This is part one of an exclusive three-part series intended to delve deeper into the dynamics of sustainable manufacturing, what it means, how it is achieved, and the value it can bring to the business enterprise and customers. It also covers the challenges and opportunities associated with creating a culture of sustainability in a manufacturing environment.
Sustainability is no longer a trend, if it ever was. The word is certainly used more and more in our vernacular, and it is challenging to go a day without coming across something new about the topic. Several examples exist of businesses that have chosen to dismantle “sustainability” as a buzzword and reassemble it as a purpose-driven value to their business. Companies as large and diverse as GE and Boeing and as product specific as Nike and Green Mountain Coffee are embedding their own renditions of sustainability within their business strategies, products, operations, and corporate cultures.
While much has been written on the evolution of sustainability at large, global, and high-visibility companies, much less attention has been paid to small businesses and, in particular, small manufacturers. When it comes to the promise and potential of sustainability, small business in America is big business. Establishments with less than 500 employees account for nearly 50 percent of private-sector payrolls, 46 percent of private-sector output, and 33 percent of exporting value. Small businesses are also critical suppliers to many large and well-known brands that are the most top-of-mind sustainability leaders.
Large global businesses have discovered that sustainability offers an opportunity to manage their corporate risks; differentiate their products, brand, and image; and create new value which fosters revenue generating growth. Many global businesses rely on suppliers to support their products, production, marketing, and logistics. While many large businesses have created management and operational positions and teams to address sustainability, they also have begun to differentiate themselves by working with sustainability leaders within their supplier base and strategic partnerships.
Small manufacturers have to relearn what it means to bring ingenuity and innovation to address societal needs in a world where complexity is increasing by the moment. Issues like population growth, climate change, natural resource depletion, terrorism, natural disasters, land competition, energy security and price volatility, and food production concerns are converging. Many of these issues are not mutually exclusive, and challenges in one area may be symptoms of another.
The point is that the days of “business as usual” are over. There is no guaranteed formula for business success. Thirty years ago a satisfactory component at a reasonable price was “good enough.” Today you have to be the quickest, most cost-effective, most durable/reliable, and the highest quality, with superior service and support, if you are to earn market share. Some experts have termed the modern economy the “race to the bottom” for manufacturers of traditional commodity products, which are pressured to be less expensive and higher quality while the cost of doing business continues to escalate.
This model is unsustainable and ultimately leads to a deterioration of quality, innovation, and our natural environment. As presented in the figure below, the race-to-the-bottom phenomenon places our economy out of balance.
Manufacturers have a choice. They can compete for the race to the bottom and “win” that competition, or they can choose to reinvent themselves in the face of change and serve the needs of society. And the needs of society are shifting. As natural and capital resources are constrained, pressures in the marketplace and within ecosystems occur. Shifts in consumer preferences and behaviors and in the availability of natural resources are creating a “whole new world” for business to rediscover. This new playing field is depicted in the figure below.
The “whole new world” of business represents a global sea change which envelops:
Scarce Resources –- The scarcity of natural resources, coupled with greater demand and global competition, is leading to price and supply volatility for commodities like water, energy, and materials on which businesses are reliant.
Environmental and Sustainability Consciousness –- The “environmental and sustainability IQ” of the current generation is increasing and leading to greater social and consumer awareness. It is also influencing advocacy organizations as well as informing policymakers and regulators. Greater environmental consciousness has led to the creation of new policies and regulatory requirements for addressing the environmental impact of materials and products. Examples include the European Union (EU) Restriction of Hazardous Substances (RoHS); Registration, Evaluation, Authorization and Restriction of Chemical substances (REACH); Waste Electrical and Electronic Equipment(WEEE); and global directives requiring businesses to have greater transparency into materials (product disclosure) and end-of-life treatment of materials and products (i.e. addressing hazardous wastes in landfills).
Competition for Land Resources –- The global population now exceeds 7 billion people, all competing for suitable land resources to sustain their livelihoods. The dichotomy between developed and developing nations has become wider and deeper, intensifying the need for sustainability solutions on a global scale. The growth in global population has continued to result in increased demand for food and more efficient agriculture production. If agriculture systems become constrained, new models of food production will be required. This opens up opportunity for new products, new business paradigms, and opportunities for innovation.
Climate Change –- The global climate is changing and having a material impact on business and society. Hurricanes Katrina and Sandy are sobering reminders of the devastation that can occur from superstorms. The frequency and intensity of natural disasters seem to be increasing in step with swings in climate change across the globe. Working toward greenhouse gas (GHG) reductions, putting into place climate adaptation strategies, and identifying and implementing strategies to address material business risks such as critical facilities, logistics, and communications have each become necessary for achieving business continuity in the modern age.
Trust, Teaming, and the New Economy –- Due to the complexity, size, and scale of converging challenges impacting business and society, collaboration and team building have become critical elements of business sustainability. To address complex sustainability challenges with a sense of purpose and impact, like-minded organizations, people, and businesses need to work together.
Embracing the Sea Change: A Small Business Perspective on the Value of Sustainable Manufacturing
Founded in 1977 in Ontario, N.Y., Harbec Inc. began as a precision machine shop with CNC milling capabilities doing a lot of spill-over work from larger, more established Northeast regional businesses. Ten years after its inception, Harbec expanded its capabilities to include the development of models/prototypes, mold building, and injection molding. As Kodak, Xerox, Bausch and Lomb, and other giants in the region grew strong in the 1980s and 1990s, Harbec benefited as a regional supplier to them and other businesses.
By the late 1990s and early 2000s the domestic and global economy had begun to shift. The established “meat-and-potato” orders from regional businesses became fewer and more competitive. Sensing the economic uncertainty that was evolving, Harbec, under the leadership of president Bob Bechtold, began to make a fundamental shift to ensure its business would continue to survive, let alone grow. The company chose to envelop sustainability as a core business value. In addition the company began a deliberate pursuit of sustainable manufacturing based upon:
- The need to achieve operational excellence to earn the right to operate
- The need to adopt and foster innovation to achieve new market access and business growth
Harbec began absorbing the costs and risks of adopting new plant energy infrastructure including distributed generation and combined heat and power (DG/CHP), wind turbines, proactive use of wasted thermal energy from injection molding machines for cooling manufacturing floor air temperature, and a host of other energy and environmental initiatives. Like many early adopters of sustainability, Bechtold and Harbec were often misunderstood and criticized for their passion to adopt a new business model which seemed to throw the conventional wisdom of American manufacturing on its head.
Today Harbec provides tight-tolerance prototypes, tooling, machined components, and quality injection molded parts in a sustainable manner and with a social conscience. Earning the right to operate and advancing innovation to open new market opportunities and achieve business growth are just a couple of the drivers which have impacted the company’s decisions to integrate sustainability within its business.
The next article in this Manufacturing Sustainability series will delve deeper into how tremendous value can be obtained from integrating sustainability throughout operations.
Mark Coleman is business development manager for Harbec Inc. He is the author of the book The Sustainability Generation: The Politics of Change and Why Personal Accountability is Essential NOW!.
Throughout his career, Mark has developed a strong focus on the critical areas of energy, environment, and sustainability. His career has spanned strategic and leadership positions in government, applied research, technology development, and management consulting organizations. This rich and diverse experience has enabled him to have access to, engage, and work with a broad range of regional, national, and international leaders on the subject of sustainability.
Mark resides in Auburn, N.Y., with his wife, Aileen, and two sons, Owen and Neal.
Read part two of this series, Using Operational Excellence to Achieve Sustainability and a Competitive Advantage.
Read part three of this series, Sustainability Happens When People and Innovation Collide.