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Business man-ufacturing

Positioned as we are with front-row seats for the melting of the polar ice caps, we, the people of Australia, are not often accused of environmental insensitivity.

We conserve water; recycle paper and glass. We’re careful about the impact we might have downstream. And yet, as most of us know, our record of bringing real environmental reform to industrial settings has not been stellar.

There’s a lot of talk about sustainable manufacturing, but what is that really?

For most companies, sustainable manufacturing is no more than the latest green buzz, which usually arrives at a company in one of two recognisable forms. It might be an employee-driven initiative to recycle more and conserve energy.

Alternatively the company will fall briefly under the sway of a salesman extolling the virtues of bio-polymer packaging or photovoltaic cells to power vending machines in the break room.

These are all fine ideas, of course, but the problem with initiatives like this is they are all stuck to the business like an extra limb. As soon as hard times hit or a new buzz appears, the old initiative is allowed to fall into disuse.

Remember compact fluorescent lights? Remember when people said we were doing enough just by changing the light bulbs?

All of us are responsible for protecting our natural resources, but competition mandates that we increase customer value while controlling costs.

Fortunately, proven lean tools and management principles can help companies address both challenges. And when sustainable manufacturing and agriculture become indistinguishable from the business model – when we make money by being green – that’s when we’ve done something real.

In the food business, this can be particularly challenging. Food safety can demand that we use a certain amount of energy and water (we think). And, of course, consumer tastes and demands can shift on a whim. Food inventory and waste therefore comes with the cost of doing business.

It can be argued, however, that high inventory, food waste, excess water and energy use – none of which are ultimately sustainable – are all unnecessary, and therefore do not belong in business.

The CSIRO states that the key to sustainable manufacturing is inter-national standards and protocols, and compliance with regulations. The rules, in other words, shall set you free.

In truth, however, it is the customer who is the key to sustainability – not the government, not bio-polymer packaging or an employee initiative to separate waste paper. Because the customers’ demands are – or should be – the focus of the entire business, the priority should be on sustainable business, not just sustainable manufacturing.

By listening to what customers want and responding to their desires – giving them that, and only that – waste, over-stock, and spending can all be reduced. This is the key to sustainability.

This is a ‘pull’ system. The customer pulls the desired product through a process, which responds only to his desires, at the rate of demand. If this principle is used to guide business practices, as a central component of a lean philosophy, an entire company should start acting more sustainably.

The trick is to ask, ‘what will my customer’s pay for?’ The average consumer will pay for quality ingredients, prepared safely and delivered promptly. That’s about it. They don’t want to pay for inventory storage, or for transporting half-baked goods between one batch process and another, or for a conversion to a new enterprise-wide software program with ‘green’ features.

By listening to the customer and getting rid of the unwanted extras, a reduction in the costs of inventory storage, extra energy required to bring half-done product up to temperature and back down; and the petroleum products and emissions required to truck inventory from one place to the next will all take effect.

With sustainable businesses, we should be talking not just about the environment, but also about the long-term financial health of a company. And nothing keeps a company as healthy as keeping the customers happy.

— Carl Deeley is the managing director of TBM Australia.

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