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Nov 04, 2009

Get Ready. Cap and Trade Is Coming

Cap and trade is not going to go away. Seen as a cornerstone of the national movement to cut carbon emissions from greenhouse gases, a cap and trade program is expected to have the greatest impact on manufacturers and supply chain partners but no business or individual will be immune from the drive to lower greenhouse gas emissions. Scientific reports detailing life-threatening scenarios of potential climate disaster and irreparable damage to the planet have spurred President Obama and his team to demand action this year on environmental regulations now moving through Congress.

In June, the U.S. House narrowly passed (219 to 211) the green-energy climate bill HR 2454, referred to by press and public as the Cap and Trade Bill. Heated debate has ensued in the Senate which may or may not bring the matter to a vote before the year ends, despite presidential pressure. Senators, particularly those representing agricultural and coal states, are understandably wary of the potential economic repercussions cap and trade could have on already suffering businesses, particularly manufacturers. Although Congress may drag its feet for another year, most analysts agree that cap and trade will eventually become law.

Savvy businesses are already implementing green programs to curb energy use and switch from gas and diesel-powered equipment to clean energy battery and electric-powered material handling equipment. Even small changes like moving from power-chomping forklifts to green battery-powered motorized carts and powered tugs can add up to a significant plus on your carbon emissions balance sheet. Ergonomically-designed electric material handling equipment like DJ Products’ innovative CartCaddies kills two birds with one stone. They respond to government efforts to reduce carbon emissions and increase worker safety. Win-win! 

Jul 11, 2008

Using Sustainability to Create a Competitive Edge

Being eco-friendly is increasingly considered a social, political and economic advantage in U.S. business and industry — and, therefore, a competitive edge. Forward-thinking companies are using environmental initiatives and dedication to sustainability to create advantageous public opinion. Cutting edge, eco-friendly solutions gain customers. The extreme, sometimes almost rabid, level of dedicated customer loyalty, despite sometimes higher consumer costs, has been an unexpected benefit. An increasing number of ecologically-concerned Americans are willing to pay more for products and services that protect or sustain the environment. Interestingly, consumers view this as a way of partnering with industry to save the environment.

More industries are pursuing sustainability to reduce the life-cycle costs of parts, equipment and processes (see our July 9 post). “Anything not in a product is considered a cost; it’s a sign of poor quality,” say the authors of Green to Gold in explaining 3M’s Pollution Prevention Pays program. “As 3M execs see it, everything coming out of a plant is either product, by-product (which can be reused or sold), or waste. Why then should there be any waste?” As the authors point out, 3M views waste as unrecouped expenses and something to be avoided. The company’s goal is 100% sustainability.

Sustainability is not limited to the direct costs of business and industry. Savings can also be realized in indirect costs such as packing, transportation and other logistics considerations. Eco-friendly smart packages that reduce cardboard and filler save resources and money. Replacing gas-guzzling forklifts with energy-smart electric and motorized carts and tugs is another environmentally smart way to cut costs. Optimizing shipping loads and delivery strategies can result in significant cost savings given skyrocketing fuel prices.

Implementing a sustainable supply chain also eliminates or reduces the amount of money spent on disposal of harmful by-products, scrap and adherence to regulatory issues. In many instances, by-products previously disposed of as waste are now generating viable revenue sources for environmentally-conscious companies. Sustainability is already being used to competitive advantage by many companies who have found it a profitable way to grow market share in their industry.

Jul 09, 2008

Learning to Think Sustainably

Supply Chain Sustainability and Green Sustainable Supply Chain are the coming watchwords in the material handling and logistics industries (see our July 7 post). A green sustainable supply chain is the process of using environmentally friendly resources to create products that when used — and also when eventually discarded at the end of their life cycle — break down into components that either benefit the environment or can be recycled to create new products without harming the environment. 

“The whole idea of a sustainable supply chain is to reduce costs while helping the environment,” explained Patrick Penfield of the Whitman School of Management at Syracuse University in a 2007 article for MHIA’s publication On the Mhove. To gauge the cost savings of a sustainable supply chain requires that businesses think in terms of the life cycle costs of a part, piece of equipment or process. It’s merely the next step in the evolution of cost analysis, argues Penfield. “In the past,” he says, “most companies were focused on reducing unit costs. Many companies later evolved into looking at total landed costs with the onset of global trade. Companies also started looking at the usage costs with a piece of equipment.” Figuring costs based on the total life cycle of a part, piece of equipment or process is simply taking an even broader view of cost analysis.

Approaching business and industry from the broad outlook of sustainability “could be a tremendous weapon for companies to reduce costs,” Penfield believes. “There are many facets of the supply chain that could be improved by looking at it from a sustainability standpoint.” Today, companies worldwide are reviewing design and production processes and redesigning those processes to use fewer resources and less energy. In one example, Interface Corporation, a leading maker of materials for commercial interiors, decreased the horsepower requirements of a pump system by 92% simply by using shorter, fatter pipes than originally called for. Their engineer’s redesigned system “cost less to build, involved no new technology and worked better in all respects,” Penfield points out.

Next time: Using sustainability to create a competitive edge

Jul 07, 2008

Sustainability Takes “Green” to Next Level

Everyone is “going green” these days. Concern for the environment sparked “green” businesses, but skyrocketing fuel prices have ignited those efforts, pushing environmental practices ever more quickly toward sustainability.

What is sustainability? Sustainability takes environmentally-friendly practices to the next level. It improves upon the protection and husbandry of the world’s natural resources by utilizing processes that reclaim and reuse the products and byproducts of industry. Production comes full-circle: resources are used to create products which are then used and, at the end of their life cycle, recovered and reused to create new products.  The ultimate goal of sustainability is to complete the cycle without creating unusable byproducts or waste and without polluting the environment.

Supply Chain Sustainability and Green Sustainable Supply Chain are the coming watchwords in the material handling and logistics industries, said Patrick Penfield of Syracuse University’s Whitman School of Management in a 2007 article for On the MHove, a MHIA publication. Growing concern over environmental pollution and dwindling natural resources are driving the push for sustainability.  “Humankind has inherited a 3.8 billion per year store of natural capital. At present rates of use and degradation, there will be little left by the end of the next century,” authors of the book Natural Capitalism warned in 1999. Less than a decade later, scientists are concerned that the crisis point could be reached far sooner.

Despite the Bush administration’s failure to embrace global environmental efforts (and there are many valid arguments on both sides of that issue), European legislation restricting pollution and hazardous substances presage the future. Experts predict that the world will be unable to support its populace if the global community — including the U.S., China, Brazil, India and developing countries around the world — does not embrace environmental protection and work quickly to implement sustainable industry.

Next time: Supply Chain Sustainability