Spring made its official entrance to North America on Mar. 20. The subject of green, however, has been on the minds of many in the material handling business for many months—if not years. Companies are in business to make money, and while going green might be foremost on marketing people’s lips, the mission is still to make money; saving the planet is a byproduct.
Going green and making money can go hand in hand. This year’s keynote speaker at NA 2008 will tell you how. Here is information about speaker Andrew Winston, author of Green to Gold, provided by Material Handling Industry of America. Winston explains how smart companies are embracing the Green Wave to make money in the marketplace and rethink supply chains.
“The leaders in this field, like General Electric and Wal-Mart, are all about business growth,” says Winston, founder of Winston Eco-Strategies, a business consulting firm, and co-author of one of the leading books on the Green Wave. “They are not apologetic about making money, and why should they be? The title of my book is Green to Gold. It’s not subtle.”
During the keynote, Winston will discuss:
• The forces coming to bear: It’s not just governments that are demanding environmental change. Consumers and business customers are also rewarding companies with a commitment to environmentally responsible practices.
• What companies are doing in response to those forces: Companies like Wal-Mart and GE are reducing their carbon footprint and creating green products. Wal-Mart is committed to a 25% reduction in solid waste, including reductions in packaging, over the next three years. That impacts suppliers.
• How the Green Wave is beginning to ripple across the supply chain: As major manufacturers like Proctor & Gamble, Unilever and others begin to comply with the demands of their major customers, they will require changes from their suppliers.
The most important takeaway might be this: “There isn’t really a choice anymore,” says Winston. “Wal- Mart is never going to go away because going green is making their business better. If you’re in their supply chain, your choice is to lead or fall behind.”
In an interview with MHIA representatives, Winston was asked to define sustainability.
Winston: There’s no simple answer to that question. One definition is that we’re providing for our needs without damaging the ability of future generations to provide for their needs. Literally, it means: Can you do this indefinitely? I think that is a pretty useful definition.
MHIA: What does it mean to be a sustainable company?
Winston: One answer is that it’s a company that isn’t drawing down more than it’s producing. But, it’s very challenging to break that down into what it looks like day to day, and that’s why everyone is talking about this. It’s going to take years and generations to figure that out. At the same time, the data and hard facts of just what’s going on out there are getting scarier. We have less and less time to answer that question.
MHIA: This is new territory for most companies, isn’t it?
Winston: It is. If you go to conferences, it seems like everyone is talking about this. The reality is that most companies are really just starting to think green.
MHIA: Are there some industries that are further ahead on this?
Winston: Basic resources, like energy, paper and forestry, have been dealing with environmental regulations for decades because they have the most obvious impact on the environment. Now, you’re seeing retailers and consumer brands pursuing a green strategy as a consumer niche. The ripple effect of those two phenomena is putting pressure on everyone in the middle. That’s why people doing supply chain work are right in the heart of this now.
MHIA: Have lifecycle management regulations in Europe had an impact?
Winston: Yes, especially on the electronics and chemicals industries. The ROHS directive, for instance, determines what substances can be in products. Big tech companies have had to remake their products and reengineer their processes. And, then, the WEEE directives determine how they dispose of their products at the end of life. Those are clearly logistics and supply chain issues because you’re dealing with reverse logistics and how you get your products back. The academic phrase is “extended producer responsibility,” but it really comes down to “you make it; you own it.”
MHIA: What are the forces that are impacting companies today?
Winston: Fundamentally, the Green Wave can be divided into two buckets. First, there is the natural world and the real resource constraints that we are experiencing. Oil, for instance, is a resource constraint. We’re not really running out of oil, per se, but we are running out of the things that happen when you burn the fuel, like clean air and a stable climate. There are clear constraints on water in many places. That’s the natural world. Then, there are the stakeholders who care about these issues and are asking tough questions. That list is much more diverse than most companies realize. It’s not just governments and non-government organizations. It’s now your employees and your own customers. It’s the banks that are lending you money and your insurance companies. It’s changing very fast.
MHIA: Are there forces specific to the supply chain?
Winston: Certainly, there are forces on the supply chain specifically in the B2B realm. Companies are pressuring each other. For instance, companies in many industries are asking their suppliers to change their behaviors.
MHIA: What are some of the initiatives you’re seeing?
Winston: I’m beginning to see industry-related initiatives like the Supply Chain Leadership Coalition. It includes companies like Proctor & Gamble, Unilever and Nestle that are asking their suppliers for information about emissions data about their products. That’s a direct reaction to retailers like Wal-Mart and Tesco asking them for information about their carbon footprint and the greenhouse gas emissions of the products they’re selling. These companies realize they don’t have the answers because they don’t know what their supply chain does. The companies that are handling logistics and supply chains are going to have to begin to collect and package data.
MHIA: How, then, are companies responding to those forces?
Winston: There are a lot of different ways to create value with green thinking. One is to cut costs through more efficiency. Another is to create value by driving more revenue. So, like any company, as a supply chain-related company, you can create products and services that your customers like. I think that’s going to include gathering more environmental data that you can package for your business customers. If you can help them with their environmental issues, you can drive your revenues. I think the data and information movement in this space is going to be profound.
MHIA: One of the things material handling systems companies are telling us is that the projects getting funded today have a green component. If someone can attach green to a new conveyor system when they take it to the board for comapproval, they have a better chance of getting the project funded.
Winston: Well, so what, as long as it actually does reduce the carbon footprint? Too many companies feel apologetic that they are making money by going green. The guys that are leading in this, like GE, are all about business growth. They are not apologetic about making money, and why should they be? The title of my book is: Green to Gold. It’s not subtle.
MHIA: What if you don’t have the clout of a Wal-Mart? How does the small-to-mid-size company drive sustainability in its supply chain?
Winston: People ask me all the time if I’m going to write this book again for small companies, and I think I already did. Cost-cutting, pursuing ways to innovate for your customers, building your brand and attracting good people aren’t that much different for small companies than large companies. The critical difference is that you can’t put the same kind of pressure on your suppliers that a big company can. I think industry gatherings and industry groups are one answer to that. As a group, you can set a standard, so the playing field is level for everybody.
Or, if you can get together with your competitors, you can demand more from your supply chain. For instance, there is a paper working group that includes companies as varied as Staples and Toyota. They got together to work on standards for increasing the amount of certified paper in the supply chain. None of them is big enough on its own to move the paper industry, but together, they have clout. I think small companies can do that, as well. They may need to get more of them together, but it can still be a useful way to do things.
MHIA: How much of this is a business discussion, and how much of it is a political discussion?
Winston: There’s certainly politics and policy all around this, and the politicizing of the environmental issue has done a disservice to a lot of people. To be frank, if you’re not a fan of Al Gore, you might think that his focus on climate change is just a liberal thing. That’s unfortunate, because this is about societal and business realities, and it shouldn’t matter who’s saying it. You know, I have an MBA and I’m talking about this from a business point of view. I think we’ll look back some day and wonder why it was debatable that using fewer resources to produce the same good was just good for business.
MHIA: Where does a company that isn’t doing anything start to turn green into gold?
Winston: They buy a really good book. That was a joke, but you do have to read up on the subject and understand how other companies are thinking about this. At a practical level, you start by figuring out where you stand. What’s your environmental footprint up and down the value chain? Companies with good financial controls can tell you how much money they made last month to the penny, but ask them how much energy they used, and they can’t bring it together in one place. Next, you can ask, “What are your suppliers and your customers doing?” That will identify opportunities where you can help them. Those are the first steps. Then, you can build in metrics, change people’s incentives, and you can communicate about this internally.
MHIA: If we’re turning green into gold, what is the business case for sustainability?
Winston: We l l , we t a l k about buckets of value creation. Reducing costs, eco-efficiency and reducing resources are the big ones. There’s also revenue creation. That’s about innovation, creating new products and creating new services with a green theme. There’s also an intangible benefit, which is having higher brand value, higher customer retention, higher employee attraction and retention. Those are hard to measure but are included in the kind of companies that are seeing the most value. There’s tremendous opportunity in all of those areas. But, the bottom line is that there isn’t really a choice anymore. This isn’t an optional movement because of those forces I talked about. There’s a base, underlying physical reality to the planet that isn’t going anywhere, and there’s the base, underlying reality in the shift in perceptions and demands. Wal-Mart is demanding this, and they’re never going to go away because their business is better. Their business is better doing this, so it’s not a fad. The business case is lead or fall behind.
MHIA: Do most companies realize this?
Winston: No. Most people haven’t really thought about this yet and aren’t realizing how profound the change that’s coming really is. It’s going to be a faster and wilder ride than people realize.
Winston will be expanding on this topic during his keynote address, Apr. 22 at 8:45 a.m.