Industries as a whole have been talking about sustainability for some time now, but it has been little more than words and good intentions. Until now. 2020 was a turning point for sustainability.
There is a genuine readiness and awareness in the manufacturing industry for sustainability, not just because of regulations but also because of the changing perception of how to measure the value of sustainability, including non-financial measures such as employee community and satisfaction, customer retention, trust and brand awareness.
The Impact of COVID-19 on Sustainability
IDC research shows that the COVID-19 pandemic has accelerated the urgency to address sustainability, in line with accelerating digital transformation journeys. According to a recent IDC study, 22% of manufacturers see sustainability as the top global trend in 2021.
The irony is that many companies suddenly became more sustainable overnight during the pandemic, mostly by going remote and thereby saving commuting-related CO2 emissions — demonstrating that rapid change is possible.
Sustainability is not just an initiative — it requires fundamental change in the way manufacturers operate. This change needs to start at the very beginning, with product design. Manufacturers need to create new as-a-service business models, together with the necessary environments in which products can be easily maintained, repaired, upgraded, refurbished for second use or finally recycled.
This will create the opportunity to move from a linear to a circular economy — and there is a huge market for other players to find space in this new economy.
How Does the Circular Economy Relate to IT?
The role of data and the digital thread is paramount in the circular economy as it creates the necessary visibility and therefore product traceability capability to understand exactly what is happening within the entire value chain, including material sourcing, products and all actors involved. It also helps manufacturers make the shift from being a siloed company towards a wider ecosystem.
Technology is a key enabler of sustainability, with 96% of manufacturers reporting that their digital technology investments have improved their environmental sustainability-related performance.
The good news is that today’s technologies are already offering solutions for manufacturers to get started on their sustainability goals, including artificial intelligence, cloud, IoT and digital twins. Custom-made applications, underlined with the new capability of building low-code/no-code apps, are also democratising the data and bringing agility into the process of building a sustainable framework.
These technologies can help manufacturers to become more efficient, reduce their environmental footprint and most importantly redesign their products and value propositions with the aim of achieving not only sustainability but also resilience for the future.
The Sustainable Manufacturing Supply Chain
Of course, manufacturers’ sustainability accountability extends to the wider supply chain. The German government, for instance, has just introduced the Supply Chain Act to make manufacturers accountable for human rights violations within their supply chains.
Such regulatory requirements will push manufacturers to make the necessary investments to digitise their supply chain processes, visibility and traceability — enabling them to download a product’s history at any point in time.
Today’s technology is only scratching the surface of what manufacturers will be able to achieve to drive their sustainability initiatives. As digital tools evolve (and they are evolving quickly) we can expect more opportunities to make an impact in the right direction.
Now is the time to tackle sustainability — and the cost of not doing anything could be high.
IDC’s Technology for Sustainability and Social Impact (TSSI) Practice covers many sustainability-related topics, including the circular economy, energy efficiency, regulations and financial value. To find out more, please get in touch.
Our IDC European Manufacturing Executive Digital Summit 2021, to be held on November 18, will provide a great opportunity for manufacturing executives to discuss this and other key issues related to how to best respond to changing market conditions and customer requirements and how to establish transparent and responsive operations leveraging digital technologies.
To learn more about our upcoming research, please head over to https://www.idc.com/eu and drop your details in the form on the top right.