‘Managing operations in an environmentally and socially responsible manner – “sustainable manufacturing”– is no longer just nice-to-have, but a business imperative.’ – Andrew Wyckoff
Andrew Wyckoff, a Director at the Organization for Economic Co-operation and Development (OECD), recognises that business operating today face huge challenges.
Not only is there an increase in the cost of materials and energy. There’s a raft of complex government regulations to understand and comply with. There’s also growing pressure from customers and investors alike to demonstrate your commitment to the environment and society.
The good news, according to Andrew, is that ‘environmental improvements go hand in hand with profit-making and improved competitiveness’.
And with $12 trillion worth of market opportunities associated with the UN’s Sustainable Development Goals, the businesses that take the lead in the new circular economy are the ones that will benefit the most.
What is sustainable manufacturing?
The US Department of Commerce defines sustainable manufacturing as ‘The creation of manufactured products that use processes that minimise negative environmental impacts, conserve energy and natural resources, are safe for employees, communities and consumers, and are economically sound’.
As a manufacturer, you need to keep the three dimensions – the environment, society and the economy – of your business in balance.
What are the benefits of sustainable manufacturing?
As you review your processes across the entire value chain, you are likely to see ways to increase your operational efficiency. This can often help you reduce costs. As just one example, the UK’s Carbon Trust estimates that most businesses can cut their energy bills by up to 20% with only a small investment – a saving that could equate to as much as a 5% increase in your overall profits.
Another area where you are likely to save money is through reducing your waste. By looking for ways to prevent waste from coming into the business in the first place to implementing a reuse and recycle policy, you can cut down on the costs of waste disposal.
A study by Harvard and London Business Schools found that financial analysts rate companies with a visible reputation for environmental responsibility higher than others. Operating in a sustainable manner can build trust and boost your reputation with your employees, customers and even investors.
Governments and larger organisations, like Walmart and Unilever, are setting high standards when it comes to sustainable business practices. And those standards apply to their suppliers too. If you’re a manufacturer that wants to win competitive contracts, operating sustainable could open the door to opportunities.
How to get started
One tool you can use to start your journey toward documenting and managing your sustainable manufacturing processes is a Life Cycle Assessment.
Providing a ‘cradle-to-grave’ analysis, this method looks at the use of raw materials and energy as well as the release of waste into the environment through five key stages:
- Extracting raw materials
- Manufacturing the product
- Transporting the product
- Using the product
- Disposing of the product at the end of its life
The OECD also has a Sustainable Manufacturing Toolkit that helps businesses of all sizes, types and sectors start to measure their sustainability performance. Here’s what the Toolkit covers:
1. Map your impact and set priorities: Bring together an internal ‘sustainability team’ to set objectives, review your environmental impact and decide on priorities.
2. Select useful performance indicators: Identify indicators that are important for your business and what data should be collected to help drive continuous improvement.
3. Measure the inputs used in production: Identify how materials and components used into your production processes influence environmental performance.
4. Assess operations of your facility: Consider the impact and efficiency of the operations in your facility (e.g. energy intensity, greenhouse gas generation, emissions to air and water).
5. Evaluate your products: Identify factors such as energy consumption in use, recyclability and use of hazardous substances that help determine how sustainable your end product is.
6. Understand measured results: Read and interpret your indicators and understand trends in your performance.
7. Take action to improve performance: Choose opportunities to improve your performance and create action plans to implement them.
It can feel like a mammoth task when you first start, but try to start small with the quick wins or the pieces of work that will generate the biggest return. Those early successes will give you the momentum and business support to roll out your efforts to the entire value chain.