Environmental sustainability in manufacturing
By Michelle Shember
The 2015 Dow Jones Sustainability Indices recently reported the results of its annual study tracking sustainability-driven companies worldwide. This year, one of the most notable companies to make the list was Bank of America Corp. Some companies, including Cisco Systems Inc. and PepsiCo Inc., were deleted from the list. In conjunction with the release of this report, Dr. Sime Curkovic of the integrated supply management program at the Haworth College of Business, shared his experience with students, faculty and community members about sustainability in manufacturing—where it stands today and the potential it has to revolutionize the future of manufacturing.
The operations of manufacturing within a corporation all strive to meet the same goals: "better, faster, cheaper,” says Curkovic. The main priorities in manufacturing today are making the product easier to produce while returning a higher profit. However, Curkovic says an essential piece missing from the manufacturing equation is sustainability.
Companies face pressures from domestic, international and societal forces to put long-term sustainable changes into place. But because corporations focus on minimizing overhead costs and increasing profits, even with many incentives such as tax breaks and positive marketing opportunities, sustainability still doesn’t make the cut as a top priority, Curkovic reports.
Often, it takes longer for a sustainable practice to yield results versus other initiatives and investments that focus on reducing costs. As an example, Curkovic cites the 1990s auto industry, which purchased parts at reduced prices from China. “Now, 20 years of data analytics shows that the part from China was actually more expensive,” explains Curkovic. “Right now, this is killing companies because they’re stuck with that sourcing decision five, ten, twenty years later, and it was the wrong sourcing decision all along and they actually ended up paying more.”
Creating a culture of sustainability
While there is hesitation in industry to fully embrace a sustainable structure, some organizations have successfully incorporated environmentalism into their production. Some of the large international organizations leading the way include West Michigan-based Herman Miller and Kellogg. Curkovic cites support from top management as a key component for success with a sustainable program, and these companies have done just that.
- Kellogg has employed a chief sustainability officer and vice president of environmental stewardship, health and safety—demonstrating that environmental awareness is given serious priority within their organization and culture.
- At Herman Miller, an online product scorecard offers transparency of the sustainability of their products to consumers. On their eco-scorecard website, consumers can search any of their products and see how much pre- or post-consumer recycled content is used, for example, among other gauges of sustainability.
For a company interested in developing a new sustainable model, obtaining the momentum to get it off the ground can be tricky. “It can be hard to quantify a sustainable investment—which is why it’s sometimes hard to gain momentum,” explains Curkovic. “There is data that shows sustainability yields a very high return on investment—just not enough data, yet.”
According to Curkovic, the initial steps toward creating a sustainable model can be broken down into three essential steps.
- An organization needs the upper management to not only support that mission but to believe in it enough to see it through to the end.
- A company needs to implement training at all levels and in all departments of the organization—everyone needs to be on the same page, from marketing to engineering.
- There needs to be incentive for employees to pursue environmental strategies. Offering a reward for a successful sustainable idea is one of the best ways to encourage it within the organization, Curkovic says.
“If an organization doesn’t embrace sustainability, it runs a very high risk in the future of competing with companies that do,” says Curkovic. “None of this will work, though, unless top management is willing to lead and give this issue the recognition it deserves.”
Curkovic’s presentation focused on why corporations have been cautious to implement these initiatives and ways they can begin to include them in their processes—all while continuing to become better, faster and cheaper.