Equipment management and sustainability


Key takeaways:

  1. Modernizing manufacturing processes reduces the amount of equipment, energy, and raw materials used in production and can significantly cut CO2 emissions.
  2. The factory floor can act as an important “command-and-control” point for a larger decarbonization journey, particularly now as the sustainability emphasis of firms expands to include Scope 1, 2, and 3 emissions.
  3. The key to overcoming sustainable manufacturing hurdles is to increase access to visibility through data analytics and digitally connected supply chains.  
  4. The circular economy is a progressive journey of many steps, which begins with viable business plans for managing materials and energy in the immediate term, and revamping “design-for-sustainability” manufacturing processes for long-term circularity.
  5. The primary goal of accelerating decarbonization in manufacturing processes is to increase efficiency, which requires both leaner processes and manufacturing facilities that can be segmented into smaller, more flexible, and modular components. This allows producers to adjust assembly lines, processes, and material inputs so that they are more precisely calibrated to better forecast data for on-demand customized manufacturing.

Sustainability and the factory floor

The carbon impact of the world’s manufacturing industries has held the imagination of climate change activists for decades. The belching factory smokestack was one of the first salient targets of the decarbonization movement, beginning with the passage of the US Clean Air Act in 1970.

Today, with ever-dire projections of the impact that global warming will have on sustainable life on the planet, the role that enterprises play in mitigating climate change has come into even sharper relief. Firms increasingly need to demonstrate concrete sustainability goals to maintain customer loyalty and investor confidence. Nine out of 10 Fortune 500 companies publish sustainability reports—nearly 100 have committed to carbon neutrality, and over 70 are committing to Science Based Targets, a greenhouse gas reduction framework established by the United Nations Global Compact and the World Wide Fund for Nature.

Decarbonization in the manufacturing process, through improving equipment operations, reducing waste, and making products with less carbon-intensive inputs, is increasingly fitting into global firms’ broader green agendas. But, more work on this clearly needs to be done. In its 2022 Corporate Climate Responsibility Monitor, the New Climate Institute reviewed the net-zero commitments of 25 large corporations and found their emission-reduction efforts would only achieve 40% reductions on average, and only three of the companies (none of them manufacturing firms) would achieve 90% decarbonization by their target dates.

Manufacturers have several levers to pull in their efforts to decarbonization. One is to diversify their energy sources away from fossil fuel-based electricity, purchasing from renewable energy producers or developing photovoltaic microgrids to produce their own green power.

Another lever is to accelerate the efficiency of equipment maintenance and process optimization, using improved data, analytics, and Internet of Things (IoT)-based sensors to identify production-asset faults and assess operating conditions with greater accuracy.

A third lever involves modernizing manufacturing processes to reduce processes and the amount of raw materials used during production, as well as decreasing the usage of machinery and improving the performance of existing machinery.

Castrip, a US-based flat rolled-steel processor firm, licenses technology that converts liquid steel into one- to two-millimeter thin strips for use in industrial, automotive, and construction applications. It has dramatically reduced the amount of CO2 emitted when converting liquid steel into thin steel strips by 80% to 90% over traditional methods, thanks to reduced machinery usage and fewer production processes.

Castrip’s director of technology, Walter Blejde, says his company’s core technology innovation, which is about two decades old, has transformed the emissions profile of steelmaking. “A conventional slab casting hot strip mill has massive structures on an energy-intensive production line some 800 meters long,” he explains. “We have removed rollers and other processes and created a strip casting process that pours liquid steel through a single rolling mill only 50 meters long.”

Castrip’s approach has extracted many of the processes that consume energy and generate heat, thus significantly reducing a mill’s carbon footprint. Blejde points out, however, that these process improvements were not explicitly designed to reduce the energy intensity of their producing strip. “The first driver was to make a smaller capacity strip for a niche production plant of half a million tons, which is a pretty good size for even a small developing country in terms of its requirement for sheet steel,” he says.  The carbon-friendliness was a fortunate side benefit, which Castrip has now turned into a core selling point.

The ongoing challenge, however, is to continue to decrease energy intensity. “We’ve totally removed any need to reheat a big section of steel, but we eliminated that process so there’s no scale for further improvement,” says Blejde. “We have reduced the number of rolling mills from six big stands to one big stand, so we’ve got most of the gains there. Now, there are tools to further reduce the energy consumption in the rolling mill, so we’re working on fine-tuning aspects like that, but these gains are small relative to our original big-step changes.”

One area that Castrip has been working on for the last two years is increasing the use of machine intelligence to increase process efficiency in the yield. “This is quite affected by the skill of the operator, which sets the points for automation, so we are using reinforcement learning-based neural networks to increase the precision of that setting to create a self-driving casting machine. This is certainly going to create more energy-efficiency gains—nothing like the earlier big-step changes, but they’re still measurable.”

Reuse, recycle, remanufacture: design for circular manufacturing

Growth in the use of digital technologies to automate machinery and monitor and analyze manufacturing processes—a suite of capabilities commonly referred to as Industry 4.0—is primarily driven by needs to increase efficiency and reduce waste. Firms are extending the productive capabilities of tools and machinery in manufacturing processes through the use of monitoring and management technologies that can assess performance and proactively predict optimum repair and refurbishment cycles. Such operational strategy, known as condition-based maintenance, can extend the lifespan of manufacturing assets and reduce failure and downtime, all of which not only creates greater operational efficiency, but also directly improves energy-efficiency and optimizes material usage, which helps decrease a production facility’s carbon footprint.

The use of such tools can also set a firm on the first steps of a journey toward a business defined by “circular economy” principles, whereby a firm not only produces goods in a carbon-neutral fashion, but relies on refurbished or recycled inputs to manufacture them. Circularity is a progressive journey of many steps. Each step requires a viable long-term business plan for managing materials and energy in the short term, and “design-for-sustainability” manufacturing in the future.

IoT monitoring and measurement sensors deployed on manufacturing assets, and in production and assembly lines, represent a critical element of a firm’s efforts to implement circularity. Through condition-based maintenance initiatives, a company is able to reduce its energy expenditure and increase the lifespan and efficiency of its machinery and other production assets. “Performance and condition data gathered by IoT sensors and analyzed by management systems provides a ‘next level’ of real-time, factory-floor insight, which allows much greater precision in maintenance assessments and condition-refurbishment schedules,” notes Pierre Sagrafena, circularity program leader at Schneider Electric’s energy management business.

Global food manufacturer Nestle is undergoing digital transformation through its Connected Worker initiative, which focuses on improving operations by increasing paperless information flow to facilitate better decision-making. José Luis Buela Salazar, Nestle’s eurozone maintenance manager, oversees an effort to increase process-control capabilities and maintenance performance for the company’s 120 factories in Europe.

“Condition monitoring is a long journey,” he says. “We used to rely on a lengthy ‘Level One’ process: knowledge experts on the shop floor reviewing performance and writing reports to establish alarm system settings and maintenance schedules. We are now coming onto a ‘4.0’ process, where data sensors are online and our maintenance scheduling processes are predictive, using artificial intelligence to predict failures based on historical data that is gathered from hundreds of sensors often on an hourly basis.” About 80% of Nestle’s global facilities use advanced condition and process-parameter monitoring, which Buela Salazar estimates has cut maintenance costs by 5% and raised equipment performance by 5% to 7%.

Buela Salazar says much of this improvement is due to an increasingly dense array of IoT-based sensors (each factory has between 150 and 300), “which collect more and more reliable data, allowing us to detect even slight deteriorations at early stages, giving us more time to react, and reducing our need for external maintenance solutions.” Currently, Buela Salazar explains, the carbon-reduction benefits of condition-based maintenance are implicit, but this is fast changing.

“We have a major energy-intensive equipment initiative to install IoT sensors for all such machines in 500 facilities globally to monitor water, gas, and energy consumption for each, and make correlations with its respective process performance data,” he says. This will help Nestle lower manufacturing energy consumption by 5% in 2023. In the future, such correlation analysis will help Nestle conduct “big data analysis to carbon-optimize production-line configurations at an integrated level” by combining insights on material usage measurements, energy efficiency of machines, rotation schedules for motors and gearboxes, and as many as 100 other parameters in a complex food-production facility, adds Buela Salazar. “Integrating all this data with IoT and machine learning will allow us to see what we have not been able to see to date.”

The role that IoT plays in harnessing insights across a manufacturer’s entire operations is becoming crucial to firms achieving their sustainability goals. “We link IoT sensors to our operational models to conduct predictive performance management and determine when assets need maintenance or repair,” says John Perrigue, senior director of digital process design at US pharmaceutical and fast-moving consumer goods (FMCG) giant Johnson & Johnson (J&J).

“Greater efficiency in our equipment drives lower energy consumption and is enabling some of our production sites to push into carbon-neutral mode.” This effort, Perrigue explains, is being taken up by J&J’s consumer goods businesses, where sensors are used to govern solar panels, implement wastewater reduction, “and oversee every part of the manufacturing process so we can shrink it down, and reuse as much as possible.”

Known as Smart Asset Optimization, Perrigue believes this program has slashed average energy costs in the production line by 20% to 25%. It is now being evaluated by J&J’s global innovation scouting group to be scaled up and deployed to meet similar requirements in the company’s pharmaceutical and medical technology groups.

Extending the use of sensors and predictive tools across the entirety of production facilities—and not just on assets on the assembly line—will increasingly become the norm, explains Schneider’s Pierre Sagrafena. He believes every manufacturer must understand three core transformations to achieve carbon neutrality, and IoT is a critical enabler of each. “IoT can be used to manage microgrids and balance electricity loads as firms accelerate their electricity decarbonization,” says Sagrafena. “Internet-connected controllers can be used to increase process electrification, and IoT-delivered data can deliver insight that enables the next step of visibility as firms increase their efficiency and work towards circularity.”

Circularity principles involve making manufacturing tools more efficient and the entire production design less carbon intensive. Analytics tools transmit better information about the condition and energy use of equipment used in production lines, as well as the usage of raw materials and components across the supply chain. “Analytics are quite important—internally, we share tooling, through a searchable database of tools that allows us to reuse them across different facilities,” explains Bruno Chazalette, head of circular solutions at Renault Trucks in France.

“Externally, in order to assess and to measure precisely all our products, and the carbon composition from the components, we need to precisely measure everything. We have had all our trucks connected for years, and we use data collected on our trucks in service to support customers in their own optimization journey.” Such efforts complement Renault’s longer-term transition toward complete circularity, which includes the repurposing of existing product lines and efforts to accelerate the introduction of low-carbon electric vehicles. 

Flexible and fungible: modularity as the future of sustainable manufacturing

As in any other operational improvement process, the goal of decarbonizing a factory or production line involves a reassessment of the overall efficiency of these facilities, with an eye to design them in climate-friendly ways. Moreover, as sustainable manufacturing increasingly takes into account the carbon impact of products after they leave the assembly line, such design principles must also be implemented in ways that increase the energy- and material-efficiency of each product’s lifecycle, as well as that of the operational infrastructure that builds it.

Digital technologies and analytics improve predictive processes that producers can use to design more sustainable manufacturing capabilities from the start. J&J’s John Perrigue describes how his company works with virtualization technology and analytics to develop digital models of manufacturing processes for various consumer goods, which use predictive tools to stress-test sustainably optimal production models in virtual reality before committing them to actual carbon-intensive manufacturing lines.

“By modeling the mixing processes, we can look at heating and cooling times, and use computational fluid dynamics and simulation to predict cycle operations before we try it in a full-scale environment,” says the senior director of digital process design. “We are thus able to deliver products faster, and validate the materials required to create the product right the first time.”

Perrigue sees digital twinning as a core element in J&J’s design for manufacturability R&D processes, which also creates decarbonization gains. “We are able to improve our quality and improve our equipment functionality, which gives us good cycle-time performance, which means less heating, cooling, and electricity consumption.”

Ultimately, accelerating decarbonization in manufacturing processes requires leaner processes and more modular manufacturing facilities, both of which help producers consume fewer materials and less energy. By making components more modular—segmenting them into smaller, more flexible components—producers can more precisely calibrate assembly lines, processes, and material inputs so that they can  provide on-demand and customized manufacturing.

Flexible manufacturing can also be developed into part of a circularity-oriented business solution for producers. “Our CEO wants us to move into an ‘equipment-as-a-service’ business model,” explains Renault Trucks’ head of circular solutions, Bruno Chazalette. “The more we do this, the more we need to understand our customers’ business, and the more we will customize our production. But to customize, we need modularity in our facilities.”

Digitizing manufacturing processes enables J&J to take an aggregated view across its global operations and to benchmark across its facilities so that it can make greater carbon reductions globally, says Perrigue.  “Digital is fundamentally transforming the way we approach sustainable manufacturing design and how we approach manufacturing process-planning. Failure mode and effects (FMEA)-type analysis within our facilities and management groups determines a total cost lifecycle ownership over most of our products. This primarily looks at efficiency improvements in production, but there are also elements of fixed- and variable-cost reduction in the overall bottom line, and all this rolls up into our broader mission to promote a healthy planet.” He notes that this involves encoding sustainability principles into the design facilities of critical utilities and assessments of the sustainable practices of manufacturing and business partners. 

Many of these efforts include modernizations such as increased use of automation and robotics, but Perrigue believes that, ultimately, a more systemic approach to sustainable manufacturing is needed. “In an age of increasingly personalized medicine or consumer goods, we are going to have to start thinking about ways to build products on a mass scale that are customized for individuals, not for markets.

This will require a flexible, modular, and mobile approach to manufacturing, enabling the ability to wheel equipment in and wheel it out.” Such a shift to respond to changing consumer dynamics, he believes, will quickly accrue sustainability benefits. “Such an approach will require less fixed equipment, less energy to run and operate, and it will take less energy to build such facilities for multiple product lines, as more rapid turnover will require smaller and fewer components. If we are making a body cleanser today and a lotion tomorrow, we’ll just swap out the elements of the packaging line or swap out elements of the upstream process,” says Perrigue.

Sustainability for the long haul 

Leading firms are integrating production-specific sustainability practices into their overall sustainability objectives at an organizational level. Increasingly, firms are looking to create viable sustainable supply chains as well, extending their carbon-footprint targets to the materials and services provided by ecosystem partners. As this report has discussed, the long-term goal of manufacturers working toward carbon neutrality requires achieving two cojoined goals: increasing visibility of the carbon content across a firm’s entire supply chain and reorienting their business model based on circular economy principles.  

Measuring and management are key strategies for maximizing the lifespan of products and equipment used in operations.Up until recently, equipment and asset management (upgrading equipment, use of automation, more responsive repair processes, and performance-based maintenance) has largely been used to increase operational performance and contain costs, with sustainability goals a happy coincidence.   

Now, however, with investors and customers increasingly evaluating firms on their environmental, social, and governmental (ESG) objectives and sustainable development goals, sustainability is becoming the goal of process improvements. Industry 4.0 tools such as IoT sensors and performance management software increase the availability and precision of production data, and now includes sustainability-relevant data such as energy consumption and the carbon content of materials.

Managing these inputs downward has proved challenging for the world’s manufacturing industries, even in mature economies: in Canada, for instance, average energy consumption in manufacturing industries has remained relatively constant over the last decade and even increased in recent years, dropping only significantly in 2020 as the impact of covid-19 took hold.

This reality means firms must actively look at managing their entire sustainability impact. “We try to capture the impact we generate per unit of product that we make, to get metrics in place, and them obviously try to reduce our energy and material consumption. We’re really getting a handle on our factories carbon footprint, and trying get to the same insight with waste and the water,” says Scott Park, the Seoul-based CEO of global construction manufacturer Doosan Bobcat, noting that the company must seek this visibility outside of the production facility too.

“As we focus on getting the carbon footprint smaller on our products, we have to look at the usage of our products and the eventual end of lifecycle so we can determine how we can manufacture them to increase each machine’s recyclability so that fewer pounds of material go into landfills,” adds Park.

Circular economy principles are allowing firms to build in end-to-end decarbonization practices, in addition to addressing raw material scarcity—but this is a long-term objective. The quest for sustainability through better analytics is highly correlated with the broader objectives of digital transformation and continuous improvement processes.

“We are trying to evade carbon within our four walls, but we mostly run assembly facilities that have a modest footprint compared to steel-making or chemicals, so our aspirations need to be inclusive of our supply chain partners,” says a chief sustainability officer (CSO) of a major industrial conglomerate.

Only 5% to 10% of the overall carbon emissions associated with its products is directly attributed to factory activity, while the conglomerate’s supply chain probably has five to six times its own footprint, says the CSO. “The steel, plastics, and electronics that we buy from a lot of different firms with different ESG viewpoints, so to get the really big impact, our factories need to work with suppliers to get them to produce greener over time.” The firm is beginning to work with companies that supply completely recycled polypropylene and other materials.

For many leading manufacturers, the factory floor thus serves as an important “command-and-control” point in a larger decarbonization journey, particularly now as their sustainability emphasis expands to include Scope 1, 2, and 3 emissions. The production facilities of a firm may not account for a large percentage of its direct carbon footprint, but the material inputs that flow through its facilities, and the up- and downstream supply-chain relationships that connect through them, all have their own carbon journeys that must be accounted for and managed.

Partner’s perspective

Schneider Electric’s mission: to be a digital partner for sustainability and efficiency

Sustainability is at the core of Schneider Electric’s purpose, culture, and business. Schneider’s vision is to empower everyone to make the most of our energy and resources, bringing progress and sustainability for all. 

Schneider is committed to accelerating sustainability for all and to being carbon neutral in its operations by 2025 and end-to-end by 2040. The company actively helps its customers and suppliers to better manage energy and reduce their CO2 footprint by 800 million metric tons of CO2 by 2025.

Schneider is continuously developing innovative services for decarbonization. The company is hiring 2,500 new green jobs in consulting, modernization, and maintenance to build and execute sustainability strategies, identify energy savings, diversify its energy portfolio with greener sources, and extend the life of equipment to minimize waste and maximize efficiency.

By considering the design of products throughout their full lifecycle, Schneider Electric enables larger circularity models from take back, refurbishment, reuse, and recycling. As an example, Schneider Electric is committed to phasing out sulfur hexafluoride (SF6) through the launch of its iconic SF6-free equipment as well as the recovery services of this most potent greenhouse gas.

Schneider’s innovative Service Plans leverages connected products, analytics, on-site, and remote monitoring expertise to enable optimized condition-based maintenance while preventing equipment failure. Its services also integrate new technology like Electrical Digital Twin or extended reality to make installation more resilient, safe, efficient, and sustainable.

This content was produced by Insights, the custom content arm of MIT Technology Review. It was not written by MIT Technology Review’s editorial staff.



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