Brands are facing mounting pressure from modern consumers who have a growing expectation for businesses to be transparent about their sustainability commitments. Consequently, they are engaged in a competitive race to establish concrete environmental, social and governance (ESG) benchmarks. In the manufacturing industry, these efforts primarily revolve around enhancing supply chain practices.
Precisely assessing the utilisation of raw materials and quantifying the environmental consequences of production processes, such as emissions and waste, are crucial considerations for manufacturers. As a result, businesses are leveraging technology to bolster their sustainability narrative.
“Manufacturing a more resilient and sustainable future is not a task that any one company, industry or even a country can achieve by itself,” says Parag Ladha, director of manufacturing industry marketing at Microsoft. “This can only be achieved by collaborating on all levels across the manufacturing value chain, from designing sustainable products and manufacturing them via a sustainable process that utilises materials sourced sustainably, to recycling them at the end of life.
“Technology is a catalyst that can help accelerate innovation across this value chain, and Microsoft is working to make technology easy to adopt and deploy by partnering across the manufacturing technology ecosystem. At the factory level its critical to empower frontline workers with communication and collaboration tools to help unlock innovation.
“The challenge and the opportunity ahead of us are so enormous that to accelerate progress, the only way forward is to collaborate on innovations to enable societal conditions that will support a sustainable future.”
The concept of supply chains has always been familiar to customers, and they were consistently disrupted, even prior to the pandemic. According to Gartner’s Supply Chain Executive Report: Shaping Supply Chain Disruption in a Volatile Risk Environment, 70 per cent of supply chain leaders reported that they have been constantly responding to disruptions since the beginning of 2019.
“The pandemic only exacerbated the underlying challenges that manufacturers faced and exposed the fragility of global supply chains,” says Ladha, noting that one of these challenges was the industry’s persistent struggle to attract skilled workers. “This can be attributed to a blend of factors such as an ageing workforce and a disparity between the skills needed and those available in the labour market.”
For example, Microsoft’s IoT Signals: Manufacturing Spotlight report, which was published in 2022 and surveyed 500 manufacturers working on smart factory and smart product projects, showed that skill shortages in data science, artificial intelligence and IT cybersecurity were the top inhibitors for scaling the projects beyond the proof-of-concept phase.
“Manufacturers are also grappling with stringent energy and environmental regulations as governments strive to mitigate climate change and deal with the fallout of geopolitical developments,” says Ladha. “This has led manufacturers to shift their digital transformation strategies to focus on resilience and cost optimisation. They need to balance these two priorities without sacrificing their sustainability commitments, which is a huge challenge that technology can help resolve to an extent.”
However, what approaches can manufacturers adopt to establish robust supply networks, operate factories that prioritise safety and security, and simultaneously provide more sustainable products and services?
“Visibility is the first step to resilience; manufacturers need to develop always-on visibility into their operations across the supply chain and factories,” says Ladha. “Microsoft Azure IoT, the wider Microsoft technology stack and solutions from our partners can help unlock visibility across operations. Data analytics platforms such as Microsoft Fabric and generative AI capabilities, such as Microsoft Azure OpenAI Service in the cloud, help to democratise analytics, enabling manufacturers to develop resilient supply chains and operate safe, secure and sustainable factories.”
To achieve the goal of offering more environmentally friendly products, the initial step lies in designing products with sustainability in mind. Various leading independent software vendor solutions are being used for product design and simulation, which are accessible through Azure’s high-performance computing and AI infrastructure. With this, manufacturers now possess the capacity to generate synthetic data for enhanced simulations, explore design variations for thorough analysis by engineers, optimise parts placement, and even employ inverse design for material exploration and discovery.
“By creating digital feedback loops between designing and building products – and optimising operations with the help of AI and people – manufacturers can develop resilient supply chains, and operate safe, secure and intelligent factories,” says Ladha. “This allows delivery of more sustainable products and services.”
Ladha explains that business resilience is also dependent on cyber resilience. “To uncover shifting attacker techniques and stop breaches occurring, organisations must be able to see across their applications, endpoints, network and users,” he explains. “With essentials like enabling multi-factor authentication, limiting user access, up-to-date systems and anti-malware in place, decision makers can focus on more specific areas of concern.”
These decision makers have various areas of focus, such as data governance, compliance assurance, and fostering an environment conducive to sustainable innovation. One notable approach that Ladha highlights is that a manufacturer’s planning process and operations can be enhanced through the utilisation of digital twins for factories.
“Manufacturers are looking for a capability for remote operations,” says Ladha. “A single pane of glass where they can see all the enterprise-wide assets, their operations and their performance. They also want to be able to bi-directionally communicate with these assets. That is not only read the data from them but also change settings, parameters and configurations.
“They are also looking for capabilities around ‘rewind and replay’. If something goes wrong in the production process, they want to be able to ‘rewind’, go back in time, to see what happened and why it happened. They can perhaps also use the graphical model behind Azure Digital Twins to figure out the dependencies and conduct a root cause analysis and ensure the anomaly does not happen again.
“Third, is an ability for manufacturers to track each serialised asset with its own digital twin. This applies to both assets on the factory floor and connected products deployed in the install base. Creating individualised digital twins gives manufacturers a better visibility into the specific assets maintenance needs and conduct predictive maintenance without wasting useful life of the asset.”
Ladha also says that manufacturers want to leverage digital twins as the cornerstone for simulations and conducting hypothetical scenarios. They aspire to use digital twins as a platform for digital verification and validation. Their objective is to establish trust in the quantitative assessment of design and production process modifications through simulation and modelling exercises rooted in the digital twin framework.
In recent years, many businesses discovered that their current supply chain technologies are ill-equipped for an environment characterised by ongoing disruptions, constraints and shortages. “AI-enabled supply chain management can provide unprecedented visibility and insights, helping to solve disruptions before they happen,” says Ladha.
In March 2023, Copilot in Microsoft Supply Chain Center was launched, which Microsoft Dynamics 365 Supply Chain Management customers can access. It will provide interactive, AI-powered assistance across business functions, as well as proactively flag external issues such as weather, financials and geography that may impact key supply chain processes. “Predictive insights surface impacted orders across materials, inventory, carrier, distribution network to alert impacted partners and mitigate potential disruptions before they happen and help them to become more agile, connected, and sustainable,” says Ladha.
And for manufacturing companies striving to provide concrete ESG benchmarks while enhancing their sustainability profile, they can adopt Microsoft Cloud for Sustainability. “It enables organisations to manage their environmental footprint, embed sustainability through their organisation, and make strategic business investments to help them meet their sustainability commitments.”
Partner perspectives
We asked selected analysts and Microsoft partners how Microsoft technology is helping manufacturers set tangible environmental, social and governance standards, and improve their sustainability credentials.
“Microsoft has identified the value of leveraging digital transformation initiatives which play a dual role, helping to improve bottom line operational and financial results while also helping manufacturers to meet decarbonisation and ESG goals,” says Craig Resnick, vice president, consulting at ARC Advisory Group.
“OrbusInfinity enables manufacturers to integrate sustainability criteria and key performance indicators into decision-making processes, allowing them to consider ESG factors when developing strategies, selecting suppliers, or making investments,” says Tim Mitchell, chief evangelist at Orbus Software.
“Thanks to the technology offered by Microsoft and available on our solutions on Azure, we suggest how to optimise production and distribution processes. AI-powered software can accurately calculate sales forecasts, optimise storage processes, reduce inventory holding periods, minimise waste and obsolescence, and maximise resource utilisation,” says Francesco Stolfo, vice president of business development at Toolsgroup.
Read the full responses and more from these partners in the latest issue of Technology Record