Manufacturers and service providers are currently facing three key issues: increasingly strict regulations with which they must comply; a circular economy approach for product development and manufacturing to stay competitive; and a decline in the availability of skilled labour to make it happen. These three problems appear to have little in common and are difficult to solve, but all could be partially tackled with the help of advanced digital technology.
Manufacturers have been subject to a complex web of environmental regulations and legislations for several decades now. In Europe, for instance, the European Chemicals Agency (ECHA)'s Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) regulations were first rolled-out in 2007 and mandate that the use of substances of very high concern (SVHCs) and potential SVHCs be restricted.
In the meantime, they require companies to take innovative digital technology-based approaches to the tracking and tracing of the substances used in the products, and to design products that are compliant in the first place.
At the same time, global regulations, sparked at least in part by the Paris Agreement (through which each of over 180 member countries must determine, plan and regularly report on the contribution that they undertake to mitigate global warming), stipulate that companies must dramatically reduce the size of their carbon footprints. As such, they are seeking ways to save energy and/or to increase their use of renewable forms of energy, such as solar and wind power.
Enabling the circular economy
Further, many are looking at adopting circular economy-based approaches to developing and manufacturing their products. There are two distinct strands to this methodology, which is being promoted by governmental and non-governmental organisations alike.
The first, the so-called biological cycle approach, emphasises the design of products that biodegrade after use and have a positive impact upon the environment.
The second approach, that of the technical cycle, mandates that products circulate in a constant closed loop of manufacture, use, recovery and re-use. One strategy to implement this cycle is that of decommoditisation. Instead of presenting products as a commodity indistinguishable from those of their competitors (except, perhaps, on price), manufacturers must develop unique products with specific functionalities, designs, sustainability and reusability benefits that appeal directly to the needs of a given consumer.
To decommoditise their products, companies need to exploit digital technologies so they can be in direct contact with their suppliers and customers, well-positioned in the supply chain and flexible enough to anticipate rapidly changing demands as they emerge and reuse materials in flexible design approaches.
Further to the issues surrounding environmental regulation and the push to a circular economy, the size of the skilled workforce in Europe is decreasing owing to low birth rates and an ageing population. To remedy this, manufacturers are increasingly looking to technologies for automation and data exchange in order to increase their profitability and flexibility.
As a result, the outsourcing of non-core activities, and the use of internet-of-things (IoT) applications and data analytics for predictive maintenance or even proscriptive maintenance, are becoming more widespread. In addition, industrial clusters are looking to share services, so that, instead of owning a utility asset, they access it on a pay-per-use basis. As such, dedicated specialists must be trained in the use of digital technologies to run the asset to improve both its performance and the services it provides while reducing capital and operational expenditure.
Smoothing the transition
Royal HaskoningDHV is a trustworthy partner to support businesses in this challenging transition. We collaborate with our clients, to help enhance society by providing knowledge and digital services. With our solutions, companies can be confident, even with stricter regulations and a less skilled workforce, that they can focus on their core business and develop innovative business models in line with the circular economy push.