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Lean, Green Manufacturing Intersects with Sustainable Supply Chain Management, Creates Value

16 Dec

An efficient manufacturing process is the essence of sustainability…and is by its very nature, green.  This was the gist of the business case that I posted last year and that is captured in an article published in the MIT Sloan Management Review.   MIT presents two ways of thinking:

  • Old Thinking: Companies have long mistakenly thought that adopting environmentally friendly processes adds costs.
  • New Thinking: Green practices like recycling, reusing and reducing waste can cut costs because they make a company more efficient.

Recalling Michael Douglas’ character “Gordon Gecko “ in the 1987 film “Wall Street” statement that “Greed is Good”, MIT Sloan’s basic message is a bit of a twist- “Green is Good”.  Manufacturing is showing with increased frequency, that companies incorporating lean practices in manufacturing, are (by design or accident) becoming more “green”.  In fact a 2009 study by a research group suggested that “lean companies are embracing green objectives and transcending to green manufacturing as a natural extension of their culture of continuous waste reduction, integral to world class Lean programs.”  This is especially true for companies that integrate a number of proven methods e.g. ISO quality and environmental management systems, to meet environmental compliance and stakeholder needs.  This is more rapidly accomplished with a dedicated corporate commitment to continual improvement, and incorporating ‘triple top line’ strategies to account for environmental, social and financial capital.

What is “Lean”?

‘Lean’ Manufacturing is a set of continuous improvement activities closely connected with the Toyota Production System (TPS) and Just-In-Time Manufacturing systems.  One emerging working definition of Lean is “The elimination of waste everywhere while adding value for customers”.  This definition is a natural fit with sustainability and the “Lean and Green” business ethic.  Lean manufacturing has demonstrated how companies have saved or avoided enormous operating and maintenance costs and significantly improved the quality of their products.

Lean manufacturing looks at manufacturing from a systems perspective, which includes a thorough evaluation of upstream and downstream process inputs and outputs.  Viewed this way, suppliers and customers play a critical role in successful lean manufacturing.  Heavy emphasis is placed on design and innovation and obtaining  input of from supply chain partners, individuals and organizations through a process called ‘value-stream mapping’ (hey that’s my blog name too- ironic?…not).

The Lean, Green and Supply Chain Intersect

As I have previously said, even without specifically targeting environmental outcomes, lean efforts have been demonstrated to yield substantial environmental benefits (pollution prevention, waste reduction and reuse opportunities etc.). However, because environmental wastes and pollution are not the primary focal points, these gains may not be maximized in the normal course of a lean initiative. This is because lean waste is by its nature not always in sync with typical environmental wastes.[1] I argue that by looking deep into your your value chain (upstream suppliers, operations and end of life product opportunities) with a ‘green’ or environmental lens, manufacturers can eliminate even more waste in the manufacturing process, and realize some potentially dramatic savings

Where ‘lean’ creates a positive view (future state) of a process without waste, ‘green’ creates an alternative view of a sustainable future for organizations that play in the global marketplace or offer a unique disruptive innovation.  Lean and green approaches to manufacturing not only leverages compliance issues but also puts companies on the path to going beyond compliance. The graphic below from the U.S. Environmental Protection Agency applies the key ‘lean waste’ types in an environmental context, and crosswalks how lean waste issues can have direct environmental impact on an organization.

Using an example set by Subaru of Indiana,the MIT study shows how there are many proofs to the axiom that prevention of pollution and continually improving efficiencies with an environmental benefit works even in lean economic times. Subaru found that:

1.      Profits come by increasing efficiency and reducing waste—but they don’t always come immediately.

2.      Management’s leadership is vital in setting goals and getting departments to cooperate.

3.      The front line workers have to be engaged to spot opportunities to reduce, reuse, recycle, and find other ways to create efficiencies.

4.      Sustainability initiatives achieve maximum benefit from involvement of their supply chain.

5.      All waste by-products are potentially new products

6.      Green initiatives foster creativity and can enhance competitive advantage.

 

Source: Green, Lean, and Global Supply Chain Strategies, Univ. of Tennessee

As previously mentioned, becoming a green organization as part of a lean initiative occurs sometimes by design, and sometimes by accident.  A research study from the Sustainable Supply Chain Group at the University of Tennessee, College of Business Administration found some interesting results when evaluating how lean manufacturing, sustainability and supply chain management may at times be complementary.   The study found, among other things that: 1) Firms tend to have more sophisticated lean strategies than green strategies, and because of this awareness of ‘sustainability’ in supply chain management circles is less mature; and 2) Lean and green initiatives overlap, where projects that meet lean objectives often provide unanticipated green benefits.

Extending Lean and Green to the Supply Chain

Establishing initial goals for manufacturing efficiencies include maximizing parts, machine and material utilization, human movement and of course reducing waste. This series of continuous improvement steps offer a cornerstone for reaching both a green and efficient supply chain. But how can manufacturers work beyond the ‘four walls’ of their organizations to green their supply chain?  A green focus in supply chain management requires working with upstream suppliers and downstream customers, performing analyses of internal operations and processes, reviewing environmental considerations in the product development process, and looking at extended stewardship opportunities across the life-cycle of one or more intermediate or final products.

Lean Tools You Can Use

So far, I’ve laid a foundation for Lean Manufacturing and the intersection with supply chain management. This next section presents a couple of widely accepted practices that are used in Lean design and manufacturing, which can be modified to capture supplier network considerations.

Value-Stream Mapping

A strategic approach to mapping  environmental and lean opportunities would be to map the ‘value-stream’  of one or more products as a way to seek where the greatest waste  reduction and environmental impact reduction opportunities are. Value stream mapping arrived on the business process landscape with the emergence of Lean engineering, design and manufacturing.  A process-and systems based methodology, value stream mapping can help organizations to identify major sources of non-value added time and materials resources i.e. waste that flow into the manufacturing of a particular product or (even) service; and to develop an action (or “Kaizen”) plan to implement less wasteful practices and processes.   From an environmental perspective, practitioners can also look at processes from an environmental, health and safety point of view, focusing on processes tending to use great amounts of resource inputs and that generate waste outputs.

To illustrate what I mean, a value-stream map example (presented below) in a report issued by the U.S. EPA on Lean and the Environment depicts how supply chain vendors can interact in the production of a product and the resource waste that can result.  The areas noted in green represent interaction points with environmental, health and safety and related environmental loads associated with intermediate production steps.  Clearly the four vendor points of interaction can carry their own environmental footprints just in the trucking and distribution of raw materials and products (air and waste emissions for instance).

Typical steps in value stream mapping include:

  1. Select a product or process(es)
  2. Through interviews and work observations, collect data on the ‘current state’ of the value stream (inputs and outputs)
  3. Using a cross functional team (CFT) of knowledgeable staff, develop a ‘current state’ value stream map; focus on identifying over consumptive or waste generating activities
  4. With the CFT in place, brainstorm ideas to improve resource use, production flow, waste capture and reduction, reuse and off spec material reuse, and labor/time management
  5. Create a future state’ value stream map that identifies areas, targets and key performance metrics for continual improvement.
  6. Develop a implementation plan, complete with authorizes and responsibilities
  7. Develop continual improvement measurement and monitoring program
  8. And last but not least…get started!


 

Vendor Survey and Qualification

Manufacturers also supplement their Lean efforts by surveying their supply chain partners and  asking a series of questions designed to identify where the resource consumption and waste management opportunities may lie.  These  questions will help determine if technology, operational practices,  enhanced training and awareness or other tools can make their company  more sustainable and lead them down the path to make the decision that  best meets their business needs. These questions include but are not  limited to:

  1. How can I leverage my manufacturing capabilities and processes in a way that optimizes per unit material resource consumption?
  2. Can I reduce waste generation through improving material use, scrap/off spec reuse and improved equipment maintenance?
  3. Can  I work collaboratively with my intermediate parts or materials  suppliers to use life cycle design practices and manufacture parts with  lowered environmental footprints?
  4. How  can I encourage suppliers to increase equipment efficiency, reduce  manufacturing cycle time, reduce inventories, streamline processes or  seek quick returns on investment?
  5. Can I improve my sales and operations planning to optimize production runs and reduce resource loads or generated wastes?
  6. How  can I work more closely with logistics and transportation partners to  optimize shipment schedules, customer deliveries, warehousing, routing  and order fulfillment?
  7. Can  I work with my customers and product designers to improve packaging to  optimize space reduce materials use and improve load management?
  8. How can I collaborate more closely with customers to enable reverse logistics and profitable product reusability?
  9. What  types of value-added training and development programs can I develop to  promote lean and green opportunities with my suppliers?

Lean-Green Synergies Are Not Without Challenges

The  same University of Tennessee authors who explored the intersect of  lean, green and supply chain also discussed found that some potential  conflicts with certain types of lean strategies leading to changes in  supply change management.  For instance, they noted that  “lean strategies that require just-in-time delivery of small lot sizes  require increased transportation, packaging, and handling that may  contradict a green approach. Introducing global supply chain management into the green and lean equation increases the potential conflict between the green and lean initiatives.”

So  as companies begin to implement lean and green strategies in supply  chains, especially large and complex global supply chains, manufacturers  need to explore the overlaps and synergies between quality-based lean  and environmentally based ‘green’ initiatives, and understand the  various trade-offs required to balance possible points of conflict.  If  your organization been reluctant to engage your supply chain or  implement or maintain environmental initiatives in your product  manufacturing because of the perception that you can’t afford it, then  think again.  It is more likely that you cannot afford to ignore it.


[1] Typical classifications of environmental ‘waste’ nodes include: Energy, Water, Materials, Garbage, Transportation, Emissions, and Biodiversity

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Organizational Collaboration, Transparency, and Metrics CAN Foster Sustainable Change

20 Nov

In an earlier post I mentioned the soon to be availability of “The Portland Bottom Line: Practices for Your Small Business from America’s Hotbed of Sustainability”.   Well, the book has arrived and I am more proud than ever to be a contributor to this publication.  The short 400 word essays by myself and over 50 contributors explores how small businesses can effectively and efficiently shift toward sustainability and thrive in a challenging economy. Contributors collectively chose, by vote, the local community organization Mercy Corps Northwest, which supports the launch and growth of sustainable ventures, to receive 100% of the profits from the book’s sales.

You can buy the book now on Lulu for $16.95 (paperback) or $6.95 (download).   www.portlandbottomline.com

My excerpt from the book can be found in Part 3- Prosperity and is included in its entirety below.  Enjoy, buy the book and make a contribution to the growth of sustainable enterprise!

A few years ago, I assisted a water utility in implementing a sustainability focused initiative based on the International Organization for Standardization (“ISO”) 14001-2004 Environmental Management System standard. Many public and private organizations operate in functional silos, often don’t coordinate well, communicate effectively or run efficiently. Creating a triple bottom line-focused organization requires that all parts work together—like organs of a living being. This utility was inefficient with taxpayer dollars and under intense public scrutiny to improve its operations. It was not healthy. Through the two-year journey with the [utility], I worked hard to know each of its parts, how they interacted, where the trouble spots were, and where good health was. The goal was to build a holistic, sustainable organization that capitalized on its best assets: the staff.

To be truly optimized and efficient, it was vital to shore up operational weaknesses. The program focused on new communication techniques, champion-building, public environmental awareness, and creating a culture of continuous change management. Public agencies are often stuck in a business-as- usual (“BAU”) mindset. The ISO 14001-2004 program and other internal performance turn-around initiatives required moving beyond the BAU mindset. Key steps and measures that contributed to the turnaround included the following spheres:

  • Environmental: Early establishment of cross-functional performance improvement teams that focused on key measurable indicators, e.g. energy efficiency, resource management, and waste reduction.
  • Operational: Collaborative fact-finding, problem resolution and decision-making around staff utilization and scheduling, resource optimization, asset management, emergency response, and predictive maintenance.
  • Social: Proactive external public education and awareness campaigns at city-run facilities to engage community support related to natural resource management and watershed conservation efforts; employee initiatives that encouraged buy-in and financial rewards for cost saving measures and led to a reduced environmental footprint.

The organization achieved its ISO 14001-2004 certification, garnered prestigious national awards, and saved the City over $100 million in 5 years. After the certification award, a 30-year veteran of the department approached me. He hadn’t believed in the programs value at the start—maybe because of his BAU approach, or maybe he didn’t like change. He said, “Dave, I want to thank you. You made us do something that we would not have done ourselves”. That is what cultural change is all about. For once, I was speechless.

The keys to the success of this sustainability program and others like it are: cross-functional collaboration and employee input (early and often), early stakeholder collaboration, and metrics. These ingredients alone will go a long way toward laying the foundation for long term success of your organization’s sustainability initiatives and going beyond business-as-usual.

“Ch-Ch-Ch-Ch-Changes”: 3rd Party Logistics CEOs Priming for a Sustainable Future, Retooling to Compete

3 Oct

Last week in San Diego (my second hometown), the Council of Supply Chain Management Professionals (CSCMP) held their Annual Global Conference.  Over 3,100 supply chain professionals from 41 countries attended sessions from over 20 tracks.

At the Conference, the 17th Annual Survey of Third-Party Logistics Providers was presented by survey author, Dr. Robert Lieb, Professor of Supply Chain Management at Northeastern University, and Joe Gallick, Senior Vice President of Sales for Penske Logistics. The findings analyzed responses from 31 third-party logistics company CEOs across North America, Europe and Asia-Pacific.  The study was pretty comprehensive in its findings but me being the sustainability focused guy that I am, poured through the document in search of green stats. And as expected they were there.

With 87 percent of the companies reported to be rebuilding their workforces in 2009, CEOs revealed that green practices are still a major priority in the 3PL market.  Further, more than 80 percent of the companies surveyed now have formal sustainability groups within their companies. Even in the wake of the recession, most of the companies surveyed these are still heavily committed to environmental sustainability issues.  Take note of these numbers according to the survey:

  1. Fourteen of the 31 companies began new green initiatives during the year.
  2. Eighteen of the companies expanded existing sustainability programs.
  3. Twenty-five of the companies now have formal sustainability groups within their companies.
  4. Twelve of the 31 CEOs believe that their sustainability capabilities differentiate them from their competitors.
  5. Ranking second and third respectively in North America were opportunities related to potential differentiation based upon the companies’ environmental sustainability capabilities and opportunities related to expansion of service offerings.

Also, 27 of the 31 CEOs noted that some of their manufacturing customers have begun to move toward “near-shoring” options during the past year.  This type of “reversal of fortune” for U.S. manufacturing has been driven by quality control issues, fuel costs for transoceanic shipping and (wishful thinking perhaps) a desire to stand by corporate commitment to curtail carbon emissions associated with reduced fuel usage.

Additionally the report cited several business practice trends, related to risk management/risk sharing; business continuity planning; performance based contracts; and enhanced vendor qualifications.  Each of these growth areas fit well into the sustainable sourcing, accountability and risk management picture that I have spoken about in this space as essential elements of a green supply chain.

While the survey results are impressive, there is clearly room for improvement in terms of implementing actual “boots on the ground” solutions.  There are increasing examples everyday where 3PLs have demonstrably improved operations efficiency while lowering fuel use, energy use, air emissions and indirectly related resource consumption and waste generation. But at the same time, these efforts must be able to strike a balance between cost and benefit that CEO’s can understand, appreciate and rally around.  The stat about CEO’s belief in how sustainability can differentiate their companies (only 38% are on board) tells me that much still needs to be done to make a business case for greening of supply chains.

In another recent reportthis past spring by the Economist Intelligence Unit (EIU) of the Economist Magazine,   supply chains are in a massive state of flux.  Individual supply chains “have shrunk at the margins and the network has become denser”, according to the report. The report concluded that many companies are forced to choose between having supply chains that are simple and compact, or those that are complex, redundant and dispersed.  Efficiency versus resiliency, in effect.   But the report found it possible to increase both efficiency and resilience.

The EIU report cited that a more efficient supply chain enhances two drivers of value: operating margin and asset efficiency.  What was notable to me was a note in the report that said “efficiency also has the beneficial side effect of shrinking the carbon footprint”.  The report cited companies like Coca-Cola, that are looking at ways to move to central distribution, cutting back on empty loads (bringing back post-consumer recycled cans  for instance) as ways to ‘own’ its supply chain and drive efficiency (without losing resiliency).

Issues such as supply chain resiliency and agility are two criteria that should be evaluated as 3PL’s move down the sustainability path and create a business case for operational changes.  I am fairly certain, based on the Penske sponsored 3PL report that CEO’s and other top managers will be asking the tough questions, so be prepared to come to the table with some compelling ideas and numbers to back it up.

How Walmart & Others Use ‘Best Value’ Approach to Drive Green Supply Chain Management

22 Sep

I recently came across a great research article written a couple of years ago and published in Elsevier Business Horizons.  The article, entitled Best Value Supply Chains: A key competitive weapon for the 21st Century (co-author is no relation, but irony is cool nonetheless), emphasized how leading edge companies have adopted “best value strategic supply chain management” as a strategic approach to stay competitive and drive efficiency.  The authors describe this type of approach as way for companies to “excel across speed, quality, cost, and flexibility, and …require coordination across at least four supply chain elements: strategic sourcing, logistics management, supply chain information systems, and relationship management.”

In one example, the authors refer to “firms such as Wal-Mart, Toyota, and Zara [that have] have used their supply chains as competitive weapons to gain advantages over peers. For example, Wal-Mart excels in terms of speed and cost by locating all domestic stores within one day’s drive of a warehouse while owning a trucking fleet. This creates distribution speed and economies of scale that competitors simply cannot match.”  Exploring this approach by Walmart a bit deeper indicates several positive outcomes from an environmental perspective also.  In the past two years Walmart has committed itself to reducing its carbon footprint by 20 million metric tons by the end of 2015. The most direct manner to do this is to control how it distributes its product.  So fleet management and control, and strategic distribution placement equals lower fuel costs, miles driven and hence carbon emission reductions.  However Walmart will also accomplish its reductions largely by working with its suppliers on their own greenhouse gas emissions.  Looking a little deeper however, shows that Walmart also reported recently that its carbon emissions as a percentage of sales went down. While that is great news using ‘normalized’ performance indicators, the not so good news is that  the company’s ‘absolute’ carbon footprint continued to grow as sales and stores were added.  So this goes to show you that it is valuable to drive value through the supply chain, taking a strategic, whole systems approach to get a handle on your direct spend and indirect environmental costs.  The only way to effectively do so is to look inside the operations of your own four walls, AND explore ways to influence the outside variables that can impact your operations.

The authors also cite three key attributes of a strategic supply chain management process that must be optimized: agility, adaptability (think Darwin?), and alignment (or the Three A’s).  I agree in whole that in order to shape behavior and optimize sustainability goals within a supply chain, that its vital the companies seek to 1) set in place tools that increase flexibility and ability to rapidly respond to changes in customer behavior and preferences (agility) 2) reshape supply chains to new ways of thinking (adaptability) 2) align your organizational goals with those of your upstream and downstream suppliers, vendors and stakeholders through improved collaboration and relationship management (alignment).  Each of these success attributes plays well in the sustainability arena and in managing an organizations triple bottom line.

As I have repeatedly stated in this space, the supply chain and logistics world is changing- expanding from a company vs. company solar system to a supply chain vs. supply chain universe.  Reshaping and reforming your supply chain management practices to reflect changing business norms toward managing to the ‘triple bottom line’ makes for smart business.

Saying is One Thing, Doing is Another: Implementing Sustainability Programs with Success

30 Jul

NOTE: You can read the entire guest column as it originally appears in Sustainable Business Oregon

If you have a tween or teen living under your roof, you’ll be able to relate to this: When I tell my daughter to clean up after herself, I can pretty much expect that it will not get done.

On the other hand, when I lead by example and help build a culture of cleanliness, this becomes self-gratifying and I get the critical mass I need to have a clean house — that makes my wife happy too.

If you work for a well-meaning company that talks a good sustainability talk but lacks on the execution, well, you may be able to relate too.

Getting to “Git ‘er Done.”

I have written about the foundational aspects of the triple bottom line and sustainability and the strategy of planning for it. But once the talking is done and the planning is complete, it’s time for the heavy lifting, time to “git ‘er done.”

It’s at this point that your staff might scurry for shelter like when the lights come on and the mice scramble to their hidey holes — unless you’ve already established a culture of change. It’s been proven time and again that when a company says that it’s going to implement a sustainability initiative, but lacks the cultural framework or inertia for stakeholder “buy in”, it’s less likely to succeed.

Why? First, in Bob Doppelt’s Overcoming the Seven Sustainability Blunders, organizational traps that can lead to implementation failures often stem from weaknesses in cross-organizational communication and empowerment. In this 2003 article, Mr. Doppelt (who is executive director of resource innovations with the Institute for Sustainable Environment at the University of Oregon) discusses the “Wheel of Change Toward Sustainability.”  This process shows how seven interventions can systematically deflect those blunders, and form a continuous reinforcing process of transformation toward sustainability. Communication, feedback loops and transparency are key elements to successful transformation.

Also, in William Blackburn’s indispensable Sustainability Handbook- The Complete Management Guide to Achieving Social, Economic and Environmental Responsibility, he points out three key elements needed to achieve the critical mass for sustainability program execution:

  • Deployment into the rank and file.
  • Integration with existing tools and resources.
  • Alignment across the entire organization.

These critical factors place organizations in a position where all parts are pulling together. While top management commitment is vital to the success of any organizational change, it will fail without proper execution.  The foundation for implementation success then rests first on selecting a “cross functional” team, consisting of one or more talented and motivated individuals from across all organizational departments. This team will be well versed in the system elements, mechanics and will essentially be the “champions” by which the system can be deployed.

The rest of the guest column appears in Sustainable Business Oregon

Choose the Right Flavor: Ice-Cream, Sustainability & Business Innovation

27 Jul

Do you like your ice cream soft served or hard scooped?   What is your favorite flavor?  Do you like it straight up or with sprinkles on top?

So I heard on a very hot day recently with the kids at the ice cream “shoppe”.  This made me dwell over how my clients view sustainability.  You see, while a great deal of change has occurred in business over the years, sustainability is to the uninitiated as flavorful as the worst ice creams ever invented (http://bit.ly/aIuKYD).  Ironic that most of those flavors originate in Japan, the home of Lean, Quality Management Systems, Six Sigma, The Toyota Way, and all things continual improvement. Oh, BTW, there really ARE plenty of tasty ice creams and gelatos that are sustainably made (locally sourced materials, organics, community based giving programs http://bit.ly/dfGiaC).

The “look” and “feel” of sustainability then, depends on the level of enlightenment that a company has, the desired “end state” and on the depth of its resources to execute the change (see Joel Makower’s recent post in Two Steps Forward http://bit.ly/aTbzVz ).  So it’s important to note that while the main focus these days is on the environmental part of sustainability (i.e. “green”), that’s not the whole story.  ‘Sustainability’ embraces the legal, financial, economic, industrial, social and behavioral aspects of organizations as well as the environment.

In a new open source book, The Sustainable Business, by Jonathan Scott (http://bit.ly/bGhyu6), he describes seven key elements and criteria needed for organizations to evolve and meet the truest definition of a sustainable organization (the 7-P application model).   Briefly, the 7-P’s of sustainability are:

  1. Preparation – setting the stage for change (both physically and psychologically) and understanding what the reformer is up against when trying to implement profitable, long-term business practices while accepting the breadth and depth of this subject (e.g.: the financial implications of sustainability and the fact that it is not about being independent).
  2. Preservation – encompasses two areas: internal (collecting and displaying real-time measurement) and external (keeping ahead of laws, pending legislation, trends, and developments).
  3. Processes – sustainable belief systems, philosophies, business models, and thought patterns that help match a business with customer demands, core capabilities, and best practices.
  4. People – accepting the importance of training and education and working diligently to avoid the wasting of people, specifically: employees (who seek security and motivation), stakeholders (who want a return on their investment), customers (who want safe, value-laden products), and the world community – including the two-thirds of humanity who are currently left out of the global economic loop (who desire jobs and inclusion) and who represent an economic force all their own.
  5. Place – the buildings and places where work is performed and/or products are sold.
  6. Product – ensuring that goods and services are free from unnecessary waste (‘non-product’) and toxins – and designed so that the materials, energy, and manpower that comprise them (and their packaging) are treated as investments and continuously reused.
  7. Production – the physical, mechanical, biological, and chemical processes used to transform raw materials into products or services – and transport them.

Building on his Scotts multi-dimensional perspective on sustainability program development, three principal objectives of a sustainable organization must, at a minimum:

  • Minimize Resource Consumption, and
  • Avoid Damage to the Environment, while
  • Meeting Business Goals, Human Needs and Stakeholder Aspirations

So how does one get to there?  One way is through a systematic framework like an ISO 14001-based Environmental Management System (EMS).  While ‘sustainability’ is a guiding principle to keep organizations on track as an EMS is executed, an EMS is the framework – a set of processes and tools for effective mission accomplishment.

Supposing as Scott and Makower suggest that an organization wants to go beyond the environmental leg of sustainability and include the social and financial aspects as well…all good!  However, without the resources to make the leap and a systematic process to keep on track, the outcomes could be disappointing.  So before you leap, plan ahead.  Build a system to plan, implement, measure and check progress of the initiative.  Look for the quick wins.  Build an innovation-based culture and reward positive outcomes.  Measure, manage, report and build on the early wins.  Build the initiative in manageable chunks.

In summary, the keys to unlocking value through implementing sustainability initiatives require positioning through:

  • Identifying marketplace trends that reward innovation toward sustainability
  • Optimizing the linkage between sustainability, environmental and business objectives
  • Creating a systematic process and  internal champions that can drive the system from the inside out
  • Establish a manageable performance measurement system that demonstrates ‘triple bottom line’ results
  • Building assurance systems for compliance and credible and transparent public disclosure.

Are you ready for that ice cream cone?   What’s your appetite?   Single or  double scoop?  Sprinkles on top?

Shades of Green…Getting the Most from Your Sustainability Initiatives

13 Apr

fh-chart3

Are you “dark green” or are you “light green”…or are you a trendy “blue thinker” (having abandoned the “green” mantra as not deep enough)?  Well, two articles caught my eye this morning, both located on a very trustworthy e-zine, the Environmental Leader.  The first discussed how corporate marketers expect their companies to increase environmental sustainability initiatives over the next two to three years.

(http://www.environmentalleader.com/2009/04/10/survey-corporate-marketers-foresee-greater-investments-in-sustainability)

The second article was by Deloitte’s Peter Capozucca, who cited a 2008 study by the Economist Intelligence Unit, that stated that companies that embrace sustainability have achieved the highest share price growth over the past three years whereas companies with the worst performance focused less on sustainability (http://www.environmentalleader.com/2009/04/10/avoiding-pitfalls-on-the-sustainability-path-to-shareholder-value/)

What struck me in these two wildly divergent articles (and which seems to be a perennial challenge among both public and private organizations) is the principal motivation is behind companies drive to implement sustainable business practices.   Is the motivation driven by market barriers, new regulations, risk management thresholds, competition, globalization of goods and services, supply chain, cost containment, profit, or more altruistic reasons?   According to the Fleishmann-Hillard led marketing study:

“…three-quarters believe that corporate reputation, corporate culture and technological advancements will be the drivers for sustainability. The Obama administration’s policies also will drive the adoption of corporate sustainability programs, according to 63 percent of respondents. “

Whatever the reason it is clear, as I am discovering here in the Northwest, that sustainability and all that it offers organizations is becoming more prevalent in today’s society.  One size does not fit all when it comes to defining sustainability.  To truly be effective, an initiative must create positive change in fundamental organizational behavior, both within, upstream and downstream of the organizational walls.  This change must provide long term, measurable and meaningful value.

And despite the fact that the economic slowdown has dampened the speed at which organizations are implementing sustainable practices, organizations are finally “getting it”. A few key pointers as you head down the sustainability path:

  • Know your driver
  • Develop a compelling, clear vision of sustainability
  • Identify critical sustainability issues
  • Select areas of focus- look outside the “four walls”
  • Develop and adopt goals and measurable performance indicators
  • Reflect sustainability throughout all phases of organizational development, planning and implementation processes and decisions
  • Build a network of internal sustainability champions
  • Strengthen relationships with key external sustainability partners

Don’t wait to unlock organizational value. Position yourselves now so that you can emerge as a leader within your business sector through:

  • Optimizing the linkage between sustainability, environmental and business objectives;
  • Creating a performance measurement system that demonstrates bottom line results;
  • Identifying marketplace trends that reward innovation toward sustainability; and
  • Building assurance systems for compliance and credible stakeholder engagement.