Customers and shareholders increasingly expect manufacturers to be proactive on sustainability and social responsibility—and to be transparent about those results. PwC reports in their “ESG Reporting: Getting Started” report, published in January 2022, that the Securities and Exchange Commission (SEC) is trending toward increasing environmental, social, and governance (ESG) reporting.[1] In fact, in 2021, SEC Chair Gary Gensler stated, “When it comes to climate risk disclosures, investors are raising their hands and asking regulators for more…Companies and investors alike would benefit from clear rules of the road.”[2] To that end, the SEC is currently developing a climate impact disclosure rule.
Even without these external pressures, sustainability in manufacturing is a worthy goal in itself, especially considering that manufacturing accounts for 76.6 percent of total U.S. emissions.[3] However, only 17 percent of those emissions are directly attributable to the manufacturing sector. The remainder comes from supporting industries in the manufacturing supply chain.
Thinking outside the factory
That means manufacturers seeking to reduce environmental impact must look beyond the boundaries of their own businesses and seek ways to increase the sustainability of supply chains. Many organizations recognize this need, with 59 percent reporting investment in sustainable supply chains.[4] Another survey reports that 69 percent of companies are now taking sustainability performance into consideration when selecting new suppliers and renewing contracts.[5] The way companies set sourcing strategies and ensure upstream transparency can influence their overall environmental impact.
Those who pursue these goals are discovering that they can have operational and bottom-line benefits, as well. In one study, 70 percent of procurement leaders saw supply chain resilience as a desired outcome of sustainability efforts.[6] This finding points to the “triple bottom line” of competitiveness, environmental sustainability, and social good—something that can only be attained with high levels of visibility into supply chains.
Driving sustainability with data
With the right supply chain data and tools, manufacturers are in a better position to identify inefficiencies, measure emissions, and implement targeted mitigation strategies. Through digital transformation strategies, organizations can target various avenues to reduce a company’s environmental impact, such as:
- Implementing track and trace technologies: To make smart choices about materials and components requires insight into their origins. Internet of Things (IoT) solutions can be used to ensure transparency and comparability in terms of environmental impact. Additionally, such tools can provide insights into the efficiency of shipping routes and storage methods along with attendant carbon emissions.
- Optimizing order fulfillment: Digital supply chain management capabilities enable intelligent order fulfillment. That means physically shorter supply chains and lower-emission delivery of orders to customers. Use supply chain insights and analytics, including AI and IoT, to gain new insights that help you reduce waste and energy use.
- Adopting cloud-based computing: Moving from on-premises infrastructure to the cloud is up to 93 percent more energy-efficient and up to 98 percent more carbon-efficient compared to on-premises solutions.[7]
- Using automation and AI to increase efficiency: With the complexity of today’s supply chains, automation and AI can augment human capabilities and provide predictive insights that enhance agility and responsiveness to disruptions—supporting sustainable choices.
Helping you achieve your sustainable supply chain goals
Microsoft not only develops solutions to support sustainability but works to embody that commitment. For example, Microsoft has been carbon neutral across the world since 2012 and commits to being carbon negative by 2030. With the unique breadth of interoperable cloud solutions Microsoft provides, including Microsoft 365, Microsoft Dynamics 365, Microsoft Azure and others, it offers a strong technology foundation for manufacturers to build the environmentally friendly supply chains the world needs. Additionally, the company recently announced the public preview of Microsoft Cloud for Sustainability, a comprehensive technology solution for recording, reporting, and reducing emissions.
For manufacturers, in particular, Dynamics 365 Supply Chain Management provides predictive insights, and supply chain efficiency and agility by using data, analytics, automation, AI, and IoT. By unifying data, it opens new frontiers of real-time insight. This visibility empowers manufacturers to achieve effective supply chain operations that are lean and energy-efficient. Learn more about how digital transformation can support greater sustainability in manufacturing. Contact a Microsoft representative at [email protected]
[1] ESG reporting: Getting started, 2022, PwC
[2]Prepared Remarks Before the Principles for Responsible Investment “Climate and Global Financial Markets” Webinar, 2021, SEC.gov
[3]Sustainable Manufacturing Is Smart Manufacturing, 2020, NIST
[4]State of Supply Chain Sustainability 2022, 2022, MIT Center for Transportation & Logistics Council of Supply Chain Management Professionals
[5]Sustainable Procurement Barometer 2021, 2021, Stanford Graduate School of Business
[6]Sustainable Procurement Barometer 2021, 2021, Stanford Graduate School of Business
[7] The Carbon Benefits of Cloud Computing: a Study of the Microsoft Cloud, 2018, WSP