Why Pursue Sustainability?

24 April 2014


Urgent and Important


I’ve wondered how a business case for Sustainability becomes sufficient to motivate businesses to take definitive actions. Resource Revolution, [1] a new book by a Stanford professor and a McKinsey consultant, provides some insights.

In a discussion of why customers choose to buy “green” products, the authors maintain that around 10% – 15% will buy for ideological reasons — they already believe that “green” is the right thing to do. For the balance, perhaps 80-odd percent, “green” doesn’t substantially sway purchasing decisions. That results in a “chasm” between early adaptors and a mass market.

 Perhaps a parallel situation exists with manufacturers. A relatively small percentage might choose to pursue Sustainability for ideological reasons. Others may react to outside pressures: customer requirements, government regulations or PR demands, for example. The majority, however, likely need powerful dollars and cents competitive reasons to make Sustainability sufficiently urgent and important to drive strategic actions. The economics and competitive implications of resource utilization may provide such a reason.

A Revolution in Resource Utilization

Resource Revolution is subtitled “How to capture the Biggest Business Opportunity in a Century”. The authors maintain that opportunity exists for ten-fold improvements in resource utilization. [2] “Resource utilization” refers to raw materials utilization and energy utilization. The examples in the book mostly emphasize larger businesses or entire industries. However, the principles involved are also relevant for smaller firms.


Here are some routes to resource utilization improvements that smaller manufacturers may find useful:


>> Consider the entire value chain — The best opportunities may not be in the factory proper. They may be upstream with your suppliers or their suppliers. They may also lie with your own product and process design. Upstream resource utilization improvements cascade downstream. Further, opportunities may lie downstream, perhaps as changes in customer specifications, packaging requirements or transport alternatives.


 

>> Eliminate waste throughout the system — Serious emphasis on Lean Manufacturing methods is critical in today’s world. Lean is about systematically finding and eliminating waste in all of its nefarious forms.  Don’t forget to emphasize waste reduction during product and process design.

 >> Substitution — Over time, industries embrace materials substitutions. Consider, for example, the number of products that have migrated from metal to polymers over the years. Seen any chrome plated automobile bumpers lately? Ford is migrating to aluminum for the 2015 F-150 pickup truck series to reduce vehicle weight, hence to improve fuel economy (energy utilization). Boeing is migrating from aluminum to carbon fibers for their 787 aircraft for the same reason (the 787 is said to be 25% more fuel efficient than the planes it replaces). Communications electronics migrated from vacuum tubes to silicon, vastly improving both materials and energy utilization. Materials substitutions also apply to packaging and to coatings.

>> Dematerializing — Dematerializing refers to using less material without impairing product quality. Here, small changes can mean big bucks. Mikhail Davis, an executive at Interface Corporation, blogged on dematerialization in reaction to Resources Revolution. [3] He cites actual experiences in Interface’s carpet manufacturing operations. 

>> Increasing “circularity” — “Circularity” refers to closing the loop on materials utilization, so that recycling (or remanufacturing) takes place throughout the value chain, including end of product life. Repeated substitution of recycled material for virgin materials is one way to seriously approach ten-fold materials utilization improvement: use the same materials over and over again. Governments are beginning to require that manufacturers take responsibility for their products at the end of their useful life, so figure it out.


>> Virtualize — To “virtualize” means to remove from the realm of materials. For example, I bought the Kindle version of Resource Revolution, rather than the hardcover edition. Consider the materials and energy used in producing and transporting a hardcover book, from forest to pulp mill, to paper mill, to printer, to distributor, to me. Then consider the materials and energy involved in producing and delivering the Kindle version. Another example: consider the difference on-line income tax preparation and filing has made, compared to the old paper forms and instructions. Then consider the difference for IRS in handling and processing something like 100 million tax returns (you don’t have to like the IRS — you do have to pay for it). Something similar applies to your firm’s back office work, sales communications, marketing efforts, records keeping and more. 


This is all real. The world’s population is continuing to increase. The average per capita wealth of the world’s population is also continuing to increase. So, global demand for goods is likely to continue to increase for as far as I can foresee. At the same time, global competition in manufacturing is also likely to continue to increase. The status quo just isn’t good enough anymore. 


Chuck - PacificThoughtful comments and experience reports are always appreciated.


…  Chuck Harrington
(Chuck@JeraSustainableDevelopment.com) 


P.S
: Contact me when your organization is serious about pursuing Sustainability … CH


This blog and associated website (
www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. New blog posts are published on Wednesday evenings.


 [1] Stefen Heck, Matt Rogers and Paul Carroll, Resource Revolution: How to Capture the Biggest Business Opportunity in a Century, New Harvest Publishing (April 2014). Available in hardback and in Kindle format.

 

[2] At a workshop in December 2012, Amory Lovins mentioned that his Rocky Mountain Institute focuses on finding and commercializing step function (ten-fold) energy utilization improvements. The authors of Resource Revolution cite examples from Lovins’ Reinventing Fire, Chelsea Green Publishing (2011).

 

[3] Mikhail Davis’ blog post, Dematerialization: Make more money, use stuff differently, is at: http://www.greenbiz.com/blog/2014/04/22/three-stages-dematerialization-make-more-money-make-less-stuff?page=full.