February 10, 2026 • 6 minute read
Author: Phyllis Jackson, Senior Manager, US Marketing, UPS

Key Points

• Business practices that promote sustainable manufacturing are top of mind for many leaders. Research from UPS found that 50% of manufacturers are currently implementing closed-loop processes into their production lines, while 34% plan to do so in the future.*
• UPS survey respondents also said that sustainability in manufacturing has led to improved revenue (48%), reduced unit cost (39%) and a sufficient return on the investment (33%).**
• Other research findings reveal that reducing waste is the top sustainability target for 57% of manufacturers surveyed by UPS, and waste diversion is the priority for 30%.***

Q&A with Lorie Schlatterer

Meeting your production demands and following sustainable business practices aren’t mutually exclusive, but achieving both is a balancing act. Lorie Schlatterer, Manufacturing Strategic Lead, UPS, shares insight into how manufacturers can harmonize operational efficiency with environmental responsibility.

Q: What are effective strategies to improve sustainability in manufacturing?

A: “The most effective strategy starts with visibility. You can’t manage what you can’t see or measure. Your strategy should include tracking emissions across warehousing and transportation. Look at emissions from end-to-end within production, logistics and the entire supply chain. Get the quick wins. Start there and eventually those changes will have a ripple effect.

A more comprehensive strategy includes taking a circular approach to manufacturing, where production becomes a closed-loop system. A closed-loop system is much different than a traditional linear production system where products become waste after they lose their utility or purpose. In a closed-loop system, products are brought back into the manufacturing loop to be refurbished or recycled for another purpose.

Sustainability in manufacturing is a driver of business success and profitability. UPS research found that 50% of respondents are implementing closed-loop processes into their production lines and 34% plan to do so in the future.*

The survey also found that 48% of respondents cited improved revenue, and 39% said they saw reduced unit costs** as benefits of their sustainability efforts.”

Q: What challenges do manufacturers face when trying to balance productivity with environmental responsibility?

A:“When it comes to moving from a linear system to a closed-loop system, UPS survey respondents cited cost as their biggest challenge (51%), followed by limited in-house staff resources (32%) and other priorities (20%).†

But across all areas of production, manufacturers are under pressure to deliver products fast and at a low cost. While they may be concerned that introducing emissions goals and sustainable practices may add friction or come at the cost of performance, sustainability and efficiency initiatives are not in conflict. In fact, with the right processes in place, the two will work hand in hand.

The key is being intentional about how you integrate efficiency with environmental responsibilities and compliance. It comes down to integrating sustainable practices from the very beginning. You have to set the right goals and the right leadership habits. You may also have to rethink some of these long-standing operational practices and processes, too.”

Q: What are some of the small sustainability wins that have an impact?

A: “While increasing alternative fuel utilization is a primary strategy for UPS in our goal of carbon neutrality by 2050, we’re also working to reduce the environmental impact of every route we drive by investing in innovative technology solutions, like the On-Road Integrated Optimization and Navigation (ORION) platform, which saves our drivers 10 to 14 miles on the road every day. In addition, as of 2026, 36.4% of UPS’ ground fuel comes from alternative sources, which equates to over five billion miles driven on alternative fuels since 2020.

On the operational side, manufacturers can boost their sustainability efforts with changes as simple as using energy-efficient lighting and utilities. For example, 27.4% of global UPS facilities are powered by renewable electricity, as of 2026, and select operations run through the night. There are energy reduction costs when you work in off-peak hours.

Other things that add up quickly include automating systems, reducing overproduction, and rightsizing the warehouse layout.”

Q: How does inventory optimization help with sustainability?

A: “Reducing waste equates to good business. If you’re creating products you don’t need, there’s wasted energy, products, and materials. If those products don’t sell, then you have dead stock. Focusing on reducing waste helps from an inventory management standpoint and saves environmental resources, too.”

Q: The manufacturer-supplier relationship is so important. How can both sides work together to reduce environmental impact?

A: “Sustainability isn’t just about production. It’s about the upstream, the downstream, and collaboration throughout the supply chain. Communication with suppliers can be as simple as setting shared sustainability goals early in the relationship. Or discussing better solutions for package design, shipment consolidation, or sourcing. Supplier accountability has to be included. Manufacturers could even include emission and sustainability goals in their supplier contracts.”

Q: Technology is so integral to production, but how can AI, automation, and digital twins help manufacturers meet their sustainability targets?

A: “Technology provides a huge opportunity to connect all the dots. For example, AI can help identify where waste is occurring or why it’s happening. You can then incorporate automation to address that waste and help standardize processes to boost efficiencies.

Digital twins — virtual replicas of physical operations — allow companies to test a process in a digital environment before making the real-world change. While a digital twin can be complex to implement, it offers a way to quickly experiment and learn without using valuable resources.”

Q: How can UPS help manufacturers realize their sustainability goals?

A: “Our logistics professionals can help manufacturers understand and identify best-in-class solutions and practices so they can set goals and then learn the steps to achieve those goals.

For the big picture, we can help with optimization — inventory, warehouse, and supply chain. Manufacturers need to have sustainability as a pillar in the business’s strategic development and consider ways to use less energy or create less waste. We can provide that consultative direction.

On the product side, our products range from carbon-neutral shipping, which supports projects that help offset emissions associated with our customers’ shipments, to more advanced carbon analysis and reporting dashboards for clients. (Read more about carbon neutral credentials.) There’s also packaging made with recycled materials.”

Q: What should manufacturers be thinking about when planning for the next 5-10 years to meet increasing emissions and sustainability targets?

A: “Expectations and regulations related to sustainability and emissions reductions will continue to grow. Manufacturers should consider making sustainable practices more integral to their core business operations. Sustainability isn’t just an initiative you can use for marketing. It needs to be woven into your operations and the way you conduct business.”

The “UPS B2B Merchant Study” was distributed in an online format to 2,337 respondents in the U.S., with each respondent being compensated at an agreed-upon rate for their time. Each survey took approximately 10 minutes to complete. The survey ran December 1-14, 2025.
Questions: *Are you currently implementing any closed-loop manufacturing processes?**What part of your business has been most impacted for the better by the implementation of a closed-loop system?*** Which of the following, if any, best describe your company’s sustainability targets related to manufacturing? Please select all that apply. †What’s the biggest challenge you faced in implementing a circular economy/closed-loop system?

Individual results and options will vary. UPS makes no promises of any specific outcome in this document but instead provides only example outcomes based on certain UPS customer experiences.