• Team Auto Punditz

Will Sustainable Manufacturing be the new game-changer in the Automobile Industry too?

Sustainable Manufacturing and its processes, which have a positive effect on the environment, even as they conserve energy and natural resources, could be the game-changer in the Automobile Industry too.

Sustainable Manufacturing will be built on the strong foundations of the processes of ACES – Automated, Connected, Efficient, Safe, and Sustainable.

The Automotive Industry is a huge contributor to the global economy - More than 55 million vehicles are sold every year and add the millions already sold and in use. The industry accounts for more than half the consumption of fossil fuels across the world - add the huge requirements of water consumed in manufacturing and also the CO2 emissions, the impact of the Automobile Industry on the Global Environment is HUGE.

With increasing pressure on the environment, Governments across the World are now stressing Sustainable Manufacturing with a particular focus on Research and Development of new technologies as also recycling, to the optimum extent possible. And this is not being limited to just manufacturers but their entire supply chain.

Zero-Emission Vehicles and Carbon Neutral manufacturing are fast becoming the norm in the Automobile Industry.

Present Trends :

It has been estimated in recent studies that the Transportation sector contributes more than 30% of the worldwide greenhouse gas emissions.

This makes it amongst the biggest contributors of pollution contributing to ecological degradation including air, land, and water. The industry is coming under the scanner to limit this damage while continuing on its growth path.

However, the Automobile Industry needs to be recognized too for having consistently pioneered research and development in improving the performance of the vehicles while addressing their negative impact on the environment.

Indeed much much more than the high polluting industries.

There has been indeed a decline in emissions per car in the last two decades but this has been offset by the overall increase in the sheer volume of a number of vehicles manufactured.

The Automobile Industry structure is a complex one, with many levels of suppliers and manufacturers in the chain, before the final product is manufactured. And often, the many suppliers and manufacturers may not be equipped to address the concern of Sustainable Manufacturing due to both economies of scale and lack of sufficient financial resources.

The Sustainable model :

This model lays emphasis on having processes and technologies that limit the damages at the initial stages themselves. This could be through processes in minimizing and recycling resources like water, energy, and transportation of the raw materials as finished goods.

It would also entail a holistic approach by involving the many vendors of the Auto OEM and improving and, possibly, investing in developing sustainable manufacturing processes at all levels.

Auto Majors would need to move away from the conventional approach of the Profit n Loss statement and highlight the Sustainable Manufacturing processes that have been adapted. It has been observed that Customers; and Governments too are willing to give greater attention and value to the Auto OEMs who are willing to perform on the sustainable manufacturing platform side by side with the commercial considerations.

What are the drivers that accentuate the core areas in sustainable manufacturing?

Usually, the P&L statement discusses the top line (Sales or Revenue) and the bottom line (Income generated and the profit or loss.)

The heads and the approach for sustainable manufacturing could be detailed as :

#) Price: to be worked out keeping the green energy concerns in mind, leveraging on this to create value for the customer, have economies of scale by integrating the product mix across various plants, and have an optimum range.

#) Material: Source materials that are environmentally sustainable, have a holistic approach for the suppliers too. Have environment-friendly packaging options.

#) Manufacturing: Have processes that stress sustainability and a workforce that is knowledgeable and efficient on the same. Have processes that recycle and reuse to the maximum. Have a holistic approach that includes the processes at its vendors too. Should have the manpower that is trained and is knowledgeable to spot the sustainable opportunities early and profitably.

#) Other areas: Have systems that are able to spot and get benefits of sustainable manufacturing incentives offered by the various governments and stakeholders including rebates and tax benefits. Use the warehouses optimally to limit the environmental impacts due to the transportation of raw materials as also the finished goods. Have green infrastructure for factories and workspaces which encompasses the sustainable practices of minimum emission, renewable energy, water recycling, scrappage policy, etc. Encourage the employees to be sensitive to employ sustainable technologies in all spheres of their activities.

Organisations should have CSR initiatives inbuilt in their DNA for sustainable manufacturing.

The future could belong to the EVs or Electric Vehicles, that offer zero emissions.

In the next 5-10 years, we could be seeing a massive shift to the EVs from the present ICE technology.

There have been big steps taken by the major Auto Majors including Volkswagen and its group companies Audi, Skoda, Mercedes Benz. Volvo and GM have made big announcements on their mission and vision for the EV platform.

The EV industry of today is hampered by the limitations in charging infrastructure and the high cost of Lithium Batteries.

This challenge too, like those earlier, will be faced successfully in the Auto Industry, as earlier. A strong commitment to face the same has been announced by the Auto Majors. Government policies, incentives, and regulations for advancing the shift to the EV platform will only motivate the Auto Industry to accelerate its efforts in this regard.

Sustainable Manufacturing with its focus on reducing pollution, reuse, and recycle resources in the present and future of the Automobile Industry.