By Kim Allen, PhD, TFI Environment Consultant
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!
Electronics contract manufacturers no longer have the exclusive privilege of operating with low margins;* this year many of their customers — electronic product companies — also are experiencing rare tightening. Not a minute too soon are two “less is more” strategies for adding margin to both types of companies: One has to do with your stuff, and the other with your time.
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.
It was a very polite team meeting at the facility of one of our Silicon Valley clients, with everyone following the agenda and collaborating on a cost-reduction roadmap. But then the trash talk began, and after that toilet talk ensued. And the turn in the conversation didn’t bother our clients, or my colleague TFI Environment Consultant Danny Salinas, or me. The reason was that we were creating a High-ROI Environmental Roadmap and discussing steps that are good for business and the environment, including minimizing office-generated waste and reducing use of paper and water in the lavatories.
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.)
By Kathleen Geraghty, TFI Quarterly Forum
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?
By Barbara Wortmann, TFI Environment Consultant
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?
By Kim Allen, PhD, and Pamela J. Gordon
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?)
When in the mid-1990s I started researching high-tech companies’ beyond-compliance environmental accomplishments, I found a few dozen executives who cared about reducing their companies’ environmental impact and who saw competitive advantage from doing so. By the beginning of this decade, when my book Lean and Green was published, more executives had chosen a leadership path toward environmental stewardship and were already starting to reduce costs, improve brand, and meet employees at their values.
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?
By Jonathan Gilbert, TFI Logistics Consultant
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?
For both budgetary and environment benefits, we have been encouraging our clients to travel less and use technology more — even when learning best practices and getting expert consultation from us at TFI!
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!
Contact TFI | 2000 Santa Clara Avenue, Alameda, CA 94501 USA. Phone 1-510-601-9107
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