We share industry insights across aspects of EV Supply Chain, Battery Manufacturing and Circular economy including what businesses can do to create certainty around business growth.
CREATING A COMPETITIVE ADVANTAGE IN CARBON AND COST
Measuring carbon emissions has become a priority for businesses. The process of building a complete picture of emissions, levers and impact can be complex. Through scenario modelling, the true impact on carbon emissions and product cost can be identified. This can be a competitive advantage to make informed decisions and identify levers that not only reduce carbon but also cost.
THE COMPLETE PICTURE OF A PRODUCT’S CARBON EMISSIONS
Manufacturers can only have full visibility of their carbon emissions when calculations are done at a product level. The benefits of a granular, product-focused approach include:
- Ability for detailed analysis of how different factors impact emissions
- Identifying the best ways to reduce emissions
- Assessing impact on cost through specific activities
- Allowing for best possible decision making for long-term success
WHAT DOES IT LOOK LIKE?
For any manufactured product, a breakdown can be created capturing all relevant factors contributing to CO2 emissions – this can be calculated for simple products, like a can or potato, or much more complex items – the wing of a plane or a car battery for example.
- Packaging and logistics (5%) – The mix of materials e.g. plastic, paper, wood, metal and their source including the underlying supply chain e.g. disposable versus returnable packaging or an organisation’s supply chain design.
- Raw materials (65%) – Often forms a high percentage of emissions and includes the origin of the raw materials. Using ‘virgin materials’ versus recycled material will have a significant impact on CO2 emissions.
- Production (23%) – The production methods and how they impact on emissions including energy usage, but also understanding the impact of product composition and specific design parameters.
- Mark ups and Indirects (7%) – Factors outside direct production that generate carbon emissions, e.g. impacts of supporting infrastructure. An example is using LED lighting versus higher energy using bulbs.
- Consumables and Bought out parts (5%) – Understanding consumable content and 3rd party involvement via bought-out parts and outsourced services involved in the manufacturing process.
- Geography – Determined by country of origin and their power production. If power is made from renewable sources, this will have a significant impact the overall CO2 emissions.
LEVERS IMPACTING CARBON FOOTPRINT AND COST
Once you understand the current carbon emissions of a product, the next step will be identifying the best ways to reduce them whilst still fulfilling customer requirements. Here are some aspects you may consider changing that will affect your carbon footprint.
- Explore alternative design parameters
- Use different materials
- Create energy efficient products
Procurement and Supply Chain
- Source components from different places
- Optimise methods of transport
- Understand supplier processes
- Optimise factory efficiency’
- Implement new processes
- Consider factory location
End of life and Circularity
- Create longer lasting, durable products
- Enable a circular economy
- Review the process for waste products
MODELLING THE IMPACT
Implementing improvement initiatives can have a significant impact on reducing your carbon footprint, but also your unit cost.
- Base – 100% CO2e
- Increase recycle content (-35%) – 65% CO2e
- Solar & renewable (-19%) – 46% CO2e
- Logistics (-7%) – 39% CO2e
- Current CapEx / OpEx– 10p
- Current CapEx / OpEx– 8.1p
- 19% reduction in unit cost
CONSUMER POWER AND ELASTICITY
After looking at ways to understand and change your carbon footprint, it is vital to consider how consumers are embracing sustainability and the impact to buying behaviours¹.
- 55% of consumers would be willing to pay a little more for sustainable products, and 11% of consumers would be willing to pay a lot more for sustainable products.
- 43.7% of people try to chose sustainable products sometimes, and 14% of people actively try to chose sustainable products.
Changes to daily behaviours also reflect more focus on sustainability and sustainable products and packaging.
- 56% of people recycle more
- 36% of people buy products with less packaging
- 27% of people buy more local produce
If you would like to learn more about how to calculate and impact your carbon footprint and costs, please reach out to us.
Contact us at vendigital.com/contact
1 – Ebook-Food-for-Thought.-Does-Sustainability-Matter by Vypr
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Product and pricing decisions are key to survival. But how can a complex business make these decisions amidst so much uncertainty? The answer lies in data understanding.