Q: How important is sustainability to the E&M sector?

KD: Probably every E&M business now includes sustainability in corporate strategy, and we believe its importance will increase in the future, impacting many areas of the organization. Industrial production is responsible for about 30% of the world’s total energy consumption, so today we’re seeing a focus on improving energy efficiency, reducing greenhouse gas emissions, and increasing renewable energy usage.

As sustainability demands increase from all different stakeholders, we expect to see comprehensive concepts of sustainable manufacturing and management systems in future. For example, we anticipate green product design and production, lifecycle management of products and processes, and even sustainable organization models. New concepts such as cradle-to-cradle will be introduced for efficient and essentially waste-free production. Also greater effort will be made to create closed loop circular production systems. And as E&M companies start to recognize the resource value of waste and disused products, they will explore ways to retain ownership of the materials used in the products they sell.

Q: What is driving these developments?

KD: Customers, governments, society, and many other stakeholders are increasing their sustainability requests, compelling E&M companies to reduce greenhouse gas footprints. And there is another important driver – we believe manufacturers that succeed in increasing efficiency along the entire value chain, aligning their activities on the concept of eco-effectiveness, are likely to gain significant long-term competitive advantage. And of course competitive advantage makes a highly compelling case for sustainability. Also, as a side note, becoming energy efficient usually means becoming cost efficient, and this serves another group of stakeholders – the shareholders.

A further driver is increased compliance requests. E&M companies face the very real risk of being non-compliant which means they can lose their license to operate in a specific country or region. This is of particular concern for manufacturers operating in multiple countries and jurisdictions, of course.

Q: What are the implications for the supply chain?

KD: To manufacture in a sustainable and compliant way, it’s essential to implement sustainable and compliant supply chains. To reach sustainability goals, the supply chains of tomorrow will have to pull their weight in all areas.

Additionally, E&M companies will have to consider alternative environmentally friendly transport modes, and integrate these into existing supply chain networks. For example, rail services from China will probably become the norm not the exception. We’ll also see consolidation of inbound flows across multiple suppliers, increased product recycling, and more reverse logistics.

To measure and manage the supply chain contribution to sustainability, E&M companies will require transparency on greenhouse gas emissions end-to-end on the supply chain. This ‘carbon accounting’ will have to include suppliers and their suppliers, requiring far greater integration along the supply chain than is available today.

For more information, download the recently published DHL Engineering & Manufacturing white paper here.

Published: August 2016

Image: DHL