SME Speaks: Sustainability: The Next Competitive Edge
Although lean and quality are powerful and effective, so many companies have implemented these processes in the last 20 years that they no longer provide a competitive edge. Instead, they are expected to be the foundation on which any good business operates.
The next competitive edge is sustainability, which incorporates environmental and social values in the corporate focus/goals. Sustainability extends lean thinking by including opportunities that are outside of the lean model. When lean was first introduced, it challenged executives' assumptions about business, such as "low inventories cause low customer service" and "quality is expensive." Sustainability likewise challenges prevailing assumptions. For example, "respecting people and respecting the environment are expensive and will detract from our business." The data show that this is actually not the case—that sustainability, intelligently applied, is the best strategy for making more money and for ensuring that a company will not only survive but thrive for the long-term. And, just like lean, the first company in an industry that implements sustainability will gain a substantial and long-lasting competitive edge. For instance, the return on investment (ROI) to shareholders of the 100 best companies to work for in America in 2006 was 50% higher than the ROI to shareholders of the S&P 500 (Boyle 2006). And the composite results of stock prices of the company with the best environmental record in 50 major industries outperformed the Dow Jones industrial average. The average stock prices of these "wave riders" gained 240% between 1996 and 2006; by comparison, the Dow Jones gained 100% (Esty and Winston 2006).
So what is sustainability? One definition is "meeting the needs of the present generation without compromising the ability of future generations to meet their own needs" (Brundtland 1987). It is a movement that is both global and relatively new, although its roots are decades old in both the environmental and human resources/organizational development fields. Another widely accepted definition is that sustainability means making decisions based on a triple bottom line: profits, people, and planet.
Lean changed the lens of decisionmaking by questioning assumptions, asking first "What adds value to the customer?" Similarly, sustainability questions two basic assumptions upon which our businesses operate:
- That raw materials will remain cheap and plentiful. In reality, the cost of most raw materials, including petroleum products, metals, and energy, is increasing and will continue to increase over the long-term due to the law of supply and demand.
- That there is a good place ("away") to put all the waste that our industrial society generates, and that the waste that we generate is benign. In reality, there is no "away"; it piles up much faster than natural processes can restore it to the Earth's crust. Sustainability mimics lean in its focus on reducing waste; however, sustainability defines "waste" more broadly as anything that degrades the quality of life.
What does sustainability have to do with manufacturing companies? Manufacturing companies can start implementing sustainability and achieve results like those above. Manufacturing companies have greater opportunities than other industries because they have design authority over the products that they sell, as well as their internal processes and their supply chains. Manufacturers can gain a substantial competitive advantage by designing products that are more sustainable than competitors' products. Products can be more sustainable in several ways:
- Reduce and help the customer reduce resource use (energy, water, raw materials, and so on), such as Energy Star appliances and fuel-efficient vehicles
- Reduce resource usage by specifying and producing reusable or recyclable products and components. In Europe, laws require the manufacturer to take back cars and consumer electronics at end of life. What would that do to the design process in your company?
What does sustainability have to do with manufacturing engineers? Manufacturing engineers can include sustainability criteria as they specify equipment and design processes in the plant. They can:
- Work to reduce and eliminate toxic materials
- Include energy, emissions, and end-of-life issues as important criteria
- Design processes and machines that improve the quality of life for the operators
- Include operators and others who are affected as they design the processes and machines
- Specify sustainable criteria, including both social and environmental aspects, in supplier selection
Manufacturing engineers can also encourage their companies to explore and adopt sustainability as a go-forward strategy. One way to raise awareness of the opportunity is to use the "Sustainability Self-Assessment Tool," tailored for manufacturers, found on the resources page of www.confluencepoint.com. It's a quick two-page questionnaire that addresses each function in a manufacturing company.
What does sustainability offer you, personally? More than you might initially expect. It offers the opportunity to:
- Make decisions in the workplace that will increase margins and productivity, while simultaneously improving customer relations for the business and its shareholders. Those decisions will simultaneously help your family and community.
- Become a leader in your profession, differentiating yourself from other engineers
- Help your company thrive, thereby assuring your own financial and professional future
- Achieve higher job satisfaction
In short, you win, your company wins, your family wins, and your customers and suppliers win. No wonder sustainability is rapidly gaining momentum across our nation and around the globe.
Gary Langenwalter has 30 years experience in manufacturing. He is now a partner in ConfluencePoint, a sustainability consulting firm based in Portland, OR. SME has published The Squeeze, his business novel on sustainability. Langenwalter can be reached at firstname.lastname@example.org
- Matthew Boyle, "Happy People, Happy Returns," Fortune, January 23, 2006, 100.
- Daniel C. Esty and Andrew S. Winston, Green to Gold (New Haven, CT: Yale University Press, 2006), 27.
- Gro Harlem Brundtland, Our Common Future (Oxford, U.K.: Oxford University Press, 1987).
SME Is Achieving Its Core Purpose
The following 2007 events helped SME toward its goals, to connect manufacturing practitioners with the industry and technology information they need to advance their companies' operations.
Lean Directions Aerospace Canada (LDAC), September 11–13 in Montreal, was designed to look closely at lean implementation and sustainment for aerospace and defense manufacturers—no matter where they may be in their lean journey. Promotional partners for the event were: A.W. Miller, FARO, and Processia Solutions. Sponsors included the Quebec Aerospace Association (AQA) and CRIQ (Centre de recherché industrielle Québec).
Great Lakes 2007, September 18–20 in Grand Rapid, MI, was a new exposition and conference that showcased manufacturing innovations and emerging technologies to help advance the manufacturing community in the Great Lakes Region. Great Lakes 2007 came together through a great collaborative effort, including a large involvement by SME Chapter 38 (Grand Rapids). Event partners included ASQ Grand Rapids Section; Business Review; The Employers' Association; Grand Rapids Community College; The Great Lakes Manufacturing Council; The International Trade Club of Chicago; MiBiz Network, Michigan Manufacturers Association (MMA); Michigan Manufacturing Technology Center (MMTC); The Right Place, Inc.; the West Michigan Science & Technology Initiative; and X-ology Magazine.
SME teamed with two prestigious international abrasive technology groups to bring ISAAT to North America for the first time, from September 26–28 in Dearborn, MI. The Japan Society for Abrasive Technology (JSAT), SME, and the International Committee for Abrasive Technology (ICAT) worked together to bring all the latest advances in precision grinding and advanced abrasive technology to all aspects of the process. Promotional partners for the event included Lapmaster; SCHMITT Industries, Inc.; Erwin Junker; and Jones & Shipman/Holroyd.
SOUTH-TEC, October 2–4 in Charlotte, NC, returned to the Charlotte Convention Center with the latest technologies, more industries, and stronger manufacturing muscle than ever before. SOUTH-TEC 2007 also featured an SME Motorsports exhibit geared toward motorsports manufacturers in need of technologies and processes to help them compete and win. Event sponsors included the American Machine Tool Distributors' Association (AMTDA) and AMT–The Association for Manufacturing Technology.
Productive nanosystems are molecular-scale systems that make other useful materials and devices that are nanostructured. The Technology Roadmap for Productive Nanosystems, October 9–10 in Arlington, VA, examined what can be developed in labs today, and then mapped out a step-by-step plan for the pathways of development that must take place to achieve productive nanosystems. This conference was organized by SME and its promotional partners: Battelle, Foresight Nanotech Institute, Litmus Nanotechnology, Nanoink, and Nanorex, with special support from The Waitt Family Foundation.
CMTS, the Canadian Manufacturing Technology Show, scheduled for October 15–18 in Toronto, transforms Toronto's Direct Energy Centre into Canada's definitive showcase for the latest machine tools, automation technologies, production methods, management strategies, and more. SME recently purchased several Canadian trade shows, including CMTS, as part of a major initiative to support Canadian manufacturing companies and their employees. Sponsors of CMTS include the Canadian Machine Tool Distributors Association, the Canadian Tooling & Machining Association, the Canadian Manufacturers & Exporters, and Tradeshow Week Canadian 50.
Collaborate 2007, taking place October 17–18 in Fort Worth, TX, is designed to foster cross-industry collaboration between automotive, aerospace, and defense. This annual conference and exhibition gives attendees the opportunity to share best practices and discover solutions to technology and process challenges.
FABTECH International & AWS Welding Show 2007, which will take place from November 11 to 14 at Chicago's McCormick Place, will showcase a full spectrum of metalforming, fabricating, stamping, tube and pipe, and welding equipment and technology.
SME would like to thank all of its partners in 2007 for helping to achieve its strategic goals: exchanging information about technology advances and trends in the manufacturing community. In 2008, we hope to continue working with other organizations to engage and help educate the manufacturing community and our members.
This article was first published in the October 2007 edition of Manufacturing Engineering magazine.