Tackling ESG Challenges in Manufacturing
Regulatory requirements are a constant in the world of manufacturing. The industry currently faces new challenges in addressing environmental, social, and governance (ESG) issues. Carbon emissions continue to be a central consideration. In order to correctly calculate these emissions, new measurements and metrics are needed.
ESG scopes are the key assessment in measuring a manufacturer’s performance.
- Scope 1 emissions—tied to assets directly controlled by the manufacturer—can be directly tied to OEE, but it is challenging and time-consuming to calculate.
- Scope 2 emissions will be reported by power providers, shippers, and service utilities.
- Scope 3 emissions can provide an additional challenge for contract manufacturers, as they are called upon to provide emissions information to customers and suppliers.
The major challenge to manufacturers is collecting the right data points from production lines and facilities. This challenge can be complicated by legacy machinery, vendor-specific metrics, and a lack of network connectivity between machines and analysis software. Manufacturers are already invested in accurately measuring OEE; requiring ESG statistics just raises the stakes.
Using OEE to Address ESG
Overall Equipment Effectiveness (OEE), the familiar equation of “availability * performance * quality,” is usually considered purely as a measure of economic efficiency. However, OEE is also a useful metric in calculating ESG numbers. If energy and resource production are known, then the average time to produce one unit can effectively tie each unit to a specific carbon emissions measurement.
Over the last decade, a new metric has arisen that incorporates environment impact into OEE. Overall Environmental Equipment Effectiveness (OEEE) analyzes the relationship between OEE and sustainability. OEEE allows sustainability to be better integrated into a manufacturer’s business decisions.
As ESG regulations continue to shift and evolve, manufacturers can expect an increase in reporting requirements related to carbon emissions, waste management, and other factors. New requirements may arise around gathering and disclosing more detailed information around operational practices and performance. These shifting requirements cannot always be predicted, and they can bring with them surprising labor needs and time delays.
New regulations are rolling out constantly in an attempt to increase the consistency and transparency of ESG disclosure. Manufacturers must stay on top of shifting regulations, especially as a flurry of changes are arriving soon across the EU and UK. Electronics manufacturers in particular should be aware of the IPC’s involvement in ESG efforts.
By implementing comprehensive data collection and analytics early, manufacturers can be better prepared for changes in regulatory requirements. Better metrics now can mean less downtime and lower labor costs when manufacturers need to adapt to a shifting regulatory landscape. Improving OEE analytics now can mean better performance and less lost time down the road as reporting requirements evolve.
Capturing OEE with Arch
The specifics are unclear, but we can predict that manufacturers of all stripes will need to be able to capture and report on their carbon footprint. Precise OEE calculations are an essential and foundational step in ensuring the accuracy and completeness of those numbers.
The ArchFX platform captures metrics from every machine, not just specific vendors or those with modern APIs. Thanks to Arch’s wide variety of connectors, revelant data from the entire line can be collected, processed, and analyzed. This capability provides manufacturers, both contract and in-house with the information they need for the most accurate OEE calculations.
The goal of ESG initiatives goes beyond reporting; the numbers are a tool to find ways to increase efficiency. As a tool to find issues and identify resolutions, ArchFX provides a pathway to not just reporting OEE but improving it. Better OEE is tied to ESG because increasing efficiency spans both ESG impact and profitability.
Using the ArchFX platform to collect OEE data will better enable manufacturers to address ESG requirements. In addition, better metrics leads directly to better performance from manufacturing lines.