INDUSTRY NEWS
Decarbonise global supply chains
The commitment to tackling climate change is accelerating in all sectors of society , with net-zero pledges from companies , cities , states and regions doubling in the past year . Decarbonising supply chains is a major opportunity for companies to put these commitments into practice .
Research published by the World Economic Forum and Boston Consulting Group ( BCG ) shows how tackling supply chain emissions can be a game-changer in the global fight against climate change . ‘ Net-Zero Challenge : The Supply Chain Opportunity ’ analyses the top eight global supply chains that account for more than 50 % of global greenhouse gas emissions and finds that end-to-end decarbonisation of these supply chains would add as little as 1 % to 4 % to end-consumer costs in the medium term .
The report breaks down the major sources of emissions along each of the eight major supply chains — food ; construction ; fashion ; fast-moving consumer goods ; electronics ; automotive ; professional services and freight . It assesses the key levers to reduce emissions in each supply chain and shows that many can be easily deployed today and cost very little to implement . The report also points to the global nature of many supply chains , enabling companies to support decarbonisation across borders and in countries where governments do not yet prioritise climate action .
“ The opportunity for impact is especially high for consumer-facing companies , whose supply chain emissions far outweigh their direct emissions from manufacturing . These companies can use their buying power to push for rapid decarbonisation and help fund the transition by co-investing with upstream raw-material producers , which struggle to finance the transition alone ,” explained BCG .
“ For example , while it costs a steel producer significantly more to make zerocarbon steel , raw input materials like steel account for such a low proportion of endconsumer prices that a zero-carbon car is only about 2 % more expensive for the buyer in the medium term ,” it added .
The report points to nine major actions that CEOs should take today to address supply chain emissions . These are comprehensive measures , which also include the bulleted points listed at the top of the next column of this article . n Building a robust view of emissions with supplier-specific data and setting ambitious targets for emissions reductions . n Redesigning products and reconsidering geographical sourcing strategies to optimise for CO 2
. n Co-funding abatement measures and educating suppliers on how to implement low-carbon solutions . n Engaging in industry ecosystems to share best practices and create a demand signal for green products . n Aligning incentives internally to ensure that decision-makers focus on lowering emissions .
Patrick Herhold , a report co-author and managing director / partner at BCG ’ s Centre for Climate Action , said : “ The argument that costs are a major barrier to reducing emissions is increasingly flawed — around 40 % of the emissions across the eight major supply chains that we analysed can be eliminated with measures that bring cost savings or are at costs of less than € 10 per ton of CO 2 equivalent . Increasing process efficiency and the use of recycled materials , as well as buying more renewable power , provides companies with major climate gains at very low costs .”
VDW raises its production forecast
Orders received by the German machine tool industry in the second quarter of 2021 were 103 per cent up on the previous year ’ s figure . Orders from Germany rose by 81 per cent . Overseas orders were 114 per cent higher than in the previous year . In the first half of 2021 , the level of orders received by German providers rose by 57 per cent . Domestic orders were 38 per cent up on the previous year , with overseas orders increasing by 68 per cent . “ The industry has turned itself around with considerably more dynamism than was originally assumed and , despite some delivery difficulties , is posting strong increases in order levels ,” said Dr Wilfried Schäfer , Executive Director , VDW ( German Machine Tool Builders ’ Association ).
The very high growth rates were explained partly by weak reference values from 2020 because of COVID-19 . However , he added , order volumes have recovered noticeably and , at four per cent , are now only slightly
below the pre-COVID levels seen in 2019 . The development is also broad-based , which confirms the ‘ great pent-up demand levels among investors from all over the world ’. The main demand for German machine tools , added the VDW , is still from overseas .
“ The Asian market continues to be dominated by strong demand from China , which accounts for two-thirds of Asian order volumes . Business with the U . S . is starting to recover . There are increasing signs that U . S . orders are about to pick up more strongly . Europe has also revived noticeably . It is mainly fiscal policy measures ( including investment programmes ) which are boosting demand . Austria and Italy are prime examples . The German market is set to follow suit , albeit with a delay . Overall , however , the peak levels of 2017 / 2018 are not expected to be matched until the next quarter ,” said the VDW .
“ The picture would be even rosier without the bottlenecks and price increases in supplies of electronics , steel and sheet metal etc .,” Schäfer pointed out . However , further increases in demand are expected ( assuming the global economy continues its recovery ). This is already being reflected in production levels in the current year .
The significant increase in orders has led Oxford Economics , the VDW ’ s forecasting partner , to put production growth at eight percent , two points higher than in the spring . This would bring the volume for the current year to 13.2 billion euros .
“ Nevertheless , we are also worried about the shortage of skilled workers , which our industry will need to meet the major challenges which lie ahead . Key factors here include the transformation of the automotive industry , the energy transition and digitalisation . You need the right people to get these done ,” concluded Schäfer . n
16 | sheetmetalplus . com | ISMR October 2021