How to source materials more reliably, more efficiently – and more cost effectively

In our collaborative white paper with Forrester – titled “Transform Product Sustainability into Performance Initiatives with Product Lifecycle Intelligence” – we take insights from 493 respondents, all of whom are product design and sourcing decision-makers in manufacturing. The overall aim of the white paper? To redefine how businesses approach sustainability. 

We’re diving into a series of key takeaways from the report across a number of blogs. You can read parts 1 and 2 in the series here and here, and below we’ll take a deep dive into the third takeaway: organizations must improve their materials sourcing reliability and efficiency. Let’s take a look at why. 

Sustainability remains a business priority. But it is not simply a case of ticking regulatory boxes and filing annual reports. A business equipped with a fully considered and smoothly functioning sustainable procurement plan will not only be able to maintain critical continuity – shielding itself against the impact of supply disruptions that would inevitably result in lost production – but will also be able to manage bottom lines in a tightening and ever more competitive business environment. 

Our report found that most manufacturers track product lifecycle management metrics regularly, although sustainability-related metrics are less automated. It goes without saying that stakeholders across product development, procurement, compliance, and sustainability need to collaborate closely to shorten product development cycles, reduce cost and risks in production, and lower environmental impact throughout the supply chain. However, this can only be done well with a finely tuned and automated data-driven approach. 

Although sustainability has an increasing number of champions with businesses, the lack of detailed, reliable data on materials, components and suppliers remains a critical hurdle that many still have to overcome. Harmonized access to a breadth of reliable data forms the foundation of efficient product design and sourcing, and organizations that are able to leverage granular product lifecycle intelligence in product development will enjoy competitive advantage against their peers with a faster time to market and more successful and profitable products. 

What are organizations doing – and how can they do it better? 

Despite the growing realization of the importance of sustainability metrics feeding into both cost efficiency and business continuity, it is clear that many organization’s sustainability activities remain primarily driven by regulatory obligations. The reality of incorporating sustainability in product lifecycle management is underpinned by the findings in the Forrester report. Ultimately, it comes down to data. Basic data usage is leaving a gap between vision and execution which is by no means insurmountable, but still some way from ideal. 

Sustainability metrics in product design and sourcing are inconsistently manually tracked. Over two-in-five of those surveyed confess to haphazard or nonexistent monitoring of critical sustainability metrics such as waste generation, Scope 1 and 2, and Scope 3 greenhouse gas emissions, and recycled or reused materials or components was either manual, ad hoc, or non-existent. Less than 35% of manufacturers boast fully automated, routine reporting for any specific metric and, perhaps most damningly from the perspective of the bottom line, 39% of respondents do not track change of materials cost (or, if they do, they track it manually). Just 32% have fully automated materials cost tracking. A manual approach is not only unreliable, but time consuming and a significant drain on resources too. 

From design, production, to maintenance, and end of life, sustainability across the product lifecycle is becoming business-critical and time-critical for manufacturers seeking to maintain a competitive cadence of successful new product launches. Stakeholders across functions must have access to granular, product-level data to rapidly and accurately make trade-offs as they design products, and source materials and components from suppliers. Those who don’t make this leap will be left behind. 

The issues surrounding data maintenance are one of the key issues for many companies experiencing a lack of executive-level support, as well as the struggle to raise required budgets. Difficulties maintaining data in material and component libraries make it harder to justify the impact of sustainability, despite access to that data remaining a top priority for many. 49% of those surveyed have the challenge of maintaining stock, cost, sustainability and performance data in their materials libraries, but they find themselves between a rock and a hard place. A lack of data means an inability to measure impact, which in turn means they lack funding and support in the areas of the business where it matters most. Only with access to the right data can that situation improve. 

As it stands now, data management challenges remain fundamental and acute. When asked which three challenges create the most profound impact, leaders hone in on their data shortfalls: one-in-five decision-makers rank maintaining libraries with up-to-date data as one of their biggest issues, and over half experience difficulties measuring and quantifying the environmental impact of their products, which in turn is a significant factor in the lack of leadership alignment. These governance challenges are a manifestation of poor maintenance of availability, cost, sustainability, and performance data in manufacturer’s material and component libraries. 

Ultimately, the equation is quite simple: better access to better data equals more support and more funding, leading in turn to enhanced cost efficiency and stronger business continuity. 

How can Makersite help? 

In a volatile business environment, putting steps in place to limit supply disruptions and minimize losses in production can make all the difference between success and failure. A more secure supply chain is less prone to disruption, and an ability to source greener alternatives not only aids the bottom line in the long run, but also helps to grow market share through an adherence to emerging regulations and through catering to new, sustainability-focused customer segments. We worked with German manufacturing giant Schaeffler to achieve a similar outcome. 

To achieve a climate-neutral supply chain by 2040, the company aims to reduce the carbon footprint of its raw materials by 25% by 2030. The problem is that 90% of the raw materials used to make their electric motors are sourced from China with little-to-no deep-tier insight into emissions. It’s a common challenge faced by many manufacturers today.  

With our help, they optimized their supply chain. We detailed alternative sourcing options to China, from Australia to Norway to Canada. In a very short timeframe, we were able to implement new supply chains for Schaeffler for neodymium, disposium and electricity. In doing so, we were able to significantly lower their carbon footprint, particularly due to a better electricity carbon footprint in Norway. 

Schaeffler wanted to test whether their new, optimized supply chain was greener, more sustainable and more secure than their existing model. With Makersite, they were able to confirm their hypothesis. As their Manager of Sustainable Products & Advanced Materials Dr. Michael Kobes noted: “By teaming up with Makersite, Schaeffler can run ad-hoc automated analyses of environmental impacts from various supply chains in scope, for example for the use of materials. Together, we are able to compare difference product scenarios from sustainability perspectives.” 

Validating their results and findings gave Schaeffler the confidence that the changes they were implementing would result in a demonstrable improvement, allowing them to move from theory to practice. 

With a tool like Makersite’s procurement dashboard, sustainable procurement best practice becomes a day-to-day reality. Procurement teams have access to the data they need to make better trade-off decisions, in turn helping their organizations not only to remain steadfast in strong regulatory and economic headwinds, but to thrive in markets both old and new.