Paving the Way to Sustainability in Manufacturing with AI 

From buzzword to operational priority  

In the past, sustainability was often seen as just a buzzword. Companies considered sustainability-related activities primarily as marketing or PR efforts to enhance brand reputation and stay competitive. 

With the adoption of AI technologies, companies now view sustainability from an operational perspective. Today, it’s a core business strategy driving customer loyalty and profitability.

McKinsey refers to this as the triple play: growth, profit, and sustainability (ESG). Their analysis shows that companies that achieve better growth and profitability than their peers while improving sustainability and ESG outgrow their peers and exceed them in shareholder returns. 

 

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Our experts, in collaboration with Semantic Visions, developed the ESG Index tool to map your supply chain, score potential risks, and monitor long-term ESG trends.  

Using AI and LLM, we analyze millions of daily news articles in 12 languages to assess a company's ESG efforts in near real-time, offering insights beyond self-reported data to capture media perceptions of sustainability and social responsibility. Read the full white paper here.  

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Factors driving Europe’s manufacturers towards sustainability 

Despite the economic challenges affecting the region, Europe is making good strides towards sustainability. Businesses of all sizes are rapidly readjusting their strategies to meet their sustainability goals. For example, 9 out of 10 European business leaders plan to maintain or increase their sustainability investments. Here is why: 

1. Regulatory pressure  

The European Union (EU) aims to make Europe the first climate-neutral continent by 2050. Companies are expected to reduce greenhouse gas emissions, use renewable energy sources, and adopt circular economy principles, among other policies.

Add to this CS3D EU directive with mandatory human rights and environmental due diligence for your business. With the strict deadline, the clock is ticking and failure to comply can result in fines and penalties. 

2. Consumer demand 

There is more to the shift towards sustainable ecommerce beyond the EU demands. 63% of consumers have made modest to significant increases in their purchase of sustainable products. This indicates growing consumer interest in sustainable ecommerce, a gap manufacturers can fill to grow revenue and profitability and boost brand image. 

3. Financial benefits of renewable energy 

Opting for renewable energy sources also offers financial benefits. The cost of renewable energy in Europe is now cheaper than that of fossil fuels. This represents a path to long-term savings and higher revenues for manufacturers that go green. 

4. Social and economic sustainability goal 

Environmental sustainability in manufacturing helps businesses meet their social and economic sustainability goals. More jobs will be created, and workers will benefit from safer conditions. For context, employment in the EU's green economy increased by 23% in the last decade, significantly higher than in other sectors combined. 

Making the switch to sustainability is profitable but can be daunting. However, it becomes manageable with tools like AI.  

AI for sustainable ecommerce and supply chain  

Artificial intelligence, with the right human supervision and training, enhances everything. Sustainability is no exception.

But for manufacturers to be more sustainable, they must appreciate the interconnected nature of production, distribution, and sales processes. 

Sustainability goes far beyond using renewable energy in production plants. It also extends to sourcing the right materials to produce sustainable products, minimizing CO2 emissions during deliveries, and optimizing inventory management to eliminate waste. 

Hence, the key to environmental sustainability in manufacturing is an optimized supply chain. The smooth running of each component will translate to the success of the whole supply chain. This is where AI comes in. 

Ways to apply AI towards sustainability:

Supply chain optimisation

AI optimises logistics and reduces transport emissions. By analysing large datasets, it finds the most efficient delivery routes & adapts to real-time traffic and weather conditions, cutting fuel consumption and CO2 emissions.

Order management optimisation

AI-driven OMS systems are the go-to for manufacturers willing to scale operations and expand. These systems combine all the supply chain and order information, highlighting sustainable practices like bundling orders and choosing the least polluting carriers.

Energy efficiency

AI algorithms can optimize energy use in different ways. One method is to align energy consumption with actual operational needs. An example is controlling lighting, heating, and machinery used to tally with the production schedule. This will efficiently cut down on wastage without human intervention. 

AI can also factor in smart grid systems, helping to improve energy management and distribution. AI-powered smart grid technology is especially useful for managing renewable energy sources, lowering costs and streamlining distribution through data analytics. 

Waste reduction 

Predictive maintenance reduces waste and extends machine life. AI predicts equipment failures, enabling early repairs and minimising raw material waste.

This is important in 2 ways:

• It minimizes waste of raw materials and bad production batches created during machine breakdowns.
• Predictive maintenance extends the lifespan of ageing machines by 20%. Therefore, AI conserves capital resources as well.

Product design optimisation

Manufacturers must rise to the challenge of pushing the best products to the sustainable ecommerce market. That requires designing lighter products that use less material and are easy to recycle or dispose of. Design teams can use AI tools to simulate the design process, speeding up the development of sustainable new products. Demand forecasting 

Excess inventory is exactly the kind of inefficient resource use that sustainability aims to prevent. AI helps manufacturers predict the market needs so they can produce goods that precisely match that demand.  

Circular economy facilitation

A circular economy aims to maintain the value of products and keep them in circulation through reuse, recycling, and maintenance. AI identifies opportunities for reusing and recycling materials, fast-tracking the transition to a circular economy for manufacturers. 

Considering that raw materials account for 30% to 50% of production costs, adopting a circular economy ensures not only environmental sustainability in manufacturing but economic sustainability as well. 

Customer engagement

AI-driven platforms support sustainable ecommerce by engaging customers with information that promotes sustainable choices. Examples include recommending eco-friendly alternatives and sharing educational content on recycling through AI chatbots. 

Sales and marketing teams can use these and other customer engagement tactics to drive up demand for eco-friendly products. It also reinforced the manufacturer's commitment to sustainability, which is excellent for brand reputation. 

These are just a few examples of how AI can be applied. These strategies not only offer better profit margins but also enhance brand recognition as contributors to sustainable commerce. 

AI goes green, do you?

Green manufacturing and sustainable ecommerce are no longer just buzzwords in the industry. They are real concepts that European manufacturers must begin to prepare themselves for. They are compulsory changes and beneficial strategies to adopt, offering manufacturers better profit margins and higher brand recognition as genuine contributors to sustainable commerce. 

Optimizing the supply chain through AI integration and expert assistance is a key step to attaining sustainability in manufacturing. AI promises to improve energy efficiency and logistics while reducing waste production and overstocking inventories. Hence, this technology is the perfect partner as your business embarks on the sustainability journey.