by Carole Murphy
Most companies, in one sense or another, have become increasingly conscious of environmental concerns and sustainability issues. Non-renewable resources, energy, weather patterns and workplace safety are a few of the current topics creating growing trepidation. Out of necessity, the largest concern that arises from these changes in small to medium sized businesses is cost. SMB leaders are asking themselves: “What does it cost to research and implement alternate materials and are they feasible for my product?” “Can I afford to pay my workers more, or move manufacturing to a plant that has more established workers’ rights?” Can I afford the rising costs of energy and water?”
These questions are all valid in an economy that has been trying to find it’s footing in an uncertain environment. Unfortunately, they are not the initial questions that need to be answered for your company to withstand these shifts. Small to medium sized businesses are typically not able to invest the capital costs associated with projects such as biogas-powered generators, fuel cell installations, or water turbines in order to create energy. They also are unlikely to be able to afford the purchase of energy credit offsets.
A paradigm shift, then, is in order. Both costs and liabilities can decrease when you aim for a more sustainable operation. As you consider the various environmental concerns facing you as a manufacturer today and seek to make sustainable decisions, keep in mind as you move towards these goals, a reduction in cost should be as a byproduct of the more sustainable solution. So, what are the questions you should be asking that will bring the desired results? The following questions below can help you think about your fundamental business operation.
1. What am I risking by failing to move alongside the environmental shift?
Today, companies are being held responsible for issues that surface anywhere in their supply chain. If you avoid auditing any step in the production of your product, you could be putting yourself at risk of public and government scrutiny, along with possible legal reparations. The cost alone could put any company out of business very quickly. Scandals in the fashion/clothing manufacturing industry are wide spread. A number of companies in the industry have been considered “guilty by association,” were forced to drastically alter their approach in regards to “fast fashion.” Even if you don’t own or operate the factory that is in violation of general working conditions, wage rights, and safety codes, and other issues, you could still end up paying the ultimate price for this gap in compliance. What you don’t know can hurt you. Many of these apparel companies have lost millions before implementing controls into their supply chain.
2. Could I be doing more?
You might be thinking that if you are using renewable sources and avoid utilizing water, harmful chemicals or outsourced production, that you don’t have a responsibility or a need to discover what else you could be doing to positively impact the environment. But there are, in fact, a number of ways that you can do more for both the environment and your company.
When is the last time you have truly considered all aspects of your operation? Some companies have worked through their supply chain and dedicated large quantities of funds to design cutting edge technology that will not harm the environment. Others simply find a way to reduce the use of paperwork inside your business. The process or material changes depend on your company, how it operates, and the goods it produces. Have you switched out your styrofoam disposable coffee cups in the break room? Have you added recycling bins in the office?
Even the cost of solar panels is decreasing due to scalability and as the technology continues to evolve, they last longer. Government incentives are high, and maintenance is fairly low once installed. If you own a warehouse, they can sit right atop your roof and save a substantial portion of your energy bill. Any manufacturing company can do this and experience a substantial savings on their energy costs.
As a manufacturing firm, simply tightening process controls and ensuring that all products made or used in your business is accounted for accurately can save millions. By increasing the efficiency in your plant and the materials used, you’re also creating less waste. Implementing warehousing and distribution controls alongside increased visibility into production can be resolved through integrations within your ERP.
3. Could I be saving substantial amounts of money?
Many companies do not realize the positive aspects of becoming more environmentally sustainable. Not only could you avoid additional costs, you could save a substantial amount through increased efficiency alone. Most options require up-front cost, but the ROI is incredible. If an airline can save tens of thousands by reducing their garnish count on flights, how much could you save by reducing the quantity of packaging you use? Even a reduction of 2%, when scaled over millions of units, can make an enormous difference. You’ve already switched your lighting in your warehouses to LED, right? It’s understood that this small investment can reduce overhead by tens of thousands of dollars per year.
One way to save time, money, physical resources such as paper, and manual error would involve a completely integrated ERP system. Efficient use of time and materials are key to reducing unnecessary waste. Robust functionality and integration with your financials ensures efficient processes. The ability to trace components and raw materials back to their origins assist you with any audit process you choose to undertake, allowing you to catch any inconsistencies or errors before the issue escalates.
It is clear that visibility into your manufacturing processes can reduce risk of waste and save time and money, but you can, and should, always be looking for the variety of options that you have available to you to act in the most environmentally sustainable way you can. Acting sooner rather than later will keep you from facing concerns from the public or from authoritative entities.
About the Author
Carole Murphy, MBA and Certified Sommelier, is a Solution Coordinator at Blytheco. Connect with her at http://LinkedIn.com/in/CaroleMurphy.
Reprinted from the Summer 2016 issue of Bellwether.
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