Category Archives: Sustainability

A Lesson from the Leaders: Sustainability is the Key to Savings

Today’s post is from Tim Albinson, CEO of Aravo and blogmaster of 2Sustain.

Still wondering if sustainability can translate into savings for your company?

If so, then you need to spend a few minutes with “Designed to Matter”, the Procter & Gamble Company’s 2009 Sustainability Overview.

Sustainability is at the core of P&G’s business model, and the report is chock-full of examples of how the company is benefiting from its commitment to social and environmental initiatives. Consider this: since 2002, P&G has reduced (per unit of production) water consumption by 52%, energy usage by 48%, CO2 emissions by 52%, and waste disposal by 53%.

The company is looking specifically at its supply chain, too, and has decided to transition from multi-modal to “intermodal” transportation — a strategy that focuses on boats and trains, rather than trucks and planes. In North America, P&G’s use of intermodal transport has increased 30%, saving 11 million liters of diesel fuel and reducing overall miles by 12% since F07-08 — all while delivering the same volume of product.

I could go on, but I think you get the idea. P&G uses sustainability to reduce the environmental footprint of its products and operations, to make a meaningful difference in the lives of its employees, customers, and external partners — and to build long-term capabilities, improve its operations, and create significant savings.

Of course, a quick search will uncover leaders in every sector that are also reporting savings from their sustainability efforts Walmart, Coca-Cola, Ascent Healthcare Solutions, Marriott, Timberland, just to name a few. In fact, a new report from Siemens and McGraw-Hill Construction shows that, even during the worst recession in 60 years, corporations across the U.S. continued to accelerate sustainability efforts and increase efficiencies as part of their overall business plans.

Research like this confirms what I have been seeing for quite some time now: leaders of the world’s largest and most influential organizations are firmly committed to sustainability as a strategic imperative. Why? Because these leaders understand that sustainability is consistent with their profit missions.

As David Bent says, when it comes to sustainability, “the more you look, the more you find”. Social and environmental initiatives offer tremendous opportunities for business benefits. Start looking, and you’ll find — just as P&G and others have — that sustainability can easily translate into innovation, competitive advantage, efficiencies and savings.

Thanks, Tim.

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Is ISO 14000 Worth It?

ISO 14000 is the international standard for Environmental Management Systems (EMS). The environmentally responsible companion to the ISO 9000 standards for Quality Management Systems, it’s starting to get the attention of a few forward-thinking companies. But is it worth it? In other words, will it pay off, or should you just go lean?

In looking for the answer, I stumbled upon a recent Practix from CAPS Research on “ISO 14000 at Veris Industries”. The Practix provides a fairly detailed case study of the implementation and concludes with the following results:

  • The ISO 14000 process created a safer internal environment.
  • The identified recycling and re-use initiatives increased the recovery rate from 50% to 85% which reduced the cost of garbage hauling by 66%.
  • No price reductions resulted but Veritas believes it was a factor in keeping costs down over the last five years.
  • Natural Gas & Electricity consumption per manufacturing unit has declined.
  • On-time delivery has risen from mid-to-high 80’s to low-to-mid 90’s.

Not bad, but not great either. In other words, you can easily get the same results from a good lean initiative that focuses on waste reduction. I guess at this point, it comes down to whether or not you want something to hang on the flagpole. (And even if you do, I’d do the lean initiative first, because then it’s just a matter of documenting the processes, getting the audit, and paying for the certification.)

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SaaS Is Green … But It’s Greener If You Go Thin Client

This summer, MessageLabs (now part of Symantec) released a white-paper on “The Greening of SaaS” which I found very disappointing because one key point that many vendors overlook when selling SaaS is how it can considerably green your operations if implemented and utilized properly.

The paper indicates that with no hardware to purchase or software to run, the energy required to power that hardware and execute that software is eliminated or significantly reduced, depending on client-side consumption. While it is true that the client does not need to buy, maintain, and then dispose of (as much) energy consuming software if they go SaaS, as they won’t need a server farm in a data centre, this does not make SaaS green. If the “SaaS” vendor is actually an ASP-in-disguise vendor maintaining a separate instance of the application on separate hardware for each client, the same amount of energy will be utilized and the same amount of carbon produced. The only difference is that it shows up on the provider’s carbon footprint and not the client’s. That’s not green at all. It’s only green, on the server side, if the vendor is using a shared multi-tenant model and dynamically managing the modern high-density low-power virtualized server farm so that only the processors and storage devices currently being utilized are powered up and the utilization of active processors is at least 70% (to meet the EU PEU guidelines for green).

Furthermore, it then says that the three key local ingredients for best customer results are:

    • desktop and notebook PCs configured to spin down, suspend, or turn off when not in use,
    • utilization of usage-based power consumption devices (with idle ports suspended and inactive ports disabled) on the LAN, and
    • utilization of WAN optimization devices to minimize equipment needs, data transfer, and power consumption

.

And while all of this is a good start, it makes absolutely no mention of thin client. If all your applications are over the web, why can’t you use a SunRay II or a CP20 instead of an energy hogging desktop? Even a modern desktop will still consume an average of 100 watts of power to the 4 watts for a SunRay II or the 25 watts for the CP20 if you need to replace high-end developer workstations. Furthermore, there’s no mention that you should be replacing your old energy hog CRTs with low-energy LCD monitors if you really want to be power efficient. (Now, it is true that you’ll need one or more servers and SANS with your virtual machine instances to support your thin clients, but when you can easily run 128 virtual machine instances off of a modern, high-density, low-power 32-core diskless server, which can all be stored with terabytes of room to spare on your standard 4U 48 TB SAN, you’re still saving oodles of energy and fistfuls of dollars because the cost of 128 SunRays, 1 server, and 1 SAN is significantly less than 128 desktops which need to be replaced at least twice as often as the thin clients, which have twice the lifespan.)

So yes, SaaS is a very green solution … if it’s done right. It’s not just about aggregating traffic to minimize data transfer needs and, thus, equipment needs to support the data transfer, it’s about being smart with resource and energy utilization every step of the way, from the end user all the way back to the provider’s data centre.

For more on greening your data center and greening your desktops, see the linked posts.

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Value is a Two-Way Street

A recent article in Reliable Plant on how survival depends on delivering value and not just cutting costs pointed out that, to survive, you have to focus on your value proposition because, these days, customers don’t just want costly products, they want valuable services such as warranty, care, and customization.

It also pointed out that if you wanted to sell value, you had to

  • define “value” in terms everyone on your executive team understands and
  • define “value” in terms your customers can understand.

This is too true. Not only will your customers not buy what they don’t understand, but management probably won’t support you in your efforts to create it if they don’t understand what it is.

More importantly, it points out that value is a two-way street. For something to be truly valuable, it has to create profit for you and your customer. It’s not value if you lose money making your customer happy. And it’s not value if it doesn’t keep your customer happy, because they’ll just go elsewhere if they can find something that does. Value is that which benefits everyone. So remember to take the holistic view next time you are updating your value proposition.

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Service Leaders Speak: Ashton Udall of Global Sourcing Specialists on “Supply Chain Sustainability and Transparency”

Today’s post is from Ashton Udall, a Global Sourcing Specialist (and author of the GSS Blog).

As optimism returns and some of the challenges of the downturn begin to recede, we are quickly reminded that many challenges and trends which played at the forefront of business concerns, prior to the economic fallout of 2008, will return. How are sourcing organizations evolving to meet customer needs in the next decade? Surely, strategic sourcing, spend management, and risk assessment and mitigation will see continued development and increased sophistication. But there is another trend that has come to the fore in the last few years; a trend that requires many sourcing and procurement organizations to stretch outside their traditional bounds because of its interdisciplinary and cross-functional nature. Whether one likes it or not, for reasons of consumer demand, cost reduction and risk, and good ol’ conservationism, environmental sustainability will grow in importance and the supply chain will increasingly be dragged into the limelight on this topic.

Companies will face a demand for greater transparency as a result of growing consumer awareness and changing priorities, the continued spread of technology — cell phones, video, and internet access, and executive leadership. Authenticity and transparency will become greater drivers of brand loyalty, and companies will be expected to do as they claim, and show what they do.

Waving the green flag of sustainability is not enough. Smart companies, those who are ahead of the curve, will assume greater market leadership in years to come. These companies are working hard to find win-win situations in which both the financial and environmental bottom line benefit. Walmart is leading the charge, in one recent example, recently reporting that adherence to its sustainability goals has led to a reduction in toy packaging, saving the company 727 shipping containers and 1,300 barrels of oil in comparison to the previous year, which adds up to an impactful $3.5 million.

Packaging reduction is considered a low hanging fruit of environmental initiatives, but a survey of topics to be covered at the 3rd SustainableSupply Chain Summit (North America, 2009), includes issues such as carbon footprint, ROI on green initiatives, supplier collaboration and partnerships to attain greater efficiency, and the emergence of the Chief Sustainability Officer. Packaging reduction is only the beginning.

Design and product development teams will hand over greater requirements in the realms of sustainable packaging, sustainable materials, lower carbon footprint, and certified labor conditions to the sourcing and procurement departments, and it will be up to sourcing and procurement to provide solutions to meet these needs. Smart companies will get out in front of these issues and not remain in a reactionary state. Sourcing leaders will need to develop greater sophistication in assessing supplier operations and risk. Specifically, sourcing leaders will require more robust methods of identifying and calculating risk to CSR and marketing programs that emphasize the social and environmental perspective, vendor monitoring and compliance, and supplier capacity development. Opportunities will not be limited to finding ways to reduce environmental footprint and informing consumers. Creating and capturing value will entail sourcing professionals to develop the ability to create scenarios in which cost is continually reduced in the supply chain by reducing energy inputs, material waste, and operational inefficiencies, while simultaneously fulfilling CSR goals that build brand loyalty. Inorder for this to occur, compliance, procurement, and brand management will need to act cross-functionally, and in concert, to drive optimal results.

Sourcing solutions providers which continually investing in their staff to understand this new and rapidly evolving field, building relationships with service providers that specialize in compliance and capacity building programs, and expand and refine their network of suppliers that meet higher requirements, will be in a strong position to increasingly add value to customers’ top and bottom lines as we enter the next decade of transparency and sustainability in supply chains.

Thanks, Ashton.

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