Manufacturing the Green Future

Published 5th August 2008

By Andrew Kinder, Director, Product Marketing, Infor

Forward-thinking manufacturers have embraced Green practices to satisfy customers, comply with regulations and promote positive community relations. Many of these companies have found—often to their surprise—that Green initiatives are more than just good citizenship, they are good for business, too. These companies have developed cost-effective internal processes that encourage environmental stewardship, and are increasingly tapping revenue-generating market opportunities for products and services where customers are hungry to be more Green.

For many years a vastly different outlook dominated around the globe. Skeptics surmised that Green practices and mandates would dramatically increase costs and stymie growth. However, warnings and reports about contamination in emerging markets, global warming, toxic-product dangers, limited natural resources and rising energy costs have pushed environmental concerns to the forefront of a buyer’s mind, and, subsequently, forced business leaders to focus and find cost-effective and profitable solutions to these and other environmental issues.

The executive teams see the writing on the wall and realize more environmental regulation is just around the corner. To keep ahead, many manufacturers have started to put in place business processes and reporting systems that exceed forthcoming mandates. Moreover, those that are savvy enough have acted swiftly to earn a place at the table as rules and policies change—and are best placed to earn an increased share of the new emerging markets created in a dynamic regulatory environment.

What does all this mean? The most important driver of business challenges and opportunities in our lifetimes (and our children’s) will likely be the Green revolution. The challenge is that the earth’s resources are limited, and the population is expected to grow by 50 percent over the next four decades. Added to this is that the demand for manufactured goods continues unabated and will continue to grow globally at estimated 6 percent. This will create opportunities for every company to develop products and services that address escalating growth and gradually minimize the impact of those inhabiting the planet.

As we embark down the Green road, it is critical the manufacturing industry transition from being seen as the problem (being the major emitter of carbon emissions directly and through their consumption of energy) to being seen as the solution Only through their innovation, research, planning, action, and investment can this happen.

Green strategic planning requires company-wide (and ideally supply chain-wide) input and collaboration. Depending upon a company’s mission, culture, business sector, and other factors, going Green will involve a variety of functions and departments such as procurement, materials management, production, shipping and receiving, sales and marketing, etc. Major suppliers and customers also should be involved in the planning processes, as their ideas and early buy-in make for easier and faster adoption of new practices and products.

Becoming Green

Mechanisms that gauge Green improvement reinforce a company’s Green advances and position in the market, particularly as more and more companies claim Green business practices-—without measurement you cannot manage or report on your success.

Those given the responsibility of managing Green projects must begin to think in terms of overall business processes—not just inputs and outputs—in order to sustain lasting results. For instance, it may not be a question of whether an approval can be converted from paper to electronic, but a question of whether the approval is even necessary. Real, lasting benefit comes from streamlining processes more than just minimizing inputs and outputs. Keeping focus reduces the environmental impact and material usage, as well as wasted time, motion, energy, and human capital.

After the most basic processes are addressed, the strategy advances toward a focus on facility management, manufacturing operations, and other activities under the company’s internal control. Once the internal processes are in place, manufacturers should then look to developing Green products. This appears further in the Green lifecycle in part because most companies tend to cautiously identify market opportunities and how to attack them and product changes and new product introductions typically require long lead times, especially in complex markets. While revenue-generating product impact appears later in the Green effort, the planning and positioning for these launches should begin at the outset and be scheduled based on existing product-development cycles. The benefit of this approach is that progress with Green product development can be made while the company gets its internal house in order.

Technology Supports Green Initiatives

The foundation for any strategic change within a company is rooted on accurate data and information.
Without rigorous data-gathering and analysis, a shift in corporate approaches to doing business, either internally or externally, can be terribly flawed. Information about resource consumption, emissions management, asset performance, space usage and other capital resources is invaluable for planning, measuring and sustaining Green internal practices.

Both good data and the technology that can deliver it to decision-makers are especially important when assessing energy consumption strategies. Increased energy consumption and costs have become major obstacles to profitability for manufacturers.

Leading Green companies are using technologies—such as performance management, enterprise asset management, supply chain management, and product lifecycle management—to make strategic decisions related to environmental responsibility, including energy consumption. These applications are developed and embraced with a keen eye toward the benefits they provide.

Performance Management
Understanding the current, Green position and the ability to efficiently transform and monitor the organization is critical to success. Performance Management (PM) applications support this effort, especially in multinational manufacturers. PM helps companies link their overall Green strategy to specific operational plans and improve overall business performance.

As part of a manufacturer’s strategic Green initiative, PM helps kick off the Green effort and align strategies with resources and actions that are easily measured and monitored, and share that information across the organization. In addition, manufacturers are able to incorporate Green efforts and monitoring within the spectrum of compliance requirements including closing books, reporting financials and management reporting.

Enterprise Asset Management
A company with a sophisticated enterprise asset management (EAM) program likely has energy-consumption information for machinery and other assets. A company without EAM or comparable programs will need to invest in them, taking time to gather data before setting goals and identifying required actions.

Traditional asset management does not integrate energy consumption. For energy conservation, businesses need to select technology that gathers information on all facility assets—heating and cooling units, chillers, boilers, lighting, anything that consumes energy—and provides staff with intelligence regarding optimal maintenance and replacement schedules based on energy consumption. By incorporating energy management into your asset management, manufacturers can now account for more than 90 cents of every dollar of operating cost. The usual net result is a reduction in total energy spend even as asset performance and uptime increase.



Supply Chain Management
One of the most significant Green opportunities is in relation to the total supply chain and here it is critical to work with suppliers and customers to devise new ways of efficiently getting products into consumers hands. All across the supply chain there are opportunities to reduce energy consumption and emissions. Reduce, rework, re-cycle, renew are becoming watchwords for the way to re-think supply chain strategy.

Examples of low hanging fruit include designing new inbound and outbound transportation and distribution networks that use the least amount of fuel and facilities (warehousing, distribution, etc.) while achieving optimal on-time delivery and fulfillment. The same decision-support process when combined with carbon measurement of the different transportation modes, can result in significant modal shifts from air to sea, from road to rail – reducing carbon emissions but with some knock-on effects in inventory management which need to be part of the analysis.

More strategically, companies will re-assess their sourcing strategies through newer – green tinted glasses – and perhaps reverse some of the trend toward mass outsourcing that has been experienced in recent years.


Product Lifecycle Management
Most Green benefits that occur by changing practices hit the cost side of accounting statements. But the Green movement offers new revenue generators in two ways: alter existing product lines and create new products (for existing and new markets). Here technology is a must in evaluating the myriad opportunities.

For existing products, companies should consider current materials and processes. Can either be altered to create less waste, use renewable resources or remove harmful byproducts while meeting customer demand and maintaining profitability? Data and modeling are the keys to solid cost/benefit decisions in this area. The same is true for entirely new products.

Flexibility and speed in the product development process will become increasingly important as the number of environmental mandates increases and new technologies make possible more environmentally friendly products and processes. Building a data-management and modeling program now that encompasses product lifecycles will provide enormous advantages to Green manufacturers tomorrow.

Green Brings Benefits

Like any corporate initiative that seeks to be more than the flavor of the month, it must be firmly entrenched in the standards, habits, hearts, and minds of the workforce. To become a Green company requires an adoption of conservation principles into the culture of the company. But doing so has its rewards. Companies with well developed Green strategies are reporting new initiatives for waste reduction, cost saving and revenue generating opportunities that they acknowledge would otherwise have gone unnoticed or unimplemented.

As the most talked about topic in industry this year, companies who have not yet defined their Green strategy would do well to act swiftly, rather than wait for legislative requirements or customer mandates to force the pace. Markets are changing and new opportunities opening up. Being Green is no longer an altruistic ambition – it is becoming a strategy for competitive advantage and business profitability.