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Overcoming the hurdles: Why people, processes and bad data are hindering sustainability

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Sustainability is a buzzword. Sustainability is just about annual reports. Sustainability is a tool to appease investors. We could write a whole blog on the common objections – or dismissals – that are raised when it comes to implementing a more sustainable approach to product design and manufacturing.

There will always be critics. Doubters. People who see sustainability as an obstacle in the way of progress, rather than a catalyst for it. But the numbers don’t lie. Businesses who are embracing sustainability are on the front foot. Those who aren’t are in real danger of being left behind.

Running the numbers

A recent Bain & Company study found that while only 40% of businesses are on track to meet their sustainability goals, companies have an increasingly conscious and proactive base of consumers willing to pay 11% more for sustainable products and employees that will help.

IBM noted in a recent report that organizations that embed sustainability in their product design processes experience a 16% higher rate of revenue growth. They’re 52% more likely to outperform their peers on profitability. And they’re two times more likely to attribute great improvement in operating costs to sustainability efforts.

NYU Stern’s Center for Sustainable Business found in 2022 that the share of CPG products marketed as being sustainable grew twice as fast as conventional products, accounting for one-third of the total revenue growth in the industry. Customers paid 27% more for those products.

There is a need for a more sustainable approach – and there is a willing audience too. But in order to get there, there are still a few hurdles left to overcome.

Internal challenges

An organization with a fully functioning and proactive sustainability function is likely to reap many benefits. But getting that sustainability function set up in the first place is, for many, the more significant battle.

Our recent study with Forrester showed that 27% of respondents placed ‘create a dedicated sustainability function within the organization’ as their top initiative to prioritize over the next 12 months. The need is clear and well understood. However, 18% of respondents to the study saw breaking down data siloes to enable cross-functional collaboration as among their biggest headaches. Such data siloes are the hallmark of organizations not yet ‘mature’ enough to fully realize the benefits of embracing an approach with sustainability front and center.

It’s also clear that, at least in part, there is still some way to go before there is proper acceptance of the role sustainability has to play in a business, particularly when it comes to reporting.

In the study, 66% of respondents showcased an awareness and understanding of the potentially severe impact on product and operations that not toeing the regulatory line would bring about. Furthermore, a full 10% of respondents ranked ‘strengthening regulatory compliance’ as their greatest business priority during the next 12 months, while 35% in total ranked it as being within their top 3 priorities. Out of the 10 options given to those surveyed, ‘strengthening regulatory compliance’ came top of the list.

However, that relatively low number indicates there is some way to go before there is a full understanding of the importance of increasing regulatory sustainability reporting. With only 35% of organizations having the initiative to solve the challenge, the research suggests an element of indecision and uncertainty, exacerbated by competing priorities coming from different angles.

The struggle to gain momentum

Currently, in more ‘immature’ organizations at least, sustainability advocates are struggling to gain momentum at the top table. And it’s not just competing priorities that are causing the problem. Interconnected governance issues continue to dominate top PLM challenges, with maintaining data, securing executive buy in, and breaking siloes causing the biggest headaches.

53% of respondents to the Forrester study struggle with securing executive support for incorporating sustainability in product lifecycle management, while half find it hard to obtain budget to gather material, component, and supplier intelligence integral to optimizing their product’s quality, cost, and sustainability. Over half experience difficulties measuring and quantifying the environmental impact of their products which can be a factor for 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 – an issue for 49% of decision-makers.

Lacking the necessary data means that sustainability advocates are unable to take the necessary measurements, ultimately meaning that the support and budget they need to continue their work is not forthcoming. It’s a cycle many are finding hard to break.

It’s also a problem not limited by borders. Across US and European markets, governance obstacles are widespread. European respondents in particular highlighted their struggles influencing a strategic shift to sustainability, commonly citing a lack of management commitment when it comes to driving substantial changes (46%) and difficulties developing a business strategy for sustainability (44%).

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 rises as one of their biggest issues.

Data siloes hinder stakeholders across functions as they balance costs, risks, and sustainability criteria in product design and sourcing. An inability to embed multi-criteria data around sustainability and resilience in their generative design processes handicaps manufacturers with less mature PLM processes. Even more advanced manufacturers are challenged by the ongoing maintenance of aspects of their materials and components libraries.

Remedying the problem

Solving the problem again comes down to one key thing: data. A better and more reliable collation of availability, cost, sustainability and performance data eases the burden of obtaining budget in order to gather material, component and supplier intelligence. Similarly, better data libraries, ensuring up to date data and breaking down data siloes are all key when it comes to enabling cross-functional collaboration and ensuring that sustainability-focused voices are heard.

A business looking to succeed and grow should understand that building high-performance, cost-effective, sustainable products will create a competitive advantage. Sustainability, implemented correctly, can be a significant differentiator when positioning and marketing products.

Manufacturers must become quicker, smarter, and — given the urgency of sustainability — more environmentally conscious to thrive. They need to become more efficient and effective as they design and source products.

Data quality and accessibility form the foundation of efficient product design and sourcing, and both are significantly improved when adopting a product lifecycle intelligence solution. By modernizing product innovation processes and platforms, senior leaders at manufacturers will not only be able to satisfy regulatory mandates for product-level sustainability, but will also be able to empower designers with product lifecycle intelligence in order to modernize product innovation and achieve balanced product cost, performance, and sustainability goals.

Whether it’s people, processes, LCA software data or technology – or a combination of all four – that currently present the biggest obstacles to embedding sustainable practices in an organization, one thing is clear: those who are able to move those obstacles will thrive. Those who don’t – or won’t – will find themselves facing an uphill battle.

How to create a dedicated sustainability function in your organization

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In “Transform Product Sustainability into Performance Initiatives with Product Lifecycle Intelligence”, our collaborative white paper with Forrester, we took insights from 493 product design and sourcing decision-makers in manufacturing. Our aim in commissioning the study? To redefine how businesses approach sustainability, and to map a path forward for those who are beginning to take on the challenge. 

We’re diving into a series of key takeaways from the report across a number of blogs. You can already read parts 1, 2, 3 and 4, and below we’ll take a deep dive into our next takeaway: why it’s imperative that a business creates a dedicated sustainability function within the organization. 

The gains that stand to be made from a more sustainable approach to product design – whether financially, reputationally or from a regulatory perspective – are already clear to more ‘Advanced’ manufacturing businesses. Whether driven by changing customer expectations, an increased emphasis on supporting a circular economy, a need for greater transparency in supply chains or a variety of other factors, the reasons for implementing a more sustainable approach to product design are numerous. 

But there is a world of difference between ideas and action. Sustainability must move beyond being a mere concept or being seen as a reporting burden in order for its benefits to be fully realized. In order to do this, there is a strong need for advocates within a business. An organization with a fully functioning and proactive sustainability function is likely to reap many benefits, not least from a cost efficiency perspective. 

Managing bottom lines in a tightening business environment is critical when it comes to ensuring continued growth. A dedicated sustainability function, accordingly, encourages not only collaboration but a sharing of resources – both of which save money. Businesses hampered by a more siloed approach to sustainable practices are likely to incur more costs not only through lost time and productivity, but also through a continued reliance on outdated manual processes and expensive, unnecessary equipment and resources. 

Ultimately, cross-functional collaboration – combined with a single source of truth – is critical in enhancing product design, sourcing, and gaining a competitive edge. The adoption of product lifecycle intelligence drives sustainability improvements, faster time-to-market, higher profits, and operational enhancements for manufacturers. 

Data quality and accessibility forms the foundation of efficient product design and sourcing and product and operations improve with the adoption of a material, component, and supplier intelligence solution. 

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

Our study makes this point abundantly clear. The need for such a dedicated sustainability function is obvious and well understood. As the study shows, 27% of respondents placed ‘create a dedicated sustainability function within the organization’ as their top initiative to prioritize over the next 12 months.  

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 

With a dedicated sustainability function within an organization, procurement and supply chain leaders can utilize environmental sustainability procurement technology to address the challenge of measuring the environmental impact of the supply chain. Organizations deploying procurement technology are making significant organizational changes to enable them to understand their supply chains to measure, reduce, and report their Scope 3 emissions and to honor their sustainability commitments. 

However, obstacles remain. 18% of respondents to the study saw breaking down data siloes to enable cross-functional collaboration as among their biggest headaches. There is work still be done. These data siloes are the hallmark of organizations not yet ‘mature’ enough to fully realize the benefits of embracing such an approach. 

The study indicates that immature enterprise manufacturers have a steep hill to climb. A typical Novice manufacturer (those with the lowest maturity on the PLM maturity model that Forrester created) find themselves hamstrung by manual processes, data and decision-making silos, a lack of collaboration, and they struggle to track and verify the sustainability credentials of their suppliers. 

Regulatory compliance and sustainability are secondary considerations for Novices, with cost reductions and product improvements being of primary importance for them. Whilst understandable in the short term, this lack of forward-thinking could come back to sting them – and prevent them from growing as a business. 

In contrast, Mature companies are collaborative, take sustainability seriously, and understand the importance of systematic and automated processes. Novices remain inhibited by silos and manual processes and are yet to fully grasp the strategic and competitive importance of integrating sustainability across the product lifecycle. 

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. 

Ultimately, maturity drives agility. 

How can Makersite help? 

The benefits of giving sustainability a platform within an organization are particularly clear when it comes to two of our customers – Barco and Microsoft. By embracing a collaborative, ecodesign-led approach to manufacturing, both have reaped significant rewards. 

At Microsoft, the team were able to efficiently scale up their LCAs so their engineers could focus on designing the best and most sustainable products instead of only focusing on disclosures. While their LCA experts are still involved in the process, they can now focus on completing the model with suppliers’ primary data, performing the quality analysis, and ensuring the model is representative. 

With Makersite’s help, the benefits of their new methodology were huge. They included improved quality and representativeness of the modeling of the product’s composition, better identification of environmental impact hotspots in the supply chain, and increased accuracy by reducing the inconsistencies associated with the LCA practitioners’ decisions. 

Empowered by Makersite’s AI-powered Product Lifecyle Intelligence software, lca software Microsoft were able improve the efficiency of collecting and modelling both product and supplier data, ultimately saving time and money and eliminating data siloes in a more collaborative, sustainability-led environment. 

Similarly, Barco faced challenges in efficiently reporting SKU-level environmental data due to data being siloed and scattered across the supply chain, resulting in slow and costly manual efforts. 

Makersite provided Barco with automated Life Cycle Analysis (LCA) and Product Environmental Footprints (PEFs) at the SKU level, allowing them to accurately offset their emissions, comply with EU taxonomy reporting requirements, and implement more targeted eco-design principles across their product portfolio. 

They were able to consolidate and enrich their data, perform comprehensive environmental reporting, and make data-driven decisions to minimize their environmental impact. Automating their LCAs allows Barco to accurately offset their emissions and further promote their climate-neutral ambitions, as well as strengthen communication on sustainability with external stakeholders – all based on data. 

By leveraging Makersite’s automated Life Cycle Assessments (LCAs), Barco gained insights into the environmental impact of different design choices, enabling them to perform scenario analysis and evaluate the impact of various design changes on their products. The implementation of Makersite’s software allowed Barco to bring together the various elements of their product data in one place, enabling them to identify opportunities for sustainable design changes across their product line and make data-driven decisions to minimize their environmental impact. 

Makersite’s one model, multi-output approach enables users to integrate multiple data sources and easily deliver reporting and analytics to multiple teams including compliance reports, EPDs, PCFs, Scope 1,2 & 3, forecasts and should costs. 

With our digital twin technology, we’re able to put the burden of data siloes to rest. We connect best-in-class data for costs, markets, risks, materials, regulations, environment, health, suppliers and more to create a “digital twin” of a product design or formulation. Tools are built-in to create reports, apps, and maps to clearly visualize the data that matter, making it easier – and significantly quicker – for all involved. 

Similarly, with Makersite’s ecodesign dashboard, customers can use product data models to make smarter design, material and sourcing decisions throughout their product development process, allowing them to make better decisions based on multiple criteria whilst supporting decision-making with clear and actionable insights considering multiple criteria like carbon and cost simultaneously. 

Less than 1% of new products consider sustainability in their design, but there’s no longer any need for it to be an afterthought. That’s why we make it easy for you to make better decision choices with the data you need, fostering collarboration and enabling the building of a dedicated sustainability function in your organization with ease.