Making your business lean and green should be a top priority, says Keivan Zokaei.
Like lean thinking, greening your business is not just a “nice to have”—it is now “must have.”
It is a key economic driver for many forward-looking firms. If you are a business manager and you are yet to develop a solid plan for going green or if you are in doubt whether going green pays off, have a look at companies like Toyota, WalMart, DuPont, Tesco, Unilever, Marks & Spencer and General Electric, all of whom have invested heavily in greening their products and processes over the past few years.
Unilever plans to double its revenue over the next 10 years while halving the environmental impact of its products. GE aims to reduce the energy intensity of its operations by 50% by 2015. Tesco has announced that it will reduce emissions from stores and distribution centres by half by 2020 and that it will to become a zero-carbon business by 2050.
WalMart’s Zero Waste initiative claims that more than 80% of waste generated in its U.S. operations has been diverted from landfill while the company’s goal is to generate zero waste in the first place. In 2010, WalMart announced that it will cut total carbon emissions by 20 million metric tons by 2015.
Toyota, in its Fifth Environmental Action Plan, announced that it will improve the average fuel efficiency of its vehicles by 25% in all regions by 2015 compared to that of 2005. In production, Toyota has already reduced emissions per vehicle by 37% between 2001 and 2012.
If that wasn’t enough then look at DuPont which committed itself to a 65% reduction in greenhouse gas emissions over a ten year period up to 2010. In 2007, DuPont saved $2.2 billion through energy efficiency. In the same year its total declared profits was not much more than $2 billion! And the list grows longer with many small and medium size companies following suit.
The secret to Unilever’s success
However, there are still too many companies out there who push environmental improvements to lower priorities. They are oblivious to the reasons behind why the likes of Paul Polman, CEO of Unilever, have been so passionate about sustainability. Unilever, alongside the rest of the companies mentioned in the above, invest significant time and resources in ‘green continuous improvement’. None of them, however, have joined the Greenpeace! So why should they bother?
The secret of Polman’s recipe is simple. It’s a simple yet powerful realisation that the environmental and economic footprints are aligned. When we prevent physical waste, increase energy efficiency or improve resource productivity (they all mean the same thing by the way!), we save money, improve profitability and enhance competitiveness. In fact, there are often, huge opportunities which we call “quick wins”, thanks to years of neglect. That’s the secret of those companies.
There are other benefits too. First of all, investing in green continuous improvement (CI) unlocks great amounts of innovation and vigour across the organisation which in turn underpins future success. Secondly, with most industries there is a substantial and growing market for sustainable products.
Lean means doing more with less. That’s why lean thinking supports green and vice versa.
Nonetheless, today economic and environmental CI are separate organisational silos and sometimes even come into conflict with each other. This is one of the biggest opportunities missed across most industries. Too many greening interventions are concerned with technical fixes and top-down implementation of end of pipe solutions which hardly leave a lasting cultural change. Lean and continuous improvement practitioners, on the other hand need to obtain essential knowledge about the key environmental measures and priorities. The power of lean and green is to bring the two together.
Reducing waste by 1,000 tonnes
Here is an example. A few weeks ago we worked with one of the largest sandwich factories in the world. A team of great men and women engaged in a programme to reduce physical waste. They used simple techniques such as value stream mapping and A3 problem solving (well know lean tools). The results were staggering. No one (including me!) expected to see nearly 1,000 tonnes of waste prevented in just a few weeks, in a very mature industry. The commercial benefits where even more staggering. I am constantly surprised – in a very pleasant way – when we put lean and green together.
Our forthcoming book, “Creating a Lean and Green Business System: Techniques for Increasing Profits and Sustainability”, is packed with case studies and examples of leading firms who use lean and green as simultaneous sources of inspiration in various sectors of industry—from automotive and retail to textile and brewing.
Just to give you a little flavour of what my co-authors and I found in the process of researching for the book, I can give you an update about our benchmark study into the automotive sector. Our benchmark was done 20 years after the original IMVP Programme benchmark which led to coining the term “lean manufacturing”. Interestingly we found out that Toyota — the holy grail of economic efficiency for decades — tops the green charts too. This led us to discover more about Toyota’s notion of Monozukuri which means sustainable manufacturing and lies at the very heart of Toyota Production System (or lean thinking). Why not find out more information on our Lean Manufacturing page.