Politics aside, sustainable practices make good sense

Most companies today are taking steps to improve the sustainability of their products and processes in response to both consumer and public pressure and impending regulatory requirements. No matter where you stand on the issue of global climate change, there are good business reasons to reduce energy usage, cut down on waste and look for sustainable components and materials as substitutes for their non-sustainable counterparts. Operations management and supply chain professionals are increasingly involved in leading their respective organizations on the path to more earth-friendly operations.

Sustainability is defined as the capacity to endure. For humans, it is the potential for long-term maintenance of well being, which in turn depends on the well being of the natural world and the responsible use of natural resources (per Wikipedia). For businesses, this means two things: Reduce usage of any and all resources to the minimum necessary, and wherever possible, use resources that are renewable.

On the first point, the hierarchy of waste reduction is as follows: reduce, reuse, recycle or reprocess, and finally responsible disposal. The ultimate waste reduction is to not use the resource in the first place. Operations management has long been focused on waste reduction, so this is nothing new. Modern management programs like Lean Manufacturing represent today's best practices in this area.

Second on the waste reduction scale is reuse. This effort is most evident in a move toward reusable packaging and containers. Many companies now use more durable packaging materials (crates, cartons, pallets) that can be used a number of times instead of just once. Recycling is familiar to everyone today. Companies now consider recycling and reprocessing possibilities in product design, making sure that the products can be conveniently disassembled at end of life so valuable materials can be affordably recovered for use in new products and to prevent toxic materials from entering the waste stream.

The economics of waste reduction can be impressive. Using fewer resources inherently lowers costs. And most recyclable materials can be sold, generating revenue while reducing waste collection and landfill costs. In addition, some consumers are very concerned about environmental issues and actively seek out products from "green" producers and are even willing to pay a premium for products that are documented as sustainable or "earth friendly." Being "green" is good for your company's image even if you don't offer these kinds of premium priced products.

The other side of sustainability is the use of renewable materials wherever and whenever possible. Renewable materials (forest products and recycled materials as replacements for petroleum-based materials, for example, such as recycled paper burger boxes instead of foam plastic) often cost more and/or don't perform as well as the non-renewable counterparts, but companies are becoming more willing to pay the price for three reasons — regulatory pressure, consumer demand, and because it's the right thing to do.

Don't forget in all of this that energy usage is a prime concern for environmental sustainability. Electricity generation accounts for half of the carbon dioxide produced, and carbon dioxide is the definitive "greenhouse gas" that is the focus of so much attention among the environmental community. Other large sources of greenhouse gases are heating and transportation. Energy conservation must be high on the list of any company seeking to become more "green." In addition to energy conservation efforts in the plant, office and store, transportation management and optimization can significantly reduce the miles driven and fuel used in getting products through the supply chain. One such effort is the intelligent planning of "reverse logistics" for returning recyclables and bringing raw materials back to the plant in the same trucks that delivered the product.

Product Design Should Consider the Life – and End of Life

The last two articles I’ve written for the APICS magazine “Enterprise Insights” department (to be published in the January/February 2010 and March/April 2010 issues), deal with “green” and “sustainability”. In the second one, I wrote about designing a product with its end-of-life in mind – reuse, reprocessing, recycling, and responsible disposal. Coincidentally, the following item appeared in the SME Daily Executive Briefing on December 29, 2009:

Considering "End Of Life" Issues For Electronics Could Benefit Manufacturers.
The Chicago Tribune (12/28, Hopkins) reported on "Harrison Kim, an assistant professor in the University of Illinois Department of Industrial and Enterprise Systems Engineering at Urbana-Champaign." Kim studied the lifecycles of electronic gadgets and the associated costs, "and found that the time to think about...'end of life' issues is before the small electronics are even designed." Specifically, Kim "analyzed how design differences affect product recovery and determined that manufacturers are losing money by not reusing components." Fewer than 5 percent of retired phones "are recycled or reused." Kim said, "These are profits currently neglected." One way manufacturers could benefit, he said, is by designing products that were modular. Such products would also "appeal to the environmentally-savvy consumer."

There are regulations in Europe – RoHS and WEEE – that govern the electronics industry with specific requirements for recycling and safe disposal. You can be sure that the same kind of regulation will be implemented in the U.S. in the foreseeable future and similar regulation will apply to other industries as well as electronics. Why not get ahead of the game and start thinking about end-of-life in products you are designing today? Chances are good that this effort will pay off in future compliance as well as enhancing your image with an increasingly “green” oriented customer base. Read more articles by Dave Turbide at www.daveturbide.com or click here