Consumer demand for eco-friendly products and services, employee interest in working for ethical and responsible companies, and government regulations regarding greener operations are pushing sustainability to the forefront of business agendas. But there’s one more key driver of this movement: Sustainability initiatives can increase net profits.
Although many companies are aware of resource-optimization techniques — minimizing operational waste to lessens purchasing costs or reducing water and energy use for significant savings — others seem to have difficulty building out the proper road map to sustainability. Following are some straightforward steps to structure operations in the green direction.
Step 1: Build an effective organizational structure. Sustainability programs should be managed in a consistent and coherent manner by a corporate sustainability team. Plant-level initiatives can deliver positive results, but many organizations fail to take advantage of these beneficial strategies and apply them outside the four walls of a specific plant. When sustainability programs are organized by a corporate group, companies can foster a culture of collaboration across functional groups and locations and help all facilities access the necessary resources to reach sustainability success.
Step 2: Implement dedicated roles on the plant floor. Establishing roles and responsibilities across functional teams helps ensure that the corporate goals are well communicated to employees and that there is buy-in from all levels. It’s also important to establish cross-functional teams to ensure that best practices are shared among all groups or departments.
Step 3: Link sustainability metrics to employee compensation. It’s becoming more and more common for executive compensation to be tied to sustainability performance. However, this only addresses one level of the corporate hierarchy. The most successful programs foster both a top-down and a bottom-up approach toward a sustainability culture. Consider health and safety practices: When this emphasis is placed at the plant level and linked to compensation, the number of incidents quickly decreases. Compensation drives results. When goals are tied to financial benefits, workers are more likely to view sustainability programs as an integral part of operations, rather than just another marketing initiative.
Working toward cost savings
Once the structure and culture are handled, the focus can move to bottom-line results. A key here is sharing sustainability data and analytics across the organization to support decision-making. Connecting business processes to eliminate silos and apply analytics to newly expanded and contextualized data removes bottlenecks and empowers workers to make rapid and confident decisions.
Visibility into energy and emissions is one of the key strategies differentiating successful organizations. These companies are changing the meaning of visibility in their organizations, which means collecting data about key energy and emissions-related metrics automatically and presenting the data in the right form to the decision-makers. This enables quick and intelligent decisions. For example, in many geographies, energy prices fluctuate frequently. A production engineer or plant manager can use this information to schedule operations and achieve direct cost savings.
In fact, energy is a perfect example of how sustainable operations can affect the bottom line. Almost all manufacturers are aware of their labor or material costs, but not many have a true handle on their energy consumption. With the commoditization of sensors, controls and wireless connectivity, the opportunity to apply these technologies to energy management initiatives is clear. The data being collected needs to be controlled via a formal energy management or intelligence solution to provide executives with the ability to make connections between day-to-day tactical operations and strategic business goals.
Controls such as auto-shutdown of idle machines or auto-dimming lights can be put in place to further reduce energy use. This type of solution should be implemented via dashboards or event management tools, then tracked through reporting tools. The advanced analytics derived from these programs can give companies powerful insights into their energy use across the entire enterprise in order to keep pushing toward sustainability.
Automated data collection is the basis for building a real-time enterprise that can optimize sustainability performance. The ability to visualize and report on sustainability data is invaluable, as market and compliance requirements continue to evolve. Successful manufacturers have realized the importance of data-driven decision-making for sustainable operations and, as a result, are reaping the benefits.
To learn more about sustainable operations, read the full IDC report.
