Operations and Sustainability: 5 Tips to Improve Both
Sustainability principles can be embedded into every function in a company to provide value. This posting examines how sustainability can drive more value from company operations. Future postings will explore how sustainability affects different functional areas in a company.
Whether an organization produces goods or provides a service, operations are how the company does what it does. Here are 5 tips on how applying sustainability to operations can improve a company’s financial, environmental, and social performance.
- Consider inputs. Consider raw materials and component parts for anything you manufacture or sell. Include non-financial factors such as recycled content, sustainable supply chain, or conflict-free minerals as a component of your purchasing decisions. Retailers can also consider what they stock or promote. Service providers use resources (electronic equipment, printing), or affect resources of their clients (their sales, social stature, or community impact).
- Identify additional benefits of operational efficiencies. Operations Managers are always looking for ways to reduce the time, effort, or resources required to yield a specific output. This reduces time and costs. It may also reduce use of electricity, energy, or fuel. One company improved their process so they met production goals of an eight-hour shift in six hours. Company management shared cost savings with factory workers, and allowed them to work a shorter shift.
- Eliminate “waste.” Every process generates waste – or does it? A “waste” with another use is a byproduct. Walnut shells that used to be sent to a landfill are now ground up and used in abrasive cleaners and cosmetics. Used cooking oil is now reprocessed and used as fuel. A company that makes foam flip-flops cuts the soles from large foam sheets, leaving the cut-outs as waste. The company eliminated waste disposal costs by selling the sheets as packing protection for flower pots. In the service business, waste is unproductive downtime.
If some of this is necessary (for example, to enable prompt response to incoming customer service inquiries), consider ways to redeploy this time on other, backlog tasks.
- Consider ancillary goods and support services. Packaging, sales, shipment, and invoicing are all related to operations. As you make improvements to achieve better financial results, consider environmental and social benefits. Packaging can be made smaller, with environmentally-friendly materials – or in packages that can be repurposed by the end user. One company made their packaging smaller, and thereby acquired more shelf space, generating bigger orders from the customers and resulting in fewer out of stocks for retailers.
More efficient packaging can mean that more units can be shipped in the same size box. Not only does this reduce costs, it reduces energy consumption and greenhouse gas generation during shipment.
- Optimize social factors. Operations affect employees, contractors, neighbors and other stakeholders. Does your workforce include many parents with school-age children? If so, can work hours be adjusted to allow more work-life balance? If operations involve significant truck traffic, can the schedule be adjusted to reduce the noise impact on neighbors? Or to avoid truck traffic through school zones as children are walking to school? Can parking be shared with a neighbor with different operations schedule than yours?
A core principle of sustainability is transparency on relevant economic, environmental, and social factors. The Global Reporting Initiative is the world’s foremost platform for reporting sustainability performance.
Wherever possible, track benefits received using appropriate parameters – such as percentage of materials used that are recycled input materials (GRI reporting parameter G4-EN2), or reductions in energy consumption (G4-EN6) or hours of training provided (G4-LA9). This data will be useful for sustainability reporting, and other communications with regulators, customers and other stakeholders.
Category: Business Growth & Strategy Innovation