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Why operational efficiency equals environmental sustainability

In 2019, Macquarie Dictionary’s 3rd place for Word of the Year was eco-anxiety: feelings of distress and fear brought about by the effects of climate change.  

There was good reason, with climate change exacerbating natural disasters, including the Black Summer fires, the California Wildfires, Cyclone Idau and significant flooding events across India to name a few.  

Not only do the effects of climate change increase health risks, but also economic risks. A recent report from the Climate Council found that the accumulated loss of wealth due to a reduction in agricultural and labour productivity is projected to exceed $211 billion by 2050.  

The report, however, does shine a light on the way forward. It states that the exponential increase in costs due to climate change can be avoided by declining greenhouse gas emissions to net zero by 2050.  

We all need to work together and do our part to achieve this goal.

How to drive sustainability improvements whilst maintaining your bottom line  

The answer is to not look to improve sustainability, but to improve operational efficiency.

Lean manufacturing revolves around the notion of waste reduction. Of the seven types of waste first posited by Shigeo Shingo and Taiichi Ohno back in the 1930s at Toyota, the primary waste opportunities that will drive sustainability are defects, overproduction, overprocessing and transportation.  

The American EPA provides resources on how significant environmental benefits “ride the coattails” of lean implementation. The best part about operational improvements is that the earlier in the supply chain you apply them, the larger they snowball in benefits.  

Companies will, however, need to focus on procurement: ensuring their suppliers and vendors are performing sustainable practices.

An example of lean operation improving sustainability is Apple’s recent change to the dimensions of an iPhone box; by realising that a vast majority of consumers will already own a charger, while also tightening the dimensions, Apple was able to increase pallet utilisation. Removing the charger also reduced the amount of process steps required to complete the finished product. This reduces freight and production costs, but also reduces the carbon footprint of each iPhone through reductions in freight miles and utility usage per product.  

Learnings from this can be applied across the FMCG industry. Redesigning packaging to use as little space as required, while also constraining the dimensions to be multiples of pallet capacity, will see significant benefits to products where weight is not the constraint (e.g. cereals and crisps).

Don’t undertake projects that exist solely to improve your company’s sustainability.

Sustainability projects should be transformative, like moving to recycled packaging, on-site renewable energy generation or locally sourcing raw materials and components.  

By using financial benefits from operational improvement projects, you can fund your sustainability projects.  

Improving pallet utilisation could fund your move to recycled packaging, simplifying production to remove unnecessary process steps could pay for your rooftop solar farm, and reducing material waste and defects may give you the finances and resources to buy locally or improve your local supply chain.

Pollen has been working on building a sophisticated sustainability measurement system to capture the environmental benefits of initiatives completed with clients and from July 2021, will offer sustainability reports on all new projects.

To find out more contact Pollen Consulting Group.

Author: Matt Nixon of Pollen Consulting Group.