As per the World Economic Forum, The Fourth Industrial Revolution represents a fundamental change in the way we live, work, and relate to one another. It is a new chapter in human development, enabled by extraordinary technological advances commensurate with those of the first, second, and third industrial revolutions.
The Fourth Industrial Revolution redefines how products are designed and manufactured, raw materials are sourced, and services are offered by connecting each link in the supply chain.
“To remain competitive, both companies and countries must be at the frontier of innovation in all its forms, which means that strategies that focus on reducing costs will be less effective than those based on offering products and services in more innovative ways.”
– The Fourth Industrial Revolution, Klaus Schwab.
Importance of Sustainable Product Design?
Today, Sustainability is no longer nice to have a topic; sustainability has become a business imperative. As per G&A Institute, In 2011, only 20% of S&P 500 companies reported their ESG scores. Today a whopping 92% do.
The green line is as important as the top and the bottom line for companies, employees, and investors. The need is – How to make sustainability profitable and profitability sustainable.
Product design plays a significant role in reducing a company’s overall environmental impact. As per McKinsey’s recent report,
Up to four-fifths of a product’s lifetime emissions are determined by decisions made at the design stage. By building on proven cost-optimization techniques, companies can get those choices right.
Traditionally, product design decisions are made to optimize the manufacturing & sourcing cost of the manufacturer, and the operation & maintenance cost of the end-user. The same logic can be applied to the product sustainability aspect, such as product repair, upgrade, remanufacturing, and recycling at the end of life.
Companies’ fundamental sustainability goal is to design products that are recyclable and environmentally sustainable.
Sustainable Product design’s impact on every step in the supply chain and adapt their product design to minimize waste and maximize re-usability. This helps companies to bring recyclable & environmentally sustainable friendly products from the initial phase of product design to the end-of-life of the product, helping companies transitioning into the circular economy.
How sustainable Product Design decision helps companies on their sustainability journey?
With the product design at the core, companies aim to achieve efficiency, minimize risk, and protect their & their customers brand from all aspects of compliance applicable to product materials or ingredients.
To manage the carbon footprint of the products, companies need to Understand the CO2 footprint of inputs and operations, optimize operations (Supply Chain and Manufacturing) based on benchmarks, and transform into new business models & product portfolios while optimizing the total CO2 footprint.
Product design decisions impact the entire product lifecycle in the following lines
- Input materials:
- Optimize quantity of input materials. sourcing decisions across the supply network (e.g., raw materials with low carbon footprint, source material locally to decrease transportation emissions and costs).
- Increase the utilization of the re-used components without compromising quality. Set targets on how much re-usable input components must be used (e.g., 25%).
- Transportation: Design packaging that keeps products safe throughout their transport and avoid harmful packaging materials.
- Re-design processes: Re-design production processes to take out wastefulness from every step of your production. Process decisions made during product design helps to optimize the energy usage & reduced emission during production.
- Operate & dispose: Design to ensure that the product itself or components can be re-used in commercially viable manner.
- Business innovation: Weigh design decisions based on shift to new business models (i.e., Product as a Service) for longevity, remote diagnosis, maintenance, ease of re-manufacture etc.
How SAP Helps?
SAP’s goal is to Integrate sustainability data to business processes across all value chains to drive performance, new products, new markets. This is helping companies in getting the clarity into their green line.
To manage the green line, companies need business process technology to identify, quantify, analyze, and act on data through their end-to-end operations. To enable this, our new offering, the SAP Cloud for Sustainable Enterprises brings together a comprehensive portfolio of solutions that enables businesses to holistically manage sustainability performance. Here are few key solutions helping companies on their Sustainable Production Innovation journey.
- SAP Responsible Product Design helps companies calculate extended producer responsibility (EPR) obligations, plastic taxes, and corporate commitments to optimize material choices. The solution accesses your enterprise or third-party system data and combine it with information on global regulations to calculate obligations in key markets.
- SAP Enterprise Product Development empower companies to innovate, iterate, and introduce innovative, sustainable, and compliance products faster by connecting insights, processes, and people. This helps companies to digitalize product development – from design to operate for discrete manufacturers and design to consumer for process manufacturers – to reduce time to market.
- SAP solution Product Compliance helps companies to manage regulatory requirements, track substances, assess supplier materials, classify products, and manage and ship compliance documents. This helps to ensure product compliance and safety and build in controls throughout the product lifecycle.
Stakeholders can efficiently manage regulatory and customer requirements, create compliance documents, manage dangerous goods, and provide compliance information to all stakeholders.
- SAP Product Footprint Management helps companies to gain insights on the environmental impacts of their products across the entire lifecycle for disclosure and internal product & process optimization. The solution integrates into SAP Integrated Business Planning helping supply chain planner to select the sourcing decision based on the material having lower carbon footprint.
What are the benefits with Sustainable Product Design approach?
- Design products that are recyclable and environmentally sustainable
- Ensure high and automated transparency of product compliance requirements
- Holistic Product lifecycle Costing including social and environmental aspects
- Seamless handover to manufacturing, and efficient supplier collaboration
- Reduce exposure: Calculate fees and taxes accurately and implement measures to reduce regulatory costs.
- Lowers the Carbon Footprint across the supply chain: Product Carbon Footprint details once integrated into Supply Chain Planning system helps planner to make the sourcing decision based on the material having lower carbon footprint.
How to proceed?
- Start Transformation: Gain insight by aligning people, processes, and technology to holistically manage sustainability aspects across your enterprise and the supply chain.
- Get a baseline and identify the hot-spots for improvement: Assess how you perform – environmental, social and governance impact.
- Focus: Set the overall direction of where you want your company to go. Identify impact areas, define targets, milestones, and timelines.
- Sustainability Performance: Monitor, measure, analyze and report on improvements around sustainability performance
For more information on how SAP can help to accelerate your sustainability journey, please visit the following home page:
My Past blogs on this sustainability and Industry 4.0 Series: