TRANSCRIPTS
Question 1: How does effective MRO master data management contribute to achieving ESG goals within operations?
Hey Everyone! Great to be here today to relate some information about MDM and sustainability. Here’s a little bit about me, so you know who I am. With—I hate to admit it—about three decades of experience, I am with Sphera as their global MDM strategist, bridging gaps in supply chain, inventory, plant maintenance, safety and ESG. My objective, as it always has been, is to help organizations in navigating the dynamic market to meet business goals effectively.
How does effective MRO master data management contribute to achieving ESG goals within operations?
This question lays the foundation for understanding the direct relationship between MRO MDM and ESG objectives. We have a fantastic mission here in Sphera to help in creating a safer, more sustainable and productive world.
If you’re using carbon footprint estimating, rather than a true carbon life cycle calculation engine, you can estimate MRO carbon footprint by multiplying the CF factor for the material under consideration times the spend. The larger the spending, the larger the carbon footprint. This provides a first-level estimation of the MRO impact on the business. But what if we can do better than that?
Sphera MRO Master Data Management, which has a trusted pedigree and lineage dating back to 1978, which originally was focused on MRO, contributes to helping achieve sustainability goals and in making significant impacts on ESG directly in several ways: one, across the extended supply chain; two, in warehousing and inventory management; and three, in operations and maintenance.
Let me explain. In the extended upstream supply chain, we must determine and prioritize critical suppliers that provide the key parts and services needed to keep operations safe and plants well-maintained for reliability and resiliency.
We need to understand their Scope 3 cradle-to-gate emissions; their plans for reductions; and evaluate and select suppliers across several important dimensions, inclusive of carbon footprint density. We need visibility to specific MRO parts, based on their contribution to total carbon footprint.
Let’s take, for example, selecting remanufactured parts that have very little new raw materials in production or selecting manufacturers that utilize 100% recycled materials in production, versus using suppliers who use only ore mined out of the ground. Which suppliers and manufacturers are best for you?
There are price, performance, reliability and carbon density trade-offs to be considered. Some manufacturers are greener than others. They are moving to renewable energy sources, shifting toward energy-efficient machinery, toward electrification and incorporating U.N. Sustainable Development Goals and other ESG targets into their corporate strategies. Which manufacturer parts are best for you?
Another capability our solution provides is helping identify excess inventory and unused MRO spare parts, which leads to warehouse-space footprint and inventory-holding cost reductions and related emissions reductions. Why expend the money and incur the extra carbon footprint on parts you’ll never use?
This also relates to inventory turns and reducing spend. If the spend goes down, so, too, does the related carbon footprint. Nobody would argue that reducing spending is ever a bad thing, if service to maintain is not compromised and there are no other side effects caused by such decisions.
The third major area of impact is improving overall equipment effectiveness and production availability in manufacturing, by helping reduce unexpected and scheduled downtime and helping reduce safety incidences and accidents, which might involve fires, toxic chemical spills or catastrophic damage to plants. By assuring the right critical spare parts are available and used, and helping assure latent and deferred maintenance are minimized, carbon footprint can also be reduced.
Good side effects include reductions via reduced energy use, reduced waste, reduced water use and water supply contamination, reduced expediting, reduced unexpected repairs and remediations, reduced regulatory fines and penalties and higher quality product outputs for the same level of capital inputs, which, of course, helps with brand and reputation. What this means is leaner, greener production and more output per emissions unit. Think of it not just as return on investment, but return on emissions.
CFOs love to improve returns. They don’t ask: “What will it cost me?” They ask what will this do to help their company run better and cleaner. We want to increase potential returns, and we want to simultaneously decrease costs and emissions. It is a complex optimization problem. By doing all these things, I believe we can leave the Earth better than we found it, while also operating responsibly and profitably.
Question 2: How do organizations encounter and address challenges in integrating ESG principles into MRO processes using MDM software?
Companies are “all in” with the sustainability hype cycle, making promises to stakeholders, employees and communities about goals for certain sustainability targets, carbon neutrality or at least substantial carbon reduction targets for 2030 and getting to zero by 2050. The problem is, many are not yet ready to take this plunge, or they don’t know how to establish the right strategies or how to make change happen within their cultures.
Additionally, the right investments must be made in proper software tools for carbon footprint analysis and reporting results in a consistent, repeatable manner that conforms both to the requirements of regulations and to the expectations of investors and stakeholders.
Armed with this accurate information, decisions can be made to attack the “big rocks” of carbon footprint, to prioritize areas in the business that can be quickly improved and to set annual and quarterly goals along this path to reducing emissions. As stated earlier, MRO activity is one of those “big rocks” areas. It takes time and a new mindset to improve when things have been the same for decades.
Reducing the MRO impact is a journey, and it can start with many small steps. Companies do not have to go for the big home run all at once. Based on that concept, there are a few other key impacts that are elements of success along the MRO, sustainability and operationalization journey that are directly impacted by proper MDM MRO software. These include:
- Gaining better visibility into maintenance strategies and tactics that improve plant reliability and resiliency to reduce consumption of MRO spare parts.
- Achieving better utilization of spare parts to the point of truly having no remaining useful life before they are discarded.
- Employing responsible sourcing that considers the carbon content of the supplier at the enterprise level and at the product level and at the transportation and logistics layer.
- Utilizing transportation methods inbound and outbound that have lower emissions per ton mile.
- Identifying spare parts and equipment that can be repaired, refurbished, remanufactured, sold as is, moved to another plant where they can be utilized or recycled or repurposed, versus thrown into landfills or, in some cases, dumped out behind the factory to rust and pollute our water supplies and emit toxins into the air.
Good MRO sustainability practices provide the opportunity of being proactive rather than reactive by participating in the circular economy. A good MRO sustainability strategy can include using energy-efficient cloud-computing infrastructure, which leads to reducing the overall IT complexity, and believe it or not, IT-related carbon footprint and greenhouse gas emissions.
All combined, these holistic MRO-related activities across the MRO life cycle contribute significantly to overall greenhouse gas and carbon emissions reductions.
Question 3: How does data accuracy impact ESG compliance in MRO operations, and how does our software address this?
I really love this question. Before I answer, I’d like to spend a minute explaining my passion for data quality and why it is so important. I’ve been involved in data and its impact on businesses for nearly 30 years.
Data is the fuel for all business processes, whether they fail or succeed; bad data or bad fuel is a liability and causes business processes to fail. Good data is an asset, and we find that top quartile performers have good data for just about everything.
Data drives safety, operational excellence, efficient and low-risk supply chains and effective sustainability. Remember the “garbage in, garbage out” principle. In any system, the quality of the output depends on the quality of the input. If the input is bad, then everything from reports, to analytics, to decision-making is negated. It’s like steering a ship in the fog without a radar.
Because our data management platform can surface all the required and relevant information to users at all levels within an organization—including dashboards and reports to help inform decision-making and data-driven insights from comprehensive, correct, clean, comparable information—companies can elevate and illuminate sources of high emissions into their day-to-day operations, policies and culture to help everyone get involved in getting to zero and participate and make a difference in the sustainability journey.
Because sustainability reporting has become as important as financial reporting, it is a business imperative that all the information utilized operationally helps drive down costs and carbon emissions; and that reporting accurately reflects what has happened transparently and credibly; and that pro forma predictions of what will happen are reasonable and somewhat accurate and trustworthy. You cannot manage what you cannot measure. You must have trust in your data and trust in your reporting.
Finally, I want to thank you all again for this opportunity to reach out to everyone who wants to help create a safer, more sustainable and productive world. That is our mission here at Sphera and it’s been my own personal “why”: the key reason that motivates me to wake up every day and work with all my amazing colleagues and customers.
