Many companies have begun working on environmental initiatives within their own four walls by increasing energy efficiency and reducing waste. It seems that everyone’s favorite these days is to remove single-use cups with forever-use ones. This internal focus is natural because it is where managers exert the most control, and it is where clear metrics can be established. (Let us know if you’d like to receive our new data supporting that ceramic cups are best for reducing costs and environmental impact.)

Going much deeper into the supply chain
But companies are interactive entities, part of a larger system. Sustainability managers quickly discover that fulfilling environmental objectives – especially in the areas of product design, distribution, or procurement – means working with suppliers and customers. A seemingly simple task such as reducing the packaging on a component can involve lengthy communications and negotiations with a surprising number of people both inside and outside the company. (We recently helped a client create an efficient packaging solution when the prior method used four times the packaging necessary!)

Sustainability in the supply chain is increasingly important because of regulations also. For instance, the REACH Directive requires companies to know (and register) the chemical contents of their products in far greater detail than ever before. They are reaching back into their supply chains for basic information, which can lead to collaborative product redesigns to avoid harmful chemicals.

Insights from the CDP
The folks at the Carbon Disclosure Project have been working to ease the transition to sustainable supply-chain operations by creating a network of member companies called the CDP Supply Chain. As stated in the flagship 2010 Supply Chain Report, “The CDP Supply Chain is a collaboration of global corporations who have extended their climate change and carbon management strategies beyond their direct corporate boundaries to engage with their suppliers via CDP’s annual Information Request. …This year, 44 member companies reached out to 1,402 of their suppliers, and 710 (51%) responded to the request.”

The report summarizes the findings. Members of the CDP Supply Chain are intent on reducing the carbon emissions from their supply chains, and are working on the challenges that currently hinder progress. Some challenges involve education of suppliers, who are generally at an earlier stage of sustainability planning than members; 56% intend to deselect suppliers who fail to meet carbon management criteria in the future. Some challenges will improve with clearer communication. Collaboration and sharing of best practices is a key priority at this time.

Although the CDP work involves manufacturing supply chains, there are other efforts afoot in the world of sustainable supply chains also. The first-ever Forest Footprint Disclosure report looked carefully at forest practices among companies in that industry. Ceres issued a report on corporate water-risk management based on disclosure data from 100 large companies. And other groups (ForestEthics, Earthworks, and OxFam America) are beginning to ask questions about “dirty resources” – raw materials like metals and minerals that are often acquired at considerable environmental and human expense.

Focus Questions for VP Operations & Supply Chain
TFI recommends that VP Operations / Supply Chain as well as Sustainability Executives ask themselves these five questions, toward creating supply-chain sustainability strategies:

o Where are the potential hot spots in our supply chain for illegal or unethical labor practices, or for irresponsible treatment of electronic waste (e-waste) and emissions to air, soil, or water?
o Which of my contract manufacturers (electronics manufacturing services (EMS) and original design manufacturers (ODM)) have made visible to us as much information about their suppliers’ labor and environmental practices as we need to reduce risk of being complicit in violations and bad publicity?
o Have we reduced the mass (weight, bill of materials, unnecessary components) of our products and packaging sufficiently for economic and environmental advantage, and which of our suppliers have been most proactive in this continuous Design-for-Environment (DfE) improvement?
o How are our internal supply-chain managers and buyers rewarded – through cost savings alone or also for reducing the company’s risk from associating ourselves with suppliers violating law or engaged in unethical labor and environmental practices?
o How many times do our products circle the globe from raw materials through product usage through end of life? Have we measured the wasted time, expense, CO2 emissions, and risk in transport, compared to a using a regional-manufacturing, logistics-efficient strategy?

How prepared are you to discuss these deeper levels of your supply chain? And what do you still need to understand in order to make it more sustainable?

Now that the economy is reportedly on the upswing, manufacturers are readying to boost production in anticipation of seeing business pick up. But operations executives are experiencing a chicken-and-egg situation concerning their fragile supply chains.

They ask, “How and when do we dip our toe in the water and expand capacity, labor, and inventory?” We know that whoever acts first may have an edge, but those acting too fast will suffer from anemic cash flow. And whoever acts last will miss the window and lose critical advantage. So, how does one “read the tea leaves” with confidence about an upswing in orders, and boost operations accordingly?

Crossed signals about when orders will pick up
Operations executives wonder, will the industry build and ship product “like we used to” or are today’s off-balance supply-and-demand conditions creating a lasting tug-of-war? It’s understandable why they are perplexed. Last week I read a difficult-to- believe study suggesting that 1 in 4 manufacturers felt no impact of the recession (I don’t know any of these manufacturers; do you?). The next article I read noted that unemployment rose in December in 43 USA states. I am an optimist, but even I am still compelled to be neutral at best about the pace of the recovery.

Lengthened lead times
One major risk lies with lengthening lead times. If no one is holding inventory, are we really working in an environment of cold starts–starting from scratch? Suppliers, OEMs, distributors…none is holding inventory that isn’t supported by a commitment, if they can help it. And what about the service parts on which customers depend — 24-hour turn-around promised with stocking levels based on past consumption? How do we walk this tightrope when consumption has been at an all-time low and could turn on a dime any minute now? I wrestle with these decisions every day.

Over the past year, sales-and-operations planning (S&OP) processes have been battered. What is a demand forecast anyway, when there is little certainty behind potential bookings figures? Pull systems, build-to-order, vendor-managed inventory – how do our lean-materials management systems work when no one will carry inventory and the demand is so uncertain? Ultimately, clients ask this key question: “Should we switch manufacturing strategies to buy-and-build-to-order instead of driving material to an S&OP build plan? If we buy-to-order to conserve our cash for actual customer orders, will our lead times grow and cause us to lose these same potential orders to a more aggressive or cash-rich competitor?”

The Best Counsel for Now
In my 20 years of operations management experience, I haven’t experienced such a “perfect storm” as we have now. But it actually creates a window of opportunity to gain insight enabling more certain decisions.

I see only one real answer: customers, OEMs and suppliers all need to work together as a united supply chain, sharing information to reduce risk more than ever to get through this transition period and prepare to take maximum advantage of an increase in business. And the “perfect storm” actually gives us greater opportunity than ever to gain inter-supply-chain-partner cooperation. We’ve found that right now in the business cycle, the best externally focused tool is plain and simple – increasing the level of direct communication with customers and suppliers and listening carefully for the clues.

We start internally — by helping our clients discern: Do they have significant numbers of customers and suppliers both on credit hold? Are they rationing cash? Is it possible that they, our client companies, may be on credit hold with some suppliers? And we immediately assemble a senior-executive-driven, cross-functional (comprising Sales, Operations (Manufacturing, Supply Chain), and Marketing) internal forum to drive S&OP process, balance risk, and make optimal choices right now. Then, talk more openly than ever with customers and suppliers, who themselves are needing insight just as much or more than your company does.

How is your company coping with supply-chain uncertainty? Would you be more willing than usual to engage in frank, cross-company discussions to strengthen supply-chain predictability?

Celestica, in response to the Montreal Protocol phasing out ozone-depleting substances was the first electronics contract manufacturer to leap-frog from cleaning printed-circuit-board assemblies with CFC (ozone-depleting) solvents to the no-clean process. In doing so, Celestica leaped over the aqueous-cleaning technique requiring costly capital equipment, floor space and power for the equipment, labor hours, and disposal of heavy-metal water with permits and treatments. I interviewed the parties responsible for this change a few years afterward (for my book Lean and Green: Profit for Your Workplace and the Environment), and the smarts behind the leap-frog move were motivated by environmental conservation and competitive savings of time, cost, real estate, and more.

HP, anteing up for a package-reduction challenge by Walmart, did not do as most of its competitors did — incrementally or even substantively reducing the size and weight of the packaging surrounding the products. One HP employee had the idea to make the packaging part of the product itself. The notebook computers, cables, and accessories were packed in attractive over-the-shoulder “messenger” bags — three to a cardboard shipping box without any other packaging material. In one fell swoop, this leap-frog move resulted in 97% reduction of packaging, conservation of fuel, and reduction of CO2 emissions by removing the equivalent of one out of every four trucks previously needed to deliver the notebooks to Walmart and Sam’s Clubs around the USA.

I encourage you to take advantage of the New Year to use leap-frog thinking — in your companies’ manufacturing strategies, supply-chain and logistics designs, Lean programs, sustainability programs, and every other aspect of your workplaces. Make it easier for yourself! Raise up your company’s efficacy 4-5 steps at once instead of inching upward — facing organizational resistance to change each time. Leave the arduous step-by-step improvements to your competitors, who will arrive at the finish line much later and with far more cost.

Will you face more organizational resistance to this one leap-frog improvement than to a more routine change? Perhaps yes. But if you are like me, one of the reasons you get up in the morning and head to your desk is to make your organization and the world better places.

Do you want to try on some leap-frog ideas with the TFI and TFI Environment consultants and/or community (reply below)?

When the CFO at furnishings company Herman Miller became the CEO, the director of Environment, Health, and Safety Paul Murray felt nervous. Murray had convinced the CFO to allocate $40,000/month to invest in resource efficiencies for the company. When Brian Walker moved from CFO to CEO, he asked to meet with Murray. At that point, Murray feared that a CFO-turned-CEO would nix the investment altogether. To Murray’s surprise and relief, Walker suggested increasing the monthly investment to $50,000! Walker explained that while he was CFO he witnessed that the return on investment (ROI) from the environmental investments was simply excellent. In fact, Herman Miller ($2 billion in revenues) not only makes smart investments to reduce its own environmental footprint, but also the company is a design-for-environment leader for office chairs (I’m sitting on one) and other furnishings, and – through subsidiary Convia, Inc. — helps to reduce energy consumption of customers’ buildings with energy-management tools. CEO Walker says, “Sustainability is becoming as prevalent in customer requirements as quality was 10 or 15 years ago, and we’re at the tipping point of this movement where our customers, at least, are no longer saying it’s nice to know you do it. It’s a requirement” (Industry Week, Sep. 2009, p. 24). By the way, 20% of Walker’s compensation is based on the company’s environmental performance.

Last month, a CFO-turned-CEO at a TFI electronics-company client reviewed the High-ROI Environmental Roadmap we had prepared in concert with a multifunctional green team. The roadmap listed a half-dozen Lean and Green initiatives along with their financial and environmental benefits (cost reductions, new revenue, carbon emission reductions, and less use of paper, water, and energy). From reviewing both the environmental and financial ROI, the CEO’s response was immediate: he said he’s one-hundred percent behind one-hundred percent of the projects as outlined.

Another high-tech company CFO (not yet a CEO!) uses his sharp focus on ROI to support his company’s environmental program, with this advice: Determine priorities for the environmental initiatives according to greatest reduction of environment impact and the highest monetary ROI. For example, if you had $500,000 to spend, what projects would you choose to most efficiently maximize the environmental and monetary savings? “It’s important to prioritize in this way,” he said, “because the environmental program could be one of 50 initiatives all fighting with each other for resources. List the overhead, capital, and expense investments separately. Get on the executive agenda and carve out the initiative — just like any other business function.” The CFO added that environmental programs – like training – need to be elevated to the executive level for planned investments, because they span all company departments; the executive staff needs to dedicate funding to be appropriated to the departmental budgets in a way in which the funds cannot be “cannibalized.”

So, if you are running (or starting) your company’s strategic environmental initiatives, don’t tippy-toe around your CFO. Enlist him or her in sharpening the ROI and advocating in the executive suites for these surprisingly large-return programs.

All CFOs (and other financially-minded) readers are welcome to weigh in. (Leave a reply at the bottom of the blog.)

Last week’s InForum for the Electronics Industry — formerly known as the Quarterly Forum for Electronics Industry Outsourcing and Supply Chain, which TFI started in 1999 – was well attended and full of insights. When a couple of long-time members independently asked me, “What are you up to these days?”, I updated them on TFI’s numerous international manufacturing, supply chain, and logistics research and consulting engagements, as well as our TFI Environment consulting practice.

Their polite surprise owed to their mistaken assumption that when I passed the Quarterly Forum onto Kathleen Geraghty and Douglas Kent’s capable hands, I had also passed along TFI’s consulting and research (not true – TFI divested only the Forum program). Though thankfully that erroneous assumption is not too widely spread – as evidenced by TFI’s thriving consulting and research this year – I would like to share with our readers some examples of TFI’s current consulting and research projects on operations/supply chain and manufacturing relationships:

• Customer Retention for Business Growth program, in which we are interviewing our clients’ corporate customers in Asia, North America, and Europe/Middle East. (Our international scope was bolstered by my working abroad in the past year.)
• Reliability benchmarking for networking equipment.
• Failure Modes, Effects and Criticality Analysis (FMECA) training.
• Manufacturing-overhead benchmarking for outsourcing networking/telecom equipment companies. (Let us interview you for this important study, which provides a complimentary summary for all qualified respondents; email AFeith@TechForecasters.com to see if your company qualifies and to schedule your interview.)
• Executive coaching for CEOs of electronics contract manufacturing companies, spanning corporate strategy, marketing, customer identification, and operations.
• Identifying and quantifying innovative markets for components and materials used in the electronics and other industries.

I am delighted to have recently added Pam Wiseman to our consulting team; she was VP Operations at one of our electronics-instrumentation clients for many years, and is proving to be an excellent leader on many of our projects.

It could be the increasing attention received by TFI Environment — an organization within TFI leading teams at OEM, EMS, and supplier companies to increase profits through competitive sustainability programs — played a part in confusing some folks about “what I’m up to.” It’s true that I am immensely enjoying the High-ROI Environmental Partnership program with a growing number of clients, backed by a talented team of TFI Environment consultants and analysts. But catch me on any day and I’ll espouse equal enthusiasm about all the ways we are supporting our clients – with operations/supply chain strategies and with profitable sustainability programs.

So, what have you been up to lately?

If you frequent TFI’s Friday Best of Blogs, then you know that we recommend changes to profitably streamline tech companies’ product design, supply chain, product movement, and other operational functions. Our clients know that change is necessary, otherwise they would not have engaged us. But often they need help in overcoming their teams’ or managers’ resistance to change. Organizations have an unfortunate habit of acquiring blockages that impede progress and stymie performance.

Managers can regularly embark on search-and-destroy missions to root out barriers and obliterate them. These barriers can be difficult to find, because they morph into familiar forms and hide in plain sight. If you look carefully, you can uncover these barriers to change:

1. EXCUSES — When you start hearing excuses for why things can’t change, you have encountered a blockage.
2. FEAR — When people get scared, they freeze and plug up everything they are involved in.
3. SECRETS – This is a sure sign of a dysfunctional organization.
4. INSECURITY — When people are in over their head, they know it and their main purpose in life becomes trying to make sure other people don’t figure it out.
5. POSTURING — When people fixate on their image, you are in the presence of a blockage.
6. ROUTINES — Doing things the same way for too long creates “comfort zones,” which are places where fearful, insecure, posturing people go to avoid detection.

By contrast, positive change thrives in healthy organizations, characterized by:

1. Strong, enlightened, progressive, free-thinking, open-minded LEADERSHIP.
2. An appreciation of the value and importance of SETTING AND ACHIEVING GOALS.
3. An atmosphere of HIGH-ACHIEVEMENT, where good enough is not good enough.
4. FULL DISCLOSURE and a willingness to share virtually all information.
5. Employees who understand WHAT IS EXPECTED and WHAT THEY WILL GAIN when they achieve it.
6. A sense of TEAMWORK where everyone believes they are working for the benefit of all, not enriching the few.
7. The ability to EMBRACE CHANGE and LEARN FROM MISTAKES.
8. The capacity to GET THINGS DONE.

How many organizations truly possess all of these attributes? Precious few. The first step to positive change is creating the right conditions for improvements to exist. Life on earth didn’t emerge until there was an oxygen-rich atmosphere. The Renaissance couldn’t happen until dogma gave way to enlightened thought. And an organization plugged with barriers cannot strategically progress.

We at TFI have succeeded in having upper and middle management and all employees understand the imperative of positive change. How? We gain enthusiastic buy-in through addressing key leaders’ business and budgetary goals, inspire people through real-life examples of other companies’ success, show how it’s good for business, educate about the cost of wasted materials/processes, and tie compensation to results. We use a host of approaches depending on the company’s culture. It’s very rewarding.

How have you removed barriers to change in your company? (Please reply below.)

Myth #1: Employees will resent travel reduction. If because of business travel you have ever (1) missed your kid’s graduation or performance, (2) not registered for an evening course that requires steady attendance, or (3) felt reluctant to book vacation in a fabulous distant place because flying has worn you down, then you know to question this myth. We begin customizing a client’s travel-reduction program by interviewing frequent travelers; these interviews quickly reveal that most travelers would like to curb non-essential travel.

Myth #2: The Sales Department must be insulated from travel-reduction programs, to prevent sales erosion. We used to go along with this view: after all, no consultant wants a client to experience lower sales based on a cost-savings recommendation. But then the evidence starting flowing in, such as from Oracle’s Green Sales program, which has the sales force reduce travel via web-based demos and reduce the number of demos needed based on consultative insights. For example, instead of sending about 5 sales-related people to a customer’s site, they’ll send 1-2 and have the others participate by the web. And what was the affect on company performance? –Profits up and sales decline (owing to the economy) lower than anticipated. For effective travel reduction in the Sales function, conduct objective interviews with Sales as well as customers to uncover non-essential travel, and provide easy-to-use travel-avoidance tools.

Myth #3: Travel reduction is only about reducing airfare. Corporate expenditures on airline tickets can be only 40% to 60% of total business-travel expenses, which include steep costs for rental cars, ground transportation, parking, lodging, and meals. When you capture all travel-related costs and carbon emissions, the significant savings may surprise you.

Myth #4: Travel is a long-term strategy for integrating combined business units. Travel can help bring acquired-companies’ employees into the parent-company culture, but frequent travel is not necessary for the long term. Our research has shown that “internal meetings” is the business-travel category that travelers report they can reduce most readily — even at companies that have grown recently through acquisition. Company culture is driven in large part by the CEO, who — along with other top executives — can regularly address employees using video recordings, video-conferencing, web-conferencing, conference calls, employee newsletters, monthly “What’s on my mind” emails, and other inspiring travel alternatives. This sends a strong message that employees can likewise work productively with off-site employees without traveling each time.

Myth #5: We’ve already reduced business travel as much as we can. Owing to the economic climate many companies have recently reduced business travel. By analyzing why employees travel — through interviewing frequent travelers and requiring all travelers to specify how the trip contributes to corporate objectives — we discover process changes that render classes of business travel unnecessary.

It is undeniable that sometimes face-to-face meetings are best. Having lived and worked a year in EMEA and now back in the San Francisco Bay Area, I can attest to the value and enjoyment of having met with TFI’s EMEA clients in-person during the past year, and now reuniting with my Silicon Valley clients and colleagues. But by using a green lens to re-look at conventional business processes, we find new ideas for savings. And instead of finger-wagging employees (”Don’t spend so much money!”), we inspire them to improve the quality of our lives and the environment.

What travel purposes are sacrosanct at your organization, and should they be? (Please leave a reply below.)

This month Mark wrote in his newsletter the Marbridge Daily about China’s “Old-for-New” recycling program. In short, residents and organizations can trade in old consumer electronics and receive a 10% subsidy on the selling price of new consumer electronics. The program makes sense to me, and yet in China fashion the regulation is different from those in all other global regions. In fact “Old-for-New” is an even greater departure from the European Union’s WEEE Directive (reuse/recycling) than was China’s substance-labeling program from the EU’s RoHS Directive (substance restriction).

I asked Mark about China’s bold new law, and Mark said, “China is gradually working to improve the environment, both through recycling programs like the ‘Old for New’ program for consumer-electronics recycling, and also through use of more energy-efficient products, like “green” mobile-telephone base stations.”

Then he proceeded to give one person’s view of the impact of these laws, from the streets of Beijing: “We’ve had one of the most hospitable summers in my 7 years here – neither too hot nor humid and more blue skies than I ever thought possible for Beijing. I thought the clearer skies might be due, at least in part, to some improvements in environmental policy, such as replanting of forests between here and the Gobi Desert in the north, and even-odd license plate regulations. But the other day someone reminded me that one potentially major contributing factor is the economic downturn, which has seen a lot of factories reduce output (and the accompanying pollution).”

By the way, Friedman’s chapter “China for a Day” also reminded me of my 2004 visit to China (meeting executives at EMS and ODM companies in Shanghai and Suzhou), when with no apparent warning the Central Government banned filter-less cigarettes — without years-long deliberation by politicians in tobacco states or investments by the tobacco lobby. I found it both impressive and scary.

What do you think about China’s environmental policies and the way they are created?

At home, you likely have already experienced the benefits and fun of locating used items through online forums, rather than spending time and (too much) money shopping for them new. Freecycle, Zwaggle, and of course Craig’s List have saved people millions of dollars while simultaneously benefiting the environment through avoided production, shipping emissions, and landfill burden.

Smart companies are starting to realize that they can profit from the same concept within their four walls.

Why purchase a new stapler when an employee upstairs has ended up with three in his desk drawer? Why order new equipment for the test lab when the research lab has a spare one used last year that is no longer needed? A glance at the monthly spend of a typical company for office supplies, equipment, and research materials will convince any manager that this type of sharing and swapping is tremendously beneficial to the bottom line, not to mention conserving the Earth’s resources. The question is, how to set it up practically?

Luckily, most companies already have all the tools they need to create their own “swap meet.” The corporate intranet is a natural place to set up a forum for posting “offers” and “needs.” It can be done through most types of collaboration platforms, discussion boards, or common drive spaces that all employees can access and search.

One example is the Cisco® Resource Exchange and Disposal Online (CREDO) program. Program manager Gideon Schroeder explains that CREDO is “an in-house virtual equipment exchange” that also helps Cisco handle its scrap. “The ultimate goal is to prevent any Cisco equipment or parts from ending up in landfills.” The system – which is ISO 14001 certified – is saving company money and employees’ time, and diverting electronic waste from landfills.

CREDO is for equipment. Another tech company, a TFI client in the electronic hardware business, is setting up an online swap site that will include standard office supplies, monitors, printers, chairs, and other items that tend to accumulate in people’s cubes. It is one antidote to purchasing departments’ practice of blithely buying a fresh set for every new hire.

But how do you actually get employees to use the “swap meet” when they are accustomed to ordering something new, and how do you quantify the monetary and carbon-emission savings from the program? We recommend the following four steps (which we customize for each client according to their company culture and accounting systems):

(1) Generate interest and educate employees on how to use the system, emphasizing the time-saving benefit.
(2) Give employees incentives to track their swaps. To measure the monetary and environment-footprint savings, it is critical to know what swaps have been completed. If employees swap items by walking down the hall, they need a reason to record the transaction online. One way is to reward both the giver and the receiver with “points,” redeemable for rewards or recognition.
(3) Track transactions using categories that match purchasing or accounting conventions. In particular, it is critical to know when an asset item (as opposed to an expense) has been transferred between departments.
(4) Show progress: Create a graphic for the intranet and company newsletter that shows how much money or waste has been saved to date. Also, make it easy also for employees to suggest how to maximize the program’s utility.

Has your company benefited from an internal swapping system? Let’s make this an “information swap” — please send us your comments!

Corporations habitually buy IT equipment, furniture, supplies for offices and cafeterias, capital equipment, marketing collateral, and product-related materials. Managers fear that if they don’t buy enough stuff to consume this year’s budget, then next year’s budget will be smaller. So the process has been “Buy it, then Use it or Store it.” Employees are starting to get disgusted with how their companies are laying off people while offices and storage rooms brim with unused or underused investments.

Replace the old procurement habit with “Identify the need, then Find a solution” — whether that solution is borrowed, second hand, leased, a service, or a better process requiring no additional stuff whatsoever. CFOs need to start rewarding departments that use “Identify the need, then Find a solution” instead of those tactically following “use it or lose it.”

Cisco had it right when they created CREDO — an online inventory that matches surplus items to identified needs. Several years ago we consulted to a client trying to bring this buying-stuff alternative to other companies, but you can easily create one on your intranet. And expand your thinking to include strategic solutions that avoid opening new facilities and taking on other major expenses.

Secondly, imagine the time we’d free up if we halved the time we spent in meetings. Check out four smart tips to reducing hours (even minutes) from meetings that do not further corporate objectives. Executives can insist on dogged project-management practices, comprising milestones and accountability for accomplishing corporate objectives. Leverage priority-only meetings and on-line tools for collaboration and accountability.

Corporations will not overcome their addictions to buying stuff and holding unlimited meetings until a “less is more” culture is embraced by top management and frequently re-enforced through employee training, fun competitions, and rewards.

Before you run to your next meeting or fill out a purchase requisition, take a minute to share with the TFI network your successes with repairing margins, by leaving a reply.

*Watch for an upcoming post in which we’ll write about notable mid- and smaller-sized contract manufacturers whose margins have actually been good.

The beauty of talk such as this stems from the multifunctional, multiregional composition of green teams that develop Lean and Green strategies for product design, manufacturing, suppliers, product movement, cafeterias, corporate travel, corporate procurement, employee commutes, and in all aspects of facilities.

Two weeks ago at the TFI Quarterly Forum in Walldorf, Germany, we witnessed nearly a dozen environmental improvements throughout Forum-host SAP’s facilities. Examples include coffee and tea served in ceramic cups, avoidance of air-conditioning owing to smart natural-air-flow design and grass-covered roofs for cooling, solar panels generating 180,000 kw/year from photovoltaics, and rainwater collection for grounds irrigation and — yes — toilet flushes. And beyond the realm of facilities, SAP designs their software products to run on hardware consuming less electricity, and offers solutions to help customers to measure and reduce their carbon footprints. Taken together, SAP’s environmental and cost-savings initiatives cross numerous corporate functions and regions. We think that’s the best way to drive deep cost reductions and environmental benefits (as discussed in our recent TFI white paper).

If you are located in EMEA, consider attending the Design-for-Environment Workshop that my colleague Graham Adams and I are co-leading 22 June near Tel Aviv. It will be a full day’s experience of Leaning and Greening electronic product designs.

So, take a chance and bring up “trash talk” at your next cost-reduction meeting — in a civilized manner, of course. Last week, when discussing TFI’s High-Return Environmental Partnership, the VP of Operations at one of our electronics-contract-manufacturing clients told me, “As you know, every year I need to figure out how to take cost reductions to another level, so this may be one thing that helps us this year.”

What conversations has your green team had that led to significant savings for the company and environment?

Our clients generously call us thought leaders–in an industry where rules, like budgets, frequently change and competitive stakes are high. I thought you might like to know which books have influenced us. This is our first annotated book list, with picks by 6 of the 20 TFI and TFI Environment consultants.

From Chief Economist Matt Chanoff is Predictably Irrational, by Dan Ariely. Ariely is an economics professor at MIT, but reading him isn’t like reading any other economist. His insights into how people place value on goods are well researched, quirky, entertaining, and often mind bending. Each chapter offers the entrepreneurial reader a whole new business model.

TFI Environment Consultant Dr. Kim Allen points to The Ecology of Commerce, by Paul Hawken. Because he refused to accept that business and the environment were a tradeoff, Hawken was a radical among environmentalists 20 years ago. And yet his ideas also push into the realm of truly creative and disruptive business. The Ecology of Commerce offers a daring vision of 21st century business, full of both challenge and hope.

Senior Supply-Chain Consultant Douglas Kent admires how Supply Chain Excellence, by Peter Bolstorff, delivers a 17-week process for diagnosing the health of a company’s supply chain. The handbook is easy to follow and has served as a reference tool for companies in numerous industries.

I recommend Agenda for a New Economy, by David C. Korten. Korten wrote this book, with the cooperation of my book publisher Berrett-Koehler, immediately following the Wall Street implosion in 2008 and the failure of the subsequent bailout effort. The book proposes sane alternatives to the same-old USA market structure, and after having lived in EMEA for a year (back in the USA August 2009) I am more open to these smart departures from the norm.

Logistics Consultant Jon Gilbert chose Collapse, by Jarod Diamond. It’s an eye-opening book about what happens when societies lose track of sustainability. Diamond writes about the end of well-known past societies and the root causes behind their downfalls– the over consumption of scarce resources and lack of attention to environmental degradation. Collapse can spark discussion amongst executives and green teams about business sustainability as well.

Senior Consultant Mike Kirschner not only recommends but also was quoted in Exposed, by Mark Schapiro. The subtitle says it all: “The Toxic Chemistry of Everyday Products and What’s at Stake for American Power.”

Finally, with his second contribution to this list, Matt makes a case for why electronics industry executives would benefit from reading a biography of a Medieval tribal leader. Genghis Khan and the Making of the Modern World, by Jack Weatherford, entertains us while showing how Genghis conquered more land, people, nations, and wealth in his lifetime than did the Romans in four centuries of expansion. His secret to building an empire that endured for centuries was to combine fair mindedness and cold-eyed pragmatism. Rather than imposing his own primitive culture on the nations he conquered, Genghis took the best from each and incorporated it into a nearly global empire, with freedom of religion, rule of law that even he was subject to, better security, freer trade, more prosperity than that part of the world had ever seen, and transportation, communications, and logistics systems that operated over vast distances and trumped every foe. Matt says to read this book for insight into a guy who might well have been the greatest leader humankind has yet produced.

What books have you read that you predict will benefit today’s electronics-industry executives? (If you buy a lot of books, do as many of our clients and I have done: invest in an Amazon Kindle, for convenient, and lower-carbon-footprint reading.)

Here is a priority topic for almost everyone (even optimists). Following our recent webinar, called “Managing through the Downturn,” we had an exchange with participants about signs indicating that a company is overreacting in a downturn-economic environment. We also talked about best practices that can be leveraged to overcome these adverse overreactions.

A common overreaction, which can have negative long-term effects on companies, is making across-the-board decisions to reduce investments, compensation, and head count by the same percentage—in all divisions and functions. Our interviews last quarter revealed a number of corporate-wide directives to reduce expenses or headcount without consideration for the performance of a business unit. There is no denying that cost reductions are necessary and this broad-brush tactic may be an expedient way to achieve a corporate target, but they can be damaging to technology roadmaps and employee commitment–both critical to innovation. Overreactions are also evident when companies take steps that contradict their own long-term strategy. For example, if the strategy is differentiation, then price discounting in the short term could be dangerous.

I believe that overreactions have a few common characteristics. They typically are driven by a person or small group within the company, rather than by a cross-functional team better equipped to consider the wider implications. Overreactions are often based on external input that may be incorrect, or by framing an issue from a biased view. For example, it can be tempting to pattern expense reduction after competitors’ tactics, but instead it may be the perfect opportunity to boldly contradict prevailing trends and demonstrate a long-term commitment to the market and team.

Prevention of the pain triggered by the examples above is somewhat intuitive. While cross-functional decisions–requiring some degree of debate and consensus–take more time, they should defend against overreaction. This of course assumes the company is not suffering from group think as well. Employ thoughtful decision process, according to a disciplined set of criteria, to help guard against this reaction. In an era of vulnerability, even the corporate and operating strategies that establish our market position can be at risk. Communication that reinforces the company’s commitment to these strategies along with the discipline to resist short-term decisions that dilute or contradict them is the optimal response in a downturn or anytime.

At last month’s Green Manufacturing Conference in the UK, led by my colleague Pamela Gordon, a discussion ensued about making investments in both product R&D and operations processes during the downturn. This response makes sense in some instances, because this investment can be a leverage point that will catapult these proactive companies to competitive advantage by the time the down turns up.

What is your company doing during the downturn that will increase competitiveness? How are you combating overreactions?

Imagine a “suggest box” at a global electronics company in which—in only 3 weeks—1 in 9 employees submits ideas that collectively save the company millions of dollars and at the same time reduces the company’s carbon footprint. Far from being a wooden box atop a table at the Silicon Valley headquarters (where only half the employees sit), the “suggestion box” is an interactive web tool accessible to employees worldwide for submitting Lean and Green ideas.

This successful employee engagement is called the Environmental Heroes (E-Heroes) Awards Program. I am pleased to have brought this program to TFI Environment’s clients, from my experience as global environmental affairs director at Lucent Technologies. Employees’ ideas are judged by three TFI Environment business and technical experts according to ROI, environmental benefit / innovation, and feasibility. We enter the best ideas into the High-ROI Environmental Roadmap, which we create and execute along with our clients’ “Green Teams.”

We have learned through collective experience that employee involvement benefits a company’s performance. Companies have saved millions of dollars from implementing employees’ Lean and Green ideas.

The E-Heroes Awards Program recognizes employees throughout the company who have ideas (either already implemented or proposed) that will save the company money and achieve other quantifiable business benefits: brand enhancement, risk mitigation, and competitive advantage. We invite employees around the world to submit applications in the categories of facilities’ footprint, product/service design, supply chain, and other Lean and Green action items they predict will result in significant gain to the bottom line while reducing environmental footprint.

There’s nothing “fuzzy” about it: to fulfill its purpose the program must systematically predict and measure cost savings, revenue enhancement, and reduction of environmental harm (or creation of environmental benefit).

This program motivates employees to find Lean and Green solutions for their company, and delivers satisfaction from seeing their ideas benefit profit and planet. At one client nearly 60% of the E-Heroes ideas submitted a year earlier had been implemented, started, or considered for the following year.

Another great benefit from engaging employees is creating enthusiasm for the efforts and programs led by the Green Team. Enthusiasm is contagious and creates a buzz throughout the company, then in employees’ families. Customers, investors, suppliers, and prospective employees learn of the company’s success with the program because the “Heroes” are announced in newspapers and results are posted on the website. In some cases donations are made to environmental organizations of the recipient’s choice; this opens another avenue for press and communications.

If your company is an OEM, contract manufacturer, or supplier, do you think the E-Heroes program, or something similar, could be is a win-win-win for your employees, your company, as well as the environment?

In the mid-1990s TFI conducted a study for Electronic Buyers’ News about promising new teamwork between engineering and purchasing. Now in 2009 we’ve uncovered a whole new level of collaboration amongst not only these two traditional “silos” but also marketing, R&D, facilities, human resources, compliance, IT, logistics, and other functions. It could be the best answer yet to many an executive’s dream that through teamwork, employees’ decisions would lead to company-wide benefit, beyond that of a particular function.

Today’s organizations are responding to calls from many fronts for sustainability. Regulators are requiring carbon and resource accountability, investors want to know how companies are cutting energy costs, consumers and corporate customers are asking for green products, and employees question why their companies are not composting like they do at home. Suddenly, the abilities to track data across functional departments and share ideas company-wide moves from a dream to an imperative.

Fortunately, more companies are discovering the pleasant surprise that the very nature of environmental and sustainability programs brings about not only cost and resource savings, but also extensive cross-company collaboration. When employees are united in their support of the environment, they begin communicating with people in the company with whom otherwise they would have no contact.

TFI has observed the emergence of this collaboration in its environmental partnership programs. We’ve recently co-written a white paper called “Collective ‘Green’ Wisdom: Environmental Initiatives Evoke Unprecedented Multifunctional Collaboration,” which offers a detailed case study of this phenomenon, along with key success factors in forming a multifunctional “Green Team” and ways to avoid the most common pitfalls.

The client profiled in our white paper expects to save more than US$4 million and 4,000 metric tons of CO2 equivalent during fiscal years 2009 and 2010, which only came about because of multifunctional collaboration. In this time of simultaneous financial challenge and sustainability directives, such an advantage is even more valuable.

What inter-functional, inter-regional collaboration has been fostered by your company’s Green Team? (If your company does not yet have a Green Team, why not?)

Moving forward in time to the 2008-09 global economic crisis–and specifically to last week’s Green Manufacturing Conference– I now find tech companies embracing environmental-impact reduction as a key corporate strategy to surviving and thriving in the face of slower growing or negative-growth revenues. In my keynote presentation at last week’s Southern California conference, I described corporations’ current triple headache of cost cutting, environmental compliance, and standing out positively in the market, and how creating an aggressive and inspiring beyond-compliance corporate initiative weaves together a strategic solution to all three issues.

Conference speaker Leslie Collins of HP described how an HP product is helping UPS to reduce environmental impact and save $16.9 million in labor costs, $11.8 million in projected capital costs, and $1.9 million in consumables costs by 2013. The HP Handheld sp400 All-in-One scans and prints on packages (using 2D imaging) without needing paper labels, thus avoiding the use of 1,338 tons of paper.

According to speaker David Conrad, head of environment for Nokia North America, in the past 9 years Nokia aggressively reduced the no-load consumption of its chargers by 90% (down to 0.03 watts when in a no-load status), with correlating reductions in environmental impact and customers’ electricity bills as well.

These millions of dollars savings for high-tech companies and their customers are contributing significantly to corporations’ abilities to be economically sustainable. The conference illustrated that the business benefit from lean and green strategies is both systematic (there’s nothing fuzzy about it) and systemic (yielding cost and environmental savings throughout the corporation).

In these days of necessary carbon-emissions reductions, I did not press out-of-region clients and colleagues to travel to Southern California for the Green Manufacturing Conference (even though many of them in cold climates wanted badly to attend). Conference Manager Melanie Cruz of Canon Communications and I (as conference chair) saw to it that nearly all of the speakers were from the local region or were traveling to California for other reasons. Nokia’s Conrad, based in Texas, participated in the keynote panel by teleconference to minimize his company’s carbon footprint. We design travel-reduction plans for our clients as well, leveraging more and more great alternatives to travel to achieve both lean and green benefits.

So, if you are reading this blog from Europe, come to the 25-26 March Green Mfg. Conference in Birmingham, UK. And if you sit in North America, I can advise you of closer-to-you Green Mfg. Conferences and other opportunities to connect with TFI.

What examples do you see of corporate-environmental progress from do-good, to leadership strategy, to economic imperative?

With all of the recent bad economic news, it’s sometimes hard to think of positive effects from all the disruption we’re seeing. Just last week, Dell announced plans to close its largest manufacturing facility outside of the US, a plant in Limerick, Ireland. Most media coverage (such as an article in TimesOnline) focused mainly on the downside and loss of Irish jobs. (More on Dell’s recent troubles.)

What wasn’t mentioned in the stories about Limerick is that there are a lot of folks also applauding the plant closure. That’s because production is moving to Lodz, Poland, in search of lower labor costs and more efficient distribution of products for all of EMEA. The Poles are understandably happy, and so is Dell.

The lesson in all of this is that tough times bring challenges as well as opportunities. We need to be focused on what’s coming up and prepare. For Supply Chain managers, the current worldwide slowdown presents some unique opportunities. Good ideas that might have been tabled in prior years are now of much greater interest. We are currently working on Supply Chain models for several TFI clients, and we see substantial savings and environmental benefits coming from streamlining the flow of finished goods.

The opportunity to consolidate production and shipping at a single European facility must have been a compelling business case for Dell even before the downturn. Hard times made what was just a good idea into a necessary course of action. The end result at Dell will be a much leaner supply chain in EMEA.

More good news for manufacturers is that soft demand has led to reductions in transportation costs. This will allow supply chain managers to retain low-cost manufacturing solutions over the short-term horizon. As an example, ocean carrier Maersk Line recently cut Asia to US West Coast rates by 25%. Other sources stated that Asia to Europe container costs have decreased by as much as an astounding 66%. Air Cargo, Trucking, and Rail have all seen volume reductions, and in some cases similar changes in pricing.

This breathing room will give companies with foresight more time to continue their regionalization efforts, bringing production closer to demand over the longer term. We can view this as an opportunity to “get things right” and set up proper new infrastructure in advance of the eventual rise in transportation costs, rather than doing it quickly and perhaps less effectively in the face of sharply rising transport rates.

While it’s easy to get mired in pessimistic thinking, we must always remember that opportunities arise out of challenges.

Let’s compare notes: What efficiencies have you designed recently to reduce supply chain and logistics costs?

We help by holding conferences in diverse regions of the world, combining client visits with public presentations, placing our consultants in numerous countries, and delivering consulting and insights through web-conferencing and teleconferencing. This goes for our consulting and research on manufacturing strategies, supply-chain and logistics efficiencies, and Lean and Green environmental consultations.

I invite you to visit our list of events throughout the year, to see when we will be in a region near you or reaching you via the web. See you soon!

Sun Microsystems’ Open Work program saved the company US$64 million in real estate by saving (or avoiding) 6,600 seats. Nearly 15,000 “flexible-location workers” participated (46% of the workforce). Together with use of the company’s SunRay thin-client PC alternative, Sun’s estimate for annual carbon-emission reductions was 30,000 tons. (From “Eco-Responsibility at Sun,” presented by David Towne, at TFI’s Design-for-Environment Workshop, February 2007.)

The topic of telecommuting tends to evoke strong emotions: Employees yearn for the freedom to earn a good living without being “slaves” to long work days in the office plus 2-hour daily commutes. Managers fear that their employees would—sight unseen–abandon their deliverables and leave the manager holding the corporate objectives. Employees whose functions require on-site presence envy colleagues who could remain in their jammies all day.

Consider this rational approach from an experienced manager of telecommuting employees (and a telecommuter myself): Employees who demonstrate fiscal responsibility earn budgets. Employees who accomplish escalating levels of tasks earn promotions. Employees who consistently follow through on commitments earn the right to telecommute—perhaps starting with a day or two a week, then increasing based on managers’ evaluation of results achieved.

Then there’s the clearing of the air and loosening of traffic congestion when employees commute less frequently. I advise our clients never to underestimate their employees’ awareness of and passion about the environment. A sound telecommuting policy typically boosts employees’ job satisfaction as they get to (1) breathe and be creative when otherwise they’d be on the road, (2) get a running chance at establishing work/life balance, and (3) have a manager who trusts them and cares—like they do—about a healthy environment.

And with web-conferencing, videoconferencing, interactive electronic whiteboards, blogs, and other web-based discussion tools, it’s easier and easier to be effective when not face to face.

As your company grows (positive thinking during uncertain economic times), I challenge you to leverage a savvy telecommuting policy instead of adding new offices. Your company will avoid costs not only for the real estate, but also for furniture, supplies, cafeterias, cleaning services, landscaping, and other overhead. And with each of these categories of cost avoidance comes reduced environmental footprint.

What experiences have you had with telecommuting? Do your employees telecommute? How much is too much telecommuting?

Will the current financial challenges mean that “green” goes out the window? There are several reasons for companies to answer with a firm “no.”

First, actions that benefit the environment often overlap with cost savings. Besides the usual examples of saving electricity, water, and materials, companies now can include reducing business travel. The high price of oil encourages companies to take fewer airplane and car trips, to the benefit of the atmosphere and the bottom line.

Also, designing products that save consumers money will be highly appealing in tight financial times. This suggests creating more energy-efficient and less-materials-intensive products, which are hallmark design-for-environment practices. Many examples and practical guidelines for lean-and-green initiatives can be found in Pamela Gordon’s book Lean and Green (now categorized as a “Recession Reader — titles offering fresh economic and financial perspectives for our troubled times”).

And because climate-change and environmental protection are of great interest at this time, companies have many other reasons to remain “green.” This article from the Financial Times – Staying on Course in a Tougher Climate – points out some alternative motivations for companies not to abandon their previous interest in becoming more sustainable:

• ”Our goal is still to be one of the world’s leading brands in corporate sustainability and we regard it as central to business strategy,” says a deputy head of corporate sustainability.

• “Sustainability will remain critical to our business, even during an economic downturn,” says a group chief executive. “… [W]e have a responsibility to tackle issues such as climate change and work towards a more sustainable future.”

• An advisor on green strategies points out: “If companies drop [their interest in green issues], everyone will understand that they didn’t mean it after all. What will that do to their relationship with their customers – or with their staff?”

• According to a polling company, “Seven out of 10 people think that in tough economic times it is more important for a company to behave responsibly. The onus is very much on companies to continue to behave responsibly in line with consumer expectations. That pressure is not going away.”

These sentiments are borne out by the continued interest TFI is receiving from clients for environmental projects. Despite the financial situation, we are receiving more calls requesting sustainability training, advice on implementing green initiatives, and help in understanding the changing landscape of environmental policies and actions.

I also think the current situation represents a terrific opportunity for technology businesses – which often enjoy access to significant capital and to dynamic global markets – to be a model for the rest of the world. If we abandon sustainability during a time of economic distress, we communicate that it’s OK for other businesses to do so, and perhaps by extension for developing countries to postpone their green behavior until they are “caught up” to the developed world economically. But if we stay the course, we communicate that we really do operate from deeper values than pure single-bottom-line capitalism. Which do we want?

How about for your company? Are you still committed (or even especially committed) to your green practices in the current economic situation?