When we think of manufacturing, we often picture bustling factories and supply chains focused on efficiency and productivity. However, this traditional view is undergoing a seismic shift as sustainability and environmental responsibility take center stage. With manufacturing responsible for nearly one-fifth of global carbon emissions (and consuming over half of the world’s energy), the stakes have never been higher.
Demand is surging, as evidenced by 54 new clean-technology manufacturing facilities announced in the first nine months of 2024. Coupled with a record US$238 billion in construction spending on new and expanded manufacturing facilities, this growth places immense pressure on energy resources and infrastructure.
as demand continues to grow.
The sector is facing mounting pressure to adapt. Beyond efficiency, modern supply chains must innovate to align with sustainability goals. They must balance economic growth with environmental stewardship for a more resilient future.
The case for sustainable supply chains
For manufacturers, the urgency to build sustainable supply chains stems from a perfect storm of challenges. They include tightening regulations that enforce reduced emissions, resource shortages made worse by geopolitical instability, and increasingly unpredictable global disruptions from natural disasters to pandemics. These issues expose the vulnerability of traditional supply chains, especially those reliant on long-distance, linear systems.
Companies that integrate circular economy principles—such as reusing materials and designing for disassembly—can reduce dependence on finite resources while creating new value streams. For example, manufacturers adopting closed-loop systems are finding ways to turn waste into raw materials. This practice reduces environmental impact and insulates them from volatile materials costs.
Moreover, today’s customers—businesses and end consumers—are increasingly discerning. They support companies that share their values and are committed to an environmentally conscious future. As ESG (Environmental, Social, Governance) metrics increasingly influence procurement decisions, manufacturers with sustainable practices are better positioned to attract like-minded partners and customers. This focus can secure relevance in an evolving marketplace.
Balancing growth with emissions reduction
Manufacturers face a great paradox: how to reduce emissions while meeting rising demand. Even ambitious efforts can fall short, particularly when addressing industrial gases like SF₆ (sulfur hexafluoride). These gases have a warming potential thousands of times greater than CO2 and can last more than 1,000 years in the atmosphere. As production scales to meet demand, so does the reliance on these gases. This underscores the need for transformative solutions beyond incremental improvements.
Achieving this balance requires reimagining traditional practices. Electrifying energy-intensive operations and integrating renewable energy are critical steps to decarbonization and enable manufacturers to reduce fossil fuel reliance while improving operational efficiency. Beyond electrification, collaboration across the supply chain is essential.
Manufacturers can further reduce the carbon intensity of growth by co-developing best practices such as using recycled materials, redesigning processes, and optimizing logistics. This is an opportunity to align growth with long-term environmental and market resilience.
Localized sourcing, strategic re-use, and sustainable logistics
One of the simplest yet most impactful ways to build a sustainable supply chain is to reduce the distance that materials and components need to travel. Manufacturers can do this by evaluating vendor footprints and prioritizing sourcing closer to manufacturing sites whenever possible. This proximity-based sourcing, ideally within the same geographic area, drastically reduces transportation emissions, reduces lead times, diversifies supply, maximizes access to talent, and minimizes risk, making supply chains more resilient.
To meet the growing demand sustainably, manufacturers must also consider the long-term viability of their facility locations. This necessitates thoroughly evaluating factors such as local workforce availability, land, and reliable energy supply—especially crucial as power demands escalate. Manufacturers can enhance sustainability and operational resilience by strategically selecting locations supporting future growth.
Another critical part of sustainable manufacturing is the materials that go into every product. Integrating recycled and low-carbon materials in manufacturing processes—second-hand metals and recycled copper, for example—reduces the overall carbon footprint and minimizes environmental impact from the ground up. This approach doesn’t just address emissions. It sets a precedent, showing the industry that sustainable choices can be incorporated into every production stage.
Managing the energy needs of manufacturing industries
As global demand accelerates, so do the manufacturing sector’s energy challenges. For example, semiconductor production, now trending to over $1 trillion in revenue in 5 years, requires enormous amounts of electricity to support high-precision processes. This creates significant strain on energy infrastructure. These demands fluctuate with production cycles, adding complexity to grid stability and sustainability efforts.
In response, manufacturers like Schneider Electric are pushing the boundaries of energy management within their supply chains. As mentioned earlier, electrifying processes—particularly those used by our suppliers—have become a top priority. By reducing energy intensity and switching to renewable energy sources wherever possible, Schneider Electric and its partners work together to support high-energy industries without exacerbating environmental impact. This electrification strategy sets a model for others to follow, offering a pathway to meeting extraordinary energy demands sustainably.
Transitioning to sustainable, resilient supply chains
The actions taken now will shape the future of manufacturing industries and our environment. It’s time for leaders across the manufacturing sector to embrace these sustainable practices and rethink their supply chains to secure a place in tomorrow’s market.
For manufacturers looking to make this shift, the path forward lies in partnership, innovation, and a commitment to sustainable growth. Join us in embracing this shift in manufacturing toward supply chains that are as resilient as they are sustainable and as focused on the future as they are focused on today.
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