Improving sustainability and adopting a circular economy approach is a strategic priority for 84% of manufacturing leaders polled in new research by Sage. The report by Foundry includes responses from several countries and highlights the importance of technology in forward-looking sustainability strategies. Based on a survey of included 859 responses from IT and business leaders in the manufacturing and distribution industries, the report, at 20 pages long, provides some interesting insights.
Rob Sinfield, Head of Business Unit, Sage X3 and Sage Intacct Manufacturing, commented: Sustainability is increasingly becoming a non-negotiable for modern manufacturers and distributors. While business goals remain front of mind, the industry equally recognises the importance of environmental drivers, with energy efficiency and helping the environment as key motivations for pursuing a sustainability strategy.
“As a result, 32% of organisations adopting circular economy strategies are already reaping the rewards – from greater profitability and productivity to improved resource usage and an enhanced brand reputation. Better yet, a further 32% believe they will achieve benefits within the next three years.”
The report is divided into several sections:
- The need for sustainable change (an introduction only)
- Key research findings
- The growing Circular Economy
- Multiple challenges to overcome
- Transformation is operationally challenging
- The promise of technology and innovation
- Case study: Realising Circular Economy benefits
- Summary: Advancing your Circular Economy strategy
- 4 steps toward advancing your CE and sustainability strategy
Respondents come from UKI (230), US and Canada (230), France (130), Germany (129), Spain (70) and South Africa (70). However, there is no breakdown within the report of how different nationalities perceive the issues and only one for different regions around greenwashing. Considering the numbers involved, this might have had validity if they differed.
The Report
The first section does little to highlight the growing need for sustainable change. There are plenty of statistics for the authors to draw from. They didn’t, and the first section is a simple introduction to the report and should probably have been titled as such. The key research findings are in place of an executive summary but provide the highlights without revealing all of the insights from the report.
The meat of the report follows. The content is a mix of survey data and analysis. There are also insightful comments from the president and founder of StarCIO, Consulting CIO and tech expert Isaac Sacolick.
The report highlights that thought greenwashing may occur in the growing circular economy but is not always negative. The report does not investigate the extent of greenwashing but infers that sustainability strategies led by marketing rather than the CEO are likely to have less real impact. Or rather less impact on sustainability, though there are brand image benefits.
It would require an investigative journalist to uncover what is happening in organisations. What is disappointing is that respondents see improving brand reputation (50%) as more important than helping to improve the environment (46%)—attracting/retaining only achieved 35%, a figure that might harm some organisations as the public conscience grows.
Risks, challenges and opportunities
The report then highlights the risks of not adopting a circular economy strategy and the challenges businesses face.
- Reduced long-term profitability (46%)
- Brand damage among customers and/or partners (46%)
- Loss of operational efficiency.wasted resources (45%)
These risks, if reversed, are also the opportunities that becoming more sustainable can deliver. The top three challenges were seen as
- Cybersecurity (Internal). 76%
- Cost and profitability management (Internal). 73%
- Rising costs and market erosion. 72%
The report contains a long list of challenges, with all 28 cited as challenges by more than 50% of respondents. What isn’t known is how many more the survey identified or tracked. These issues broadly fall into one of four categories: people, process, information and technology.
Sacolick highlights people as key enablers, stating: “We need people who ask questions, who are able to look at how issues are solved today and then challenge assumptions. They should be able to do their own research and see how other people are doing things, but not only within the manufacturing or distribution space.”
The viewpoint was backed up with 71% of respondents identifying that finding people with the right expertise is the top operational challenge. Manufacturers, therefore, need the right people to identify and deploy the technology required to deliver change. Sacolick advises that the approach to deploying technology must be both bottom up and top down.
Technology to deliver a circular economy strategy
The survey identified four main technology trends that manufacturers as important for a circular economy and sustainability strategy:
- Cloud (74%)
- Data Analytics (68%)
- Automation (67%)
- IoT (48%)
However, despite other industries adopting cloud, manufacturers appear to have been laggards with public cloud used for core apps less than 40% of the time:
- supply chain (39%)
- CRM (38%)
- Business intelligence (35%)
- human resources management (34%)
- ERP (32%)
- payroll (29%)
Manufacturers and distributors see new technology and innovations (72%) as a key enabler to adopting CE and sustainability strategies, and concerns arising from inaction such as damaged brand perceptions (46%) and reduced long-term profitability (46%) are consolidating the need for investment.
Sacolink expounds on how manufacturers must adopt innovation and technology, building a technology stack that can enable efficiency and innovation.
Skagit Horticulture
A US-based wholesale grower and distributor of plants and flowers with operations in California and Washington has improved its sustainability with technology. Skagit has deployed a cloud-based ERP solution and integrated it with eCommerce to improve visibility and transparency across the supply chain.
Jeremy Myrick, IT Manager, Skagit Horticulture, commented: “With SageX3, we know what we have on hand and when it’s ready; it gives us confidence in our decisions, allowing us to better serve our customers and maximise revenue.”
..and finally
The report concludes with a summary and four steps identified by Sacolick to help organisations how to build and transform their organisation to deliver on sustainability and circular economy strategy.
- A transformational mindset in leaders and employees
- Generate more data; without data, AI and analytics are weaker
- Embed IoT, IoT can deliver data from across the factory floor and end to end in the supply chain.
- Choose tech that enables efficiency and innovation, an important point; technology also needs to deliver operational benefits and efficiencies, turning the highlighted risks into opportunities and strengths
Sacolick concludes: “With greater data insights at their fingertips, organisations will be able to identify the most suited use cases for automation and transformative technologies to enhance their cost efficiency and free up time to focus on the pressing need for a circular economy and sustainability strategy.”
Enterprise Times: What does this mean
It is worth the time to download and read this report. Sacolick puts a powerful case for transformation with some useful advice that one would expect from an industry thought leader. Where the report possibly fails is the breakdown of geographic differences and the lack of qualitative input from respondents.
The long list of challenges is interesting. While the authors identify whether each is related to people, money or process, the reality is more complex. Finding the right people with the right expertise is identified as a people challenge. However, there are elements of money and process that need fixing to overcome this challenge. What will be interesting is what further insights will come from the Foundry data soon.
