Reader H. K. writes: In today’s world, corporate social responsibility (CSR) is important for protecting the environment, but its practices can come at a financial cost. Can you share some specific examples of initiatives that have proven beneficial to both the environment and the bottom line?
When it comes to sustainability, companies don’t just have one bottom line to consider; they have the triple bottom line of people, planet, and profit. These programs may conflict with one another because implementing sustainable practices does come with a financial cost. However, this does not always have to be the case. In fact, there are two strategies companies can implement that will both help the environment and improve future profits: landfill reduction and remanufacturing.
Although traditional waste disposal methods might seem like the most economical option, there usually are significant costs associated with this as well. Space to store waste, time to process it, and fees to transport it to a landfill and dispose of it there all hit the financial bottom line. Landfill reduction through reuse and recycling can help
companies cut some of these costs.
Subaru has been operating a zero-landfill plant in Indiana for more than 10 years, according to TreeHugger,
a sustainability news organization. The Japanese automaker began the process of converting the facility to a zero-waste plant as part of its kaizen approach. Every single unused item—from scrap metal to cafeteria trash—at the plant is processed for reuse rather than landfill disposal. As a result, the company estimates that the plant saves $7.5 million a year.
Procter & Gamble also has seen the financial benefits of a zero-landfill initiative. The company has blended and processed some of its scrap metal for use in wall partitions, used its compostable materials to make soil for public parks, and converted unused material and chemicals into fuel for supplemental power for its plants. Since 2007, the consumer goods giant has saved nearly $2 billion in waste and energy, according to Environmental Leader.
In addition to reducing scrap and excess material, companies can practice remanufacturing to operate sustainably and give their products a second life. Remanufacturing is the process of receiving an item back from a customer that has used it for its proper life cycle, repairing the device to a like-new or good-as-new quality, and reselling the item back to another customer who is willing to
use remanufactured goods. The Rochester Institute of Technology reports that remanufacturing offers an 85 percent energy savings compared with recycling a product. Not only does remanufacturing reduce waste, but it also cuts the carbon emissions associated with the recycling process. Plus, the company receives added revenue from reselling the product, making it a win-win for the business.
Caterpillar is a leader in this area. The construction machinery and equipment manufacturer designs its products with remanufacturing in mind—and nets $1 billion annually as a result, the Rochester Institute of Technology reports. This process starts at the research and development stage, as equipment designers consider how products made today can be updated through remanufacturing to match later product
developments. In addition, the company estimates that its remanufacturing program decreases its energy use by 80 percent, its water use by 90 percent, and its landfill space by 99 percent, compared with producing new machinery instead.
Although embracing CSR practices initially seems costly, it may actually be costlier not to adopt certain environmentally friendly practices. In this case, the question transitions from “Can we afford to do it?” to “Can we afford not to do it?”
is research manager for APICS. He may be contacted at mtalbertapics.org.
Send APICS your supply chain or operations management questions at email@example.com