization is starting to gain international recognition by organizations, including the World Economic Forum, as a viable way of increasing economic productivity and contributing positively to global decarbonization efforts. Suppliers who offer manufacturing solutions as part of a servitization model have a vested interest in ensuring that these products are kept running efficiently and consistently over time – maximizing performance while minimizing wastage.
Within Industry 4.0, servitization means manufacturers work with a partner who can offer support-as-a-service in line with their specific goals, such as increasing uptime, throughput, and/or quality. Such a model not only passes the outcomes-focused risk on to the supplier but also assists with cost by allowing the investment to be spread out over a period of time in an OPEX rather than a CAPEX model.
Moreover, with such service-based contracts, clients can embrace a land, adopt, expand, renew (LAER) approach to their investment. This allows for change and flexibility when outcomes or goals change while remaining at the forefront of innovation with access to new technology as it becomes available.
The value of servitization in underpinning sustainable productivity is undeniable – though as a support-as-a-service model, the approach is still nascent. Domino is proud to be part of a three-year, $2.2m research project currently being undertaken by Aston Business School’s Advanced Services Group on behalf of the UK’s Economic and Social Research Council. The research objectives are to establish evidence on how servitization impacts both economic productivity and environmental performance (i.e., net zero and the green economy), and use these insights to influence industrial policy and practice.
Conclusion
Sustainability and productivity can work together. But to make real, long-term gains in sustainability, businesses need to have the right people focused on processes that are critical to current manufacturing operations, as well as those focused on tomorrow’s innovation. An Industry 4.0 support-as-a-service partner, who can help ensure OEE, will mean more productivity, less waste, and more time for your employees to invest in the next step in your sustainability journey.
[i] Noah Walley and Bradley Whitehead, “It’s Not Easy Being Green”, 1994