On June 28 and 29 I took part in the Sustainable Industrial Manufacturing conference in Brussels. Even though the discussions focused on sustainability, it was clear that data will play a fundamental role in this transition. It was reassuring to hear that manufacturers increasingly treat their data as a valuable raw material in its own right rather than just a by-product of their processes, only to be archived in some legacy storage system. Several large manufacturers presented how they built the necessary infrastructure to extract value from their process data through use cases ranging from preventive maintenance to environmental reporting.

However, panelists agreed that in order to achieve true sustainability, some data should be exchanged freely across company borders. But can the variety of data systems of customers, suppliers and regulators be connected smoothly? Will this connection require the development and adoption of common communication protocols?

Below I present my insights from the conversations I had with industry leaders as well as the views of panelists in the plenary discussions.

1. Sustainability becomes profitable

Today, there is no doubt that sustainability is important. Unfortunately, its implementation historically suffered from a lack of financial incentive: becoming more sustainable comes at a cost, coined as “the green premium”. Sustainability positively impacts the environment, but often not the bottom line of the company. Luckily, more and more consumers are becoming willing to pay the green premium themselves in order to get access to greener products.

I. The market demands green steel and aluminum

Some German car manufactures are demanding their metals suppliers to provide metrics about the environmental impact of their steel and aluminum. The European Union slaps import tariffs on imported metals that are produced in a less environmental friendly way than is done in the EU. Finally, my own employer Novelis has pledged to purchase 10% of its primary aluminum from suppliers with near-zero carbon emissions by 2030.

II. Decarbonization becomes a financial incentive

Recently, in some big cement company, the executive compensation was tied to the company’s direct and indirect CO2 emissions. As CO2 gets assigned a clear monetary cost, it becomes a tangible financial metric that the company feels inclined to optimise.

III. Regulations become tougher

Regulators increasingly demand manufacturers to calculate and report clear sustainability metrics. An example was given from the construction and demolition industry, where a company working on the cleanup of a large construction site was asked for a digital trace of all the material they tear down and extract from the site as proof of sustainable work.

2. State of the data infrastructure in manufacturing

According to the panelists, by now most manufacturers have a digital roadmap defined. However, only a minority managed to define clear outcomes. Nevertheless, the statement that the manufacturing industry hopelessly lags behind in the digital space is no longer fair. A lot of the larger players already spent considerable, multi-year efforts to join their vast number of isolated data sources (also called silo’s) into one single source of truth. The solutions they implemented vary from storing a copy of the data in a centralized data lake or data warehouse to a company-wide data mesh or fabric where data is directly retrieved at the source through one uniform query language. Large software companies like SAP and IBM are also tailoring their services towards the manufacturing industry. I had the impression that the manufacturing industry has a sound approach to data engineering.

The manufacturing industry has a sound approach to data engineering.

3. Exchanging data across company borders

As mentioned earlier, manufacturers agree that becoming more sustainable requires an exchange of data for products between all stakeholders across the entire value chain. Panelists described the idea of so-called “data villages”: large, voluntary ecosystems where companies openly exchange data so that the sustainability of their products can be gauged accurately and efficiently. Some panelists went further by suggesting the involvement of academia and startups in the ecosystem to facilitate the generation of new knowledge and business ventures.

Without a doubt, these ambitions are still a futuristic concept. Yet some early examples can already be identified. One example of a “data village” is recognized in the voluntary exchange of data between German car manufactures and their metal suppliers to allow the calculation of a sustainability score for vehicles. After all, a large portion of the carbon emissions from the construction of automotive vehicles comes from the purchase of steel and aluminum. This knowledge drives the demand for greener metals. Another great example of a company freely sharing its process data can be found in Cognite’s Open Industrial Data Project in collaboration with Aker BP. Time series data from various industrial assets is streamed into the internet, free for anyone to use for whatever purpose they desire!

4. A need for standardization

Panelists stressed the importance of protocols and agreements on how data is exchanged within “data villages”. How will data flow between systems (that can vary wildly from company to company)? What data will be shared? Who has access? Who is responsible for data quality? The answers to these questions are not trivial and will require ample discussions between companies and regulators. One thing the panelists agree on, is that the manufacturing industry needs a seat at the table in these discussions. The industry cannot let these standards be defined solely by tech companies and companies working in consumer products.

By attending the SIM Europe conference I gained new, interesting insights about the important role data plays in making industrial manufacturing more sustainable. I therefore look forward to next year’s edition to see what progress has been made!