How digitalization may support Aluminium industry to reduce carbon footprint?

Introduction

We are living in an interesting time, facing a multitude of variables. On the one hand, the world is coming out of the pandemic and trying to regain the level of economic activities of the pre-pandemic time, only with more zeal and vigour. On the other hand, ignorance cannot be an excuse; forget about bliss when it comes to the effect of greenhouse emissions on the climate and its impact. The governing bodies, activists as well as customers are being increasingly informed and asking about the carbon footprint of any product or service before reaching them and after being served. For example, before buying cloth, today’s knowledgeable customers are increasingly mindful of whether the material is recycled and recyclable after usage. Before going to a hotel, some customers, if not all, check the use of solar energy along with the traditional thermal electricity by the property. This mind-set is also fuelled for the right reasons by the relentless efforts of activists, NGOs, social media campaigns and the definitive plans taken by world leaders during meetings & forums like COP26.

Aluminium, as an infinite metal, is excellently placed in this backdrop. It can be technically 100% recycled; hence, the secondary production may be deeply emphasized. Globally sustainability is becoming the main focus for many stakeholders. The aluminium industry is not an exception. Along with the various facets of the business, digitalization will play a definitive role in supporting the industry to achieve net zero or more sustainable practices. In fact, many big names in the aluminium industry have already started putting action items in vogue towards their goal of net zero. AlCircle, being dedicated to the cause, keeps celebrating such initiatives on its platform. The work done by endeavours like ASI (Aluminium Stewardship Initiative) or other consulting organizations also creates roadways for the aluminium companies who want to take the right path and calibrate their sourcing, supply chains, business operations, and the like. A few such initiatives are highlighted in the following section.

How digitalization can help

Digital may be leveraged extensively to help aluminium companies reduce their carbon footprint, regardless of their operations (primary vs secondary aluminium producers, extrusion profilers, etc.). A few such mechanisms are highlighted below.

A.    IaaS – IaaS, or infrastructure as a service, ensures that companies look at data and software infrastructure as a cloud-based resource. Such a strategy gives flexibility and agility, refrains the organizations from building unutilized infrastructure, and drives towards a pay-as-you-go model. This reduces the carbon footprint, upfront infrastructure investment requirements, economies of scale are achieved, and business runs at its optimum simultaneously.

B.     Shifting the type of energy – Primary aluminium production is an energy-intensive process, and due to the continuous nature of the process, some reliance on the traditional type of energy may be felt. However, it is possible to shift to solar and meet the requirements of utilities at the smelting plants. Hence sizable aluminium companies globally are shifting towards solar for their plant utilities, like lights, powering the ventilation as and where required, running the pumps, etc.

C.     Industry 4.0 – Industry 4.0 has multiple applications and use cases. Monitoring energy consumption at the various machines & equipment is one of them. Monitoring the KPIs like energy consumption/ ton of aluminium and then taking measures to reduce the same can help reduce the energy consumption. Thanks to the Industry 4.0 initiatives, the plant downtime reduces, and hence the production loss is minimised, and hence the energy consumption per tonne of aluminium production is also reduced. The global market for Industry 4.0 is projected to grow from $130.90 billion in 2022 to $377.30 billion by 2029, at a CAGR of 16.3% in the forecast period up to 2029. (Source:https://www.fortunebusinessinsights.com/industry-4-0-market-102375) 

D.    Use of virtual platforms for business – During the pandemic, the use of virtual meeting platforms had increased manifolds, and the rush towards digital transformation projects and usage of digital tools had gained significant traction. The same may be leveraged post-pandemic for the growth of the business. While travelling has started and the world is trying to return to physical interaction from digital ones, a lot of business is still being done digitally. The same will keep the aluminium industry's carbon footprint in check.

E.     Turning to virtual marketplaces – The pandemic showed us that the marketplaces, like parts of the supply chain, can also remain virtual. While the last mile may remain physical, other activities to identification, discussion, negotiation, and movement initiation may be managed virtually, with significantly higher efficiency and lesser carbon footprint.

F.      Use of Chabot – Companies across the globe are increasingly using a chatbot to drive customer engagement and provide customer information based on their requirements 24X7. The global chatbot market was valued at USD 3.78 billion in 2021, and it has been projected to register a CAGR of 30.29% over the forecast period 2022 – 2027 (Source: https://www.mordorintelligence.com/). A chatbot can drive meaningful conversation with good NLP (Natural Language Processing) capability built in and also guide the customers towards the right set of products and solutions and thereby reduces the need for physical interactions and meetings to a great extent. 

G.    Use of RPA – RPA, or Robotic Process Automation, has been discussed in the AL-Tech section in the past. The software bots may outsource non-cerebral, repetitive and manual labour-intensive tasks. The major players in this field are UiPath, Automation Anywhere, Blue Prism and the like. According to the recent report developed by Next move Strategy Consulting, the global RPA market generated USD 2.27 billion in 2021 and is projected to reach USD 18.69 billion by 2030, witnessing a CAGR of 22.5% from 2022 to 2030 (Source: https://finance.yahoo.com/news/global-robotic-process-automation-rpa-140000495.html?fr=sycsrp_catchall)

Even ERP (Enterprise Resource Planning) companies like SAP have their bots that help with the data entry and basic report generation or pre-scheduled activities to the existing licensed users, giving a lot of speed and agility to the operation and keeping the number of employees at a check and hence the related travels and other activities which generate the carbon footprint.

There are many more possibilities, and globally aluminium companies are taking steps towards them. Having a CDO (Chief Digital Officer) is one step towards commitment to digital, and having the reduction in carbon footprint or larger sustainability goals on the CDO’s agenda will be the next.

Conclusion

An important question may arise, is digital the only way to reduce carbon footprint, and should there be a rush towards it? The same questions were asked when infrastructure on the cloud first came into vogue, or the digital marketing came. Those were asked around three decades back when the ERP solutions came to the market. Many companies became early adopters, taking a strategic call to watch and then deciding to become laggards. The only difference in the present context is that the cost of inaction will be significant economically and from the perspective of brand positioning and customer loyalty.

Customers are increasingly more demanding and informed. The Governments and regulatory bodies are more active. The leading market exchanges already have the sustainability index to monitor and rank the listed companies. Technology helps meet the order of the day along with the various green initiatives. A platform like AlCircle also celebrates the various green initiatives across the globe, along with itself being a conduit for organizations to have greener operations. On this platform, companies can reach their customers online, participate in Expos to launch their products and obtain access to knowledge without any significant addition to their carbon footprint. Team AlCircle will remain focused and drive the usage of Aluminium, the green metal, and celebrate the sustainable measures taken by the ecosystem regularly.