Sustainable manufacturing in automotive industry and how it can be game-changer

ACES (Automated, Connected, Efficient, Safe & Sustainable) should aptly complement a Sustainable R&D product development strategy with Sustainable manufacturing becoming a business imperative for the future.

Sustainable manufacturing in automotive industry and how it can be game-changer

The future of Sustainable Manufacturing will be built on an economically strong foundation of ACES (Automated, Connected, Efficient, Safe & Sustainable) processes that minimize adverse environmental impacts while conserving energy and natural resources, at the same time has long term advantages to the future of Automotive business by creating value ambitiously driven by product Stewardship. ACES should aptly complement a Sustainable R&D product development strategy with Sustainable manufacturing becoming a business imperative for the future!

The automotive industry is a major industrial and economic force globally, building more than 55 million vehicles annually and they are responsible for almost half the world’s oil consumption. Making each vehicle consumes substantial energy and water even before it hits the road, and the associated amount of CO2 emissions and environmental impacts are significant.

With the circular economy gaining momentum, RPM MPR (R&D, Procurement, Make, Marketing, Purpose, Return) is becoming a keenly deliberated product Life Cycle Management strategy. LCM is intended to ensure that environmental, health, safety and regulatory (EHS&R) considerations are integrated into the design, manufacture, use and disposal of automotive products.

Sustainable manufacturing in automotive is moving beyond organizations priority in becoming an imperative strategy that drives value across the automotive value chain. Current trends such as zero-emission vehicles and carbon-neutral manufacturing demonstrate the growing significance of sustainability in the automotive industry.

Current Scenario

A recent study shows transportation accounted for greater than 30 percent of greenhouse gas emissions, making it one of the largest contributors to climate change impacts and thus under continued stress from stakeholders demanding a greener & sustainable model of the end-to-end value chain. The emergence of sterner regulations to control large-scale ecological degradation, landfills, air pollution, soil and water contamination leaves with no choice to the industry but devise a sustainable model for growth.

The automotive industry has always been pioneers in driving sustainability ahead of its industry peers, however, the rate of implementation falls short of the growth which it is witnessing. Studies indicate a gradual decline in harmful emissions per car over the last two decades but, the volume growth is not able to offset the overall absolute quantum of carbon emissions.

This industry value chain is not only complex but also dives deep into multiple tiers of suppliers and manufacturers right from mining of raw materials to “end of life” management of products. Many of smaller partners down the value chain are SMEs who have lesser or negligible adoption to sustainable manufacturing models, either due to lack of resources, awareness or sometimes driven by cost pressures to survive in the short term!

Sustainable model approach

To realize sustainable manufacturing in the automotive industry, it’s of significance to understand what it should deliver. Sustainable auto manufacturing purports to minimize impacts to the ecosystem by adapting sustainable product designs through economically sustainable manufacturing processes delivering continuous beneficial advances to support a greener environment, protecting planet life for a more sustainable future. The benefits of sustainable manufacturing are infinite. Sustainable AOEMs often enjoy brand loyalty and larger market opportunities as a result of their initiatives backed up by product stewardship.

What is Measurable is Manageable and what’s manageable is corrigible! Any organization is here to stay driving profitable growth, provide value to customers & stakeholders through ethical and responsible business models and practices. As this becomes the core mantra of sustainability, I was trying to comprehend an end-to-end value mapping model – a tool kit, that supports the organizations priorities to complement its product stewardship initiatives and environmental responsibilities.

A simple P&L (Profit & Loss) statement could be a potential holistic option to capture the various opportunities and control mechanisms to drive a sustainable manufacturing model. It provides a visible framework for an organization to not only capture the value opportunities but also supports in envisaging the various cross-functional linkages in driving more profitable & sustainable manufacturing.

Have made a unique attempt to capture the drivers that accentuate the core focus areas of Sustainability in Automotive manufacturing through the eyes of the enterprise’s own P&L and the outcome- it clearly articulates every opportunity against each of the lines that contribute to the organizations functional priorities. A simple visual demonstration attached in the below figure will keep our eyes out for driving sustainable manufacturing opportunities across the automotive value chain.

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How to view P&L attached to understand Key Sustainability opportunities

A P&L statement consists of a top-line (1) representing Sales or revenue and the bottom-line (7) represents the organizations’ income or Profit/Loss. In-between the top & bottom lines represent series of lines (2 to 6) which are the costs or expenses incurred by an organization for a period. Against each of the cost/expense lines, respective sustainability opportunity drivers are indicated which form the basis of the overall sustainability efforts needed by an organization to meet its end-to-end value model for a sustainable future.

At the end of the P&L, Sustainability support drivers and the governance mechanism represented supports the central leadership to oversee sustainability outcomes as part of enterprise overall business strategies and KPI’s. It’s also important for the enterprise leadership to keep abreast of the ever-increasing regulatory & stakeholders’ expectations, at the same time leverage the incentives made available from the local/federal govt bodies in various domain from time to time, to stay ahead of the regulations driving competitive advantage and brand loyalty.

EVs or electric vehicles are envisaged to be the vehicles of the future given their significantly lower/zero emissions. EV development & sales have taken rapid strides last 5 years and it’s reckoned to make a quantum jump in sales next 5-10 years. The present challenges with EV’s are their longer refueling (charging) time, an inadequate ecosystem to support a larger network of charging infrastructure and non-sustainable materials in battery manufacturing. However, with continued research & development in the battery space, it’s envisaged to see energy-dense batteries with longer life, quick charging with sustainable product developments aptly supported with the right ecosystems.

As automotive organizations continue to embrace and make Sustainability its strategic imperative, it’s important to reflect that the newer 3P definition of sustainability – Pollution Prevention Pays – is here to stay for a sustainable future in automotive manufacturing making it one of the most innovated and extensively sought after industrial domain for future generations.

Author: Girish Appu, Head of Manufacturing & Supply Chain, 3M India

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First published on: 30-03-2021 at 11:36 IST