Lean Manufacturing and Green Automation Can Both Be Good For Business

As industrial manufacturers seek ways to reduce costs during the downturn, some may be including environmental sustainability initiatives among their cost-cutting targets. But that would be a mistake.

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Sustainability, which embodies conducting activities in an efficient, economic, renewable and repeatable way, closely aligns with one of the key factors needed to help manufacturers succeed in today’s market—doing more with less. Moreover, Accenture has found that pursuing sustainability encourages behavior consistent with the elements it associates with achieving high performance, which include growth, profitability, positioning for the future, longevity and consistency.
 
Accenture has identified five low-cost sustainability actions manufacturers can take to gain an edge in the troubled economy that correlate well with these high-performance elements. They are:

•    Seek sustainability
•    Growth opportunities
•    Align cost-reduction with sustainability action to aid profitability
•    Position the company for the future
•    Ensure longevity in a sustainability-conscious world
•    Perform consistently.

Growth does not come easily in a downturn. But, there is a growing market for sustainable products and services. Some companies are finding that their energy offerings are their primary source of stabilizing growth. For example, the energy unit of one manufacturer is the company’s bright spot these days, having reported $38 billion in revenue in fiscal year 2008, up 26 percent from FY2007, while the company as a whole grew 6 percent over the same period. Other companies are finding new customers for their existing technology. For instance, one manufacturer is licensing its transistor technology to an energy-focused manufacturer that provides solar panels.

More and more companies, too, are finding that initiatives that reduce environmental effects also reduce costs and can aid profitability. One battery manufacturer, for instance, that recycles materials as an approach to environmental cost savings has been able to save up to $1,000 per ton of lead used in the manufacture of lead-acid batteries by using recycled lead instead of raw lead.

Get active

In positioning for the future, it will be important that manufacturers not only comply with environmental regulations, but take an active role in helping to shape them. More and more companies are doing just that by partnering with competitors and organizations that have sustainability expertise, while at the same time, demonstrating the transparency of their own sustainability actions.

Part of positioning for the future is ensuring longevity in an increasingly sustainability-conscious world. In that respect, companies need to continuously renew their strategies to remain aligned with the times. Generally speaking, there are two paths manufacturers can take to stay current—innovation and acquisition.  In terms of acquisition, for example, companies seeking to capitalize on demand for sustainability products and services are doing so at the right time, as the downturn has provided an attractive opportunity to acquire quality businesses at below-market prices.

Reducing costs to remain lean and enhance profit will continue to play a crucial role in whether or not companies succeed, but so will sustainability to an ever greater extent. Those that can adapt their core processes to the realities of sustainability will be able to operate in the streamlined fashion required to survive and stay on track toward high performance during the downturn and beyond it.

James Robbins, james.a.robbins@accenture.com, is a senior executive for Accenture, a global management consulting, technology services and outsourcing company.

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