The Sustainability Buzz

Sustainable Manufacturing: The New Competitive Advantage

Differentiators for Competitive AdvantageOne of the fastest growing areas of interest in the field of sustainability is sustainable manufacturing. Let’s look at what sustainable manufacturing is, how it can reduce costs and improve your competitive advantage.

As manufacturers have developed an increased awareness of the limits of natural resources, they have begun to realize that if they inefficiently and ineffectively utilize these resources, they will eventually put themselves out of business. It’s a simple equation: if you run out of water, it’s hard to make Coca-Cola. These concerns, coupled with the dramatic finding in the mid-1990s that 93% of the manufacturing process goes to waste and only 7% to product, have spurred interest in ways to make the manufacturing process more sustainable.

A more recent driver of sustainable manufacturing has been the release of the Walmart Sustainability Product Index. Announced in July 2009, the index will require suppliers to show progress in the adoption of 15 sustainability practices to retain Walmart as a customer. Walmart has 60,000 suppliers world-wide which means these 60,000 suppliers are now focused on sustainable manufacturing.

So how can you implement sustainable manufacturing? By looking at each step in your product lifecycle through a sustainability lens to see if you are utilizing the most efficient and cost-effective processes at each step. Here are five strategies to consider:

  1. Identify substitute materials and energy. Can you use a renewable resource instead of a non-renewable? For example, bamboo, a renewable resource, is now being used for flooring and, amazingly, bed linens. Can you substitute renewable energy for a fossil-based energy source? Can you use someone else’s waste material as your raw material? How about lighter plastics? Less toxic ingredients?
  2. Reduce and redesign. Find ways to redesign your product using less material to begin with. Particularly consider packaging. Redesign processes that are water-intensive. Look at your transportation and logistics. Can better package design improve stackability on trucks, increasing product shipped per load?
  3. Reduce, reuse and recycle waste. How much waste is left after your product is finished? What do you do with it? For 3M, waste = $$$. They classify everything as product, by-product (to be reused or sold) or waste and then they ask, why is there any waste? That 93% waste figure quoted above means that on average each manufacturer throws away 93 cents of every dollar invested in manufacturing a product. Not only does reducing waste save you money, it also reduces your risk since your waste could be someone else’s pollutant. The less you create, the lower your risk.
  4. Reuse and recycle products. Can components of your product be refurbished and reused by you? Look at ways to reclaim your product after its useful life.
  5. Waste material becomes raw material. If you can’t use your waste, perhaps some other manufacturer can. Your waste then becomes their raw material, creating a virtuous cycle of sustainable manufacturers.

If you do more with less, it must cost less. That’s basic economics. While cost savings alone might be your competitive advantage (leading to lower prices), the savings realized through the implementation of sustainable manufacturing practices might also be applied throughout your value chain to support other areas of advantage, such as product development or customer service.

And remember, if you don’t want to realize those savings, there are 60,000 Walmart suppliers who will.

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