“People, Planet, Profit” is the standard in manufacturing today

In today’s global economy, manufacturers face a uniquely complex range of challenges. From ever-increasing competition to greater consumer expectations; and from rising energy costs and raw material prices to supply-chain disruptions – simply staying competitive is tougher now than ever before.

And yet maximizing profits is no longer the singular focus it once was for manufacturers. Terms like environmental, social, and governance policies (ESG); decarbonization and zero-emissions; sustainability, and more are now common goals alongside increasing the bottom line.

There are many reasons for this: from legislation, to pressure from consumers, investors and even employees. But whatever way you look at it, social (People) and environmental (Planet) concerns are rapidly gaining parity with “traditional” business goals (Profit) in boardrooms and factory floors throughout the world.

The problem, of course, is that these three priorities don’t always go hand-in-hand.

To be sure, there are many clear benefits of this combined approach. For example, studies by McKinsey have shown that “a strong ESG proposition can help companies attract and retain quality employees, enhance employee motivation by instilling a sense of purpose, and increase productivity overall.” In great part that’s because employees today – particularly of the younger generation – value “connection” and a sense of purpose as much as work satisfaction.

But in the context of manufacturing there’s no escaping the inherent conflict between sustainability objectives like cutting emissions and waste; and business targets like throughput, yield and quality targets on the other. 

With entire industries committed to zero emissions targets, and when governments, investors and consumers are increasingly attaching a financial value to negative social and environmental impacts, how can manufacturers juggle these competing goals?

Is Planet + Profit even possible to begin with?

Before we discuss juggling all three “Ps”, let’s focus more specifically on the issue of Planet vs. Profit. 

Manufacturers are responsible for 30% of global emissions (some 16 billion tons of GHG) – so naturally, the manufacturing industry has become a lightning-rod for government and media scrutiny around carbon emissions. As pressure mounted, this scrutiny has evolved into a real financial price tag. Manufacturers are increasingly being fined for the CO2 they produce, and incentivized to use greener alternative fuels and raw materials.

Sustainability is also top-of-mind for many investors. A 2019 study by KPMG illustrates the clear trend towards sustainable or “responsible” investing – with a 34% increase in sustainable investing assets across the five major markets in just 2 years (worth $30tn). Clearly, that trend will only increase, as the vast majority (81%) of millennials expressed interest in “responsible investing.”

What’s more, according to Mckinsey, consumers across many industries are willing to actually pay more to go green.

All of this has spurred a wide range of commitments across manufacturing industries – from “top-down” targets like the European Union’s Cembureau 2050 Roadmap to zero emissions in the cement industry; to “bottom-up” initiatives from companies themselves, like the Sustainable Food Policy Alliance focusing on reducing waste and emissions in the food industry, among other goals.

Even in the US, where there are far fewer regulations, 64% of manufacturers plan to transition to more renewable sources of energy in coming years, according to Deloitte.

Going green at any cost? Not so fast…

But, of course, there’s a limit to all this goodwill. 

The same Mckinsey study quoted above also showed that consumers will only pay more for greener goods up to a point. In fact, enthusiasm falls away sharply after a 5% price increase across all industries surveyed. For building materials, the number falls below 50% if prices were to increase by 10% or more. That’s particularly significant given that industries like cement and steel are among the biggest polluters – and hence face the most aggressive CO2 targets.

And it goes without saying that for all the goodwill in the world, investors won’t simply bankroll a company that fails to stay competitive.

And yet it’s precisely here, in the nexus between Profit and Planet, that the most glaring and costly contradictions exist on the factory floor.

Process manufacturing in particular is fraught with complex tradeoffs between objectives like quality vs. waste, or throughput vs. energy costs. Sustainability targets make this challenge exponentially harder – both by adding additional conflicts like CO2 reductions vs. throughput, or quality vs. alternative fuels/raw materials; as well as by exacerbating existing conflicts with extra scrutiny on areas like waste and energy intensity.

Conflicting Operating Envelopes

This conflict finds its clearest expression when process experts seek to establish the optimal operating envelopes for a given objective, by finding the optimal ranges across all process parameters.

Purely for the sake of illustration, let’s take a typical petrochemical manufacturing process. 

A key objective would be to increase yield, and the operating envelope might look something like this:

But that same manufacturer also has emissions targets. To reach them, the ideal operating envelope would have very different ranges for these same data tags:

Of course, the same conflict likely exists when considering the other objectives on the line, like quality and energy costs.

The problem runs deeper: balancing competing objectives in a dynamic environment

Juggling is tricky – juggling in the middle of a raging storm is practically mission impossible.

But that’s exactly what manufacturers have to contend with. You aren’t operating in a vacuum; external factors beyond your control are constantly shifting, and impacting your process in different ways. 

On the most basic level it could be a seasonable shift in market demand that impacts your key objectives. For example, an ice cream factory will naturally prioritize throughput/yield in the summer months to meet a spike in demand, while in the winter months the operating envelope might lean towards another goal (quality, lower energy costs, etc)

But the reality is often far more dramatic and unpredictable: from unpredicted shifts in market demand, to weather patterns, to rising energy costs, to raw material variances; and from wars, to global pandemics, and a million other global supply chain disruptions – all of these factors can influence your operating envelope at any given moment.

So even if you have pinpointed your ideal operating envelope at a given time – it might soon become obsolete.

Dynamic Multidimensional Objectives: a unified view across competing KPIs

Without mincing words, overcoming a data-oriented task of this complexity clearly requires some form of Industrial Artificial Intelligence. 

This simple fact is behind the rapidly increasing demand for Industrial AI technology and solutions among manufacturers of all kinds – as highlighted in a recent comprehensive report: Industrial AI and AIoT Market Report 2021–2026.

That in-depth report noted that just over a third of manufacturing organizations have fully or partially adopted AI solutions

Unsurprisingly, process manufacturers lead the pack by a long way, according to the study, with the top two most widely-adopted Industrial AI technologies being Predictive Maintenance and Operational Excellence/Process Optimization. But intriguingly, when also considering manufacturers who were in the pilot or testing phase of Industrial AI, Operational Excellence/Process Optimization technologies take the top spot. 

This is just one of many illustrations of the growing realization that complex manufacturing processes can only be mastered with the help of AI technology.

That doesn’t mean “lights-out manufacturing” – which is at best a far-off aspiration, but for most manufacturers an unrealistic and even undesirable goal. The goal here is to empower manufacturing teams to make the right decisions to identify and maintain the ideal process parameters for optimum performance across all objectives at any given moment, regardless of any internal or external factors.

The first step towards this is focus – specifically on a unified, multidimensional objective that accounts for all the competing objectives and constraints for a given production process.

That multidimensional objective can then be used to establish the ideal operating envelope to achieve optimum performance across all “competing” objectives.

But, as mentioned, that multidimensional objective (and the subsequent operating envelope) must also be dynamic, to adapt to changes both within and outside of the process. A Dynamic Multidimensional Objective.

Where do People fit in?

Amid the push for profitability and sustainability, the People at your plants are inevitably the first casualties. 

The COVID-19 pandemic triggered greater focus on the problem of employee burnout in the manufacturing industry. One report suggested an 86% rise in manufacturer employee burnout during the first year of the pandemic. But regardless of COVID, the constant push for ever-greater efficiency was already translating into more and more pressure on both the people who power your plants, as well as their employers themselves.

To cite one example: just prior to the pandemic, PwC’s Annual Manufacturing Report noted that British manufacturers faced the largest shortage of skilled workers since 1989. This trend is by no means limited to the UK; it’s a worldwide phenomenon.

This means 1) untenable pressure on the existing workforce to deliver beyond their numbers, and 2) an unrelenting battle between manufacturing organizations over a very limited pool of people.

Empowering your workforce to make the right decisions, at the right time

Bringing us full-circle, the “People” shortage for manufacturers also necessarily impedes them from reaching their full potential in either Profit or Planet – a fitting illustration of how closely the three “Ps” are in fact linked.

But they’re also linked in another way. The same marriage of human and artificial intelligence that can solve conflicting objectives – particularly between Profit and Planet – is also the key to empowering the People within an organization to overcome this very limitation.

First, by acting as a force-multiplier, artificial intelligence applied in this way can offset the labor shortage by empowering existing employees to reach the next level of efficiency and productivity, in particular by taking over the sisyphean data analysis tasks and leaving your process engineers and operators to do what they do best: optimize the production process.

In recent years, manufacturers in all industries have increasingly reported on this phenomenon.

The VP Operations at chocolate manufacturing giant Lindt put it this way: applying Industrial AI to process health “enables us to reach a new level of production efficiency. It enables the people that are actually operating the machines to make much better decisions.”

Watch the full interview:

Echoing that sentiment, the Global Operational Excellence Manager at Allnex, a leading chemical resins manufacturer, compared process-based artificial intelligence to “having a very skilled, very talented engineer watching the process 24/7.”

Watch the full interview:

AI can also combat the workforce shortage in other ways – for example by attracting top talent eager to use cutting-edge technology, or by enabling more remote working, thereby geographically expanding the pool of talent available for a given factory.

The 4th “P” - a healthy production Process unlocks your full potential

The bottom line is that by using AI to optimize process health, manufacturers can unlock the full potential of their People, thereby also maximizing Profits and Planet.

Process – or more specifically Process Health – is in a sense the fourth “P” that wraps up the trifecta of People, Planet and Profit.

The stakes couldn’t be much higher. Process inefficiencies cost manufacturers an estimated $1 trillion in annual production losses, and similar numbers have more recently been attached to the workforce shortage.

And as noted, there’s the environmental costs: 30% of the world’s emissions – or 16 billion tons of Greenhouse Gas Emissions – at the time of a looming climate crisis.

Unlock the full potential of your production process, with Process Health

Speak to our experts to learn how you can optimize your process health with Process-Based Artificial Intelligence™

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Unlock the full potential of your production process, with Process Health

Speak to our experts to learn how you can optimize your process health with Process-Based Artificial Intelligence™

GET A DEMO